6 Steps to health system success in the new reimbursement landscape

Six steps can bring success to your organization in the new reimbursement landscape, whatever your level of commitment to population health and risk-based contracts.

The following content is sponsored by athenahealth.

Hospitals and health systems find themselves in a confusing reimbursement landscape. Payment models are shifting from fee-for-service to new models in which provider organizations take on the financial risks of providing healthcare to pre-defined groups of people. Yet while many agree that population health management will become increasingly common, fee-for-service contracts remain and are unlikely to disappear entirely. For the foreseeable future, hospitals and health systems will have a foot in two boats — fee-for-service and fee-for value — and the engines in both must be able to run efficiently.

Fortunately, many of the competencies and technologies required to succeed under risk can also pay dividends from fee-for-service contracts as well — goals such as improving patient access, improved quality and physician alignment are good for a health system's bottom-line no matter the means of reimbursement. The overarching goal for any health system should be to deliver quality care while controlling costs.

The following six steps can bring success to your organization in the new reimbursement landscape, whatever your level of commitment to population health and risk-based contracts.

1. Understand your costs
Understand your total medical expenditure and cost drivers across your population of patients. Relying on payers to report costs and quality to providers is insufficient. Access to payer claims-based data is essential to understanding the total cost of care delivered by providers inside and outside your health system and to accurately attribute the costs of interventions to rendering providers.

2. Reduce out-migration from your network
Pay yourself, rather than a competitor, for care you can provide. While it is unlikely your health system can provide everything to your beneficiaries, make every effort to ensure your patients have access to the entire range of services you can perform. For example, establishing or increasing after-hours care can go a long way to reducing ED visits. Understanding where costs are high outside your network may reveal opportunities for new lines of business, or the establishment of new contractual relationships. Providing cost and quality transparency to providers in your network will help them make the best decisions for patient care.

Successful patient engagement is crucial to securing patient loyalty, and your approach should be both high-touch and high-tech. Healthcare is an intensely personal experience, so communication (such as appointment reminders, test results, etc.) with patients should be personalized, too. Whether email, text or voice, each contact with the patient should give the patient the impression that the provider organization cares about them and wants to see them receive the care they need. At the same time, patients are increasingly coming to expect the ability to schedule appointments the same way they reserve a table at their favorite restaurant. As a C-level executive at a multistate health system recently said, succeeding at patient engagement means moving from an attitude of telling a patient "the physician will see you now" to one of telling the physician "the patient will see you now."  

Another way to reduce no-show rates is by offering pre-visit services — precertification, prior balance presentation, financial counseling and preregistration. A recent study found that a third of patients don't know what they will owe out-of-pocket at the time of care — and financial uncertainty is a primary contributor to cancellations. This phenomenon will only increase as high-deductible plans become more prevalent, and more and more patients become de facto self-pay clients. One industry analyst reports that up to 50 percent of hospital bad debt is now with insured patients. Ensuring pre-registration of patients and prior authorization from payers will help you avoid leaving money on the table — something that no provider can afford. Patient portals should allow patients to view their own relevant and timely clinical and financial information from across the continuum as well as provide direct access to patient representatives who can explain financial obligations in detail.

Perfecting patient engagement requires practice, expertise and trial and error over many repetitions — in short, the benefits of scale. Too often, provider organizations build in-house capabilities, including large and expensive call centers and patient-access departments, when partnering with a vendor that has scale and expertise in patient engagement would be more efficient.

3. Maximize pay-for-performance reimbursement
Monitor your population directly against contracts and get every dollar available by closing gaps in care. Nearly every risk-based contract in the U.S. now includes some set of quality goals. Meeting or exceeding these goals can lead to additional revenue, or in some case represent quality "gates" whereby providers failing to meet goals do not share in any cost savings — as in the Medicare Shared Savings Program. It is essential for administrators and clinical leaders to monitor performance by provider, department, facility or health system to applicable quality measures throughout the year, to ensure month-to-month progress against goals.

Proper screening of and managing the primary health needs of a patient population saves money by keeping chronic diseases in check and by helping patients avoid expensive hospital or emergency room visits. As one chief medical information officer noted, it's the difference between "population disease management" and true "population health management." You should identify a vendor that can support your system with the tools and knowledge necessary for complete reporting, tracking and benchmarking of your financial and clinical performance — including the full downstream consequences of every ordering decision made (or missed). This insight should be shared through medical-record ordering pages so that caregivers are always current, in the moment of care, with the best referral choice — including what to order, where to order it and where to schedule it.

4. Predict who will develop issues
A crucial step to succeeding with a mix of reimbursement is to use both claims and clinical data to stratify patients depending on their health needs and their likely utilization of services. That includes relatively simple analyses that identify patients in need of routine care such as physicals, mammograms, colonoscopies and other routine screenings. Identifying patients in need of care makes good business and clinical sense whether you are being compensated for managing a population or simply treating individual patients.

The current market for population health management tools emphasizes predictive analytics to identify patients who will develop issues and require higher spending. Purchasers looking for population health tools commonly confuse risk-adjustment (the normalizing of costs and outcomes based on the number and severity of co-morbid conditions) with predictive analytics. Predictive analytics is an emerging field of big data, utilizing complicated algorithms and statistics. While promising, true predictive analytics is in its infancy, and on the whole, identifying the bulk of patients likely to generate higher costs is not complicated — they are usually the patients who have generated costs in the past. Finally, predictive analytics are useless unless patients can be engaged and influenced. A recent spot-test of athenahealth clients found that 85 percent of eligible Medicare beneficiaries had not complied with free wellness visits. This represents a missed opportunity for preventive care and revenue — a striking example of across-the-board failure at even basic (healthy) patient engagement.

5. Identify early opportunities for utilization reductions
Target reductions where there are clear opportunities for savings. Under new contracts, 30-day readmissions, the occurrence of "never events" in hospitals and the development of complications are increasingly uncompensated. Gaining control of and reducing these events is critical to reducing needless expenditures.

It also makes sense to reduce durable medical equipment expense by utilizing lower-cost suppliers. In situations where you must refer patients to out-of-network services, utilizing higher-quality, lower-cost providers is essential.

6. Support chronic care and disease management
A three-step process can also help drive responsible, medically necessary volume. First, your system should ensure patients who are essentially healthy receive essential screening tests. Second, you should provide appropriate, high-quality, cost-effective care when patients fall ill. And third, you should improve the management of patients with chronic illness through better care coordination and targeted care management.

This final step is the most difficult. But health systems can use cost savings from steps 1 through 4 above to fund disease management programs. The establishment of care-management or disease-management programs can be an expensive proposition, and the cost reductions obtained through these efforts frequently take years to accrue. If disease management is part of your strategy, fund these initiatives through cost reductions from the steps above first. Once care management is implemented, it is essential to target patients with meaningful opportunities for cost reduction. For example, the vast majority of diabetic patients will not contribute to substantial costs, so diabetes programs should be targeted at patients who are heavy users of ED or hospital services. Conversely, substantial costly programs aimed at patients in the pre-terminal stages of chronic illness are rarely successful at reducing costs.

With healthcare costs under scrutiny from purchasers, and the aging of the population, pressure is mounting in the U.S. to provide quality care while controlling costs. Having strong health IT is the backbone of providing the coordinated care that is essential to succeeding in healthcare's new reimbursement landscape. Health executives and administrators should seek an HIT partner that offers both technological and business-process support — in short, a partner willing to take on responsibility for delivering real results from the six-step process listed above. The reward will be a partnership that brings more patients in need of services into the health system, that keeps the organization competitive and its revenue strong and that engages patients in order to deliver better, more comprehensive care.

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