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GE Healthcare Camden Group Insights Blog

The Move from Volume to Value: Now is the Time for Change

Posted by Matthew Smith on Jun 2, 2016 12:19:54 PM

By Daniel J. Marino, MBA, MHA, Executive Vice President, GE Healthcare Camden Group

Volume to ValueHealthcare delivery (and physician reimbursement specifically) is undergoing unprecedented transformation. While most physician practices still operate largely in a fee-for-service ("FFS") world, government and commercial payers alike have signified their intent to reimburse physicians and other providers based on value.

Thriving in an Uncertain World

Many physicians recognize that the FFS system is imperfect at best, but the evolving value-based reimbursement system is ill-defined, leaving physicians facing a great deal of uncertainty. During this time of uncertainty, medical practices have opportunities to improve performance and position themselves for success in the rapidly changing healthcare market. It is natural to begin focusing on clinical measures and outcomes as a means for proving value, but it is just as important to remain financially viable during the transition. By understanding the structures of evolving reimbursement methodologies, changing health plan dynamics, and developing market trends, we can thrive in this uncertain world.

The Department of Health and Human Services’ (HHS) is actively involved in the fundamental shift in reimbursement, moving from volume to value in Medicare payments, reinforcing the shift to value-based care. Organizations that begin to incorporate strategies around the “value proposition” will be in the best position to meet industry demands for value-based reimbursement. This will require a dedicated strategic “call to action” across organizations and their provider community.

Controlling the Momentum of Change

There remains a fundamental question regarding how quick an organization should move to value-based care and controlling the momentum of change. Although some of the drivers are market dependent, others are based on embracing key concepts around the “triple-aim principles” and preparing the organization for the future. High-performing organizations are building their clinically integrated networks, forming ACOs, and incorporating reimbursement programs around bundled payments and minimal risk-based contracts, while still reaping some opportunities from the current fee-for-service contracts. 

The transition into value-based care is a paradigm shift of culture, care model redesign, reimbursement, and quality outcomes that takes time. Organizations that begin to plot the “value-based care” path now, while fee-for-service is still their predominant reimbursement, will be in the best position to refine their care delivery models and protect their revenue streams. It will come down to embracing the concepts of patient-centered care while focusing on improving access and reducing the cost curve. Health systems must begin to squeeze operating costs out of the system and incorporate patient-centered care models focusing on an “ambulatory-focused” model of care that carefully manages transitions across the continuum.

Balancing Risk

Many commercial payers in some markets have already begun the transition, with many more to follow.  A strong value proposition along with creating the patient-centered strategy is key to finding the right “change momentum” for your organization. Focusing on providing the value proposition, engaging physicians to lead the care redesign, and incorporating programs such as bundled payments and shared savings help to make sure organizations appropriately embrace the pace of change within their market. It also ensures the organization can maintain a steady forward pace by balancing appropriate risk with solid potential for clinical and financial gains.

Volume to Value


Marino_Dan.jpgMr. Marino is an executive vice president with GE Healthcare Camden Group with more than 25 years of experience in the healthcare field. Mr. Marino specializes in shaping strategic initiatives for healthcare organizations and senior healthcare leaders in key areas such as population health management, clinical integration, physician alignment, and health information technology. With a comprehensive background in all aspects of practice management and hospital/physician alignment, Mr. Marino is a nationally acknowledged innovator in the development of Accountable Care Organizations and clinical integration programs. He may be reached at daniel.marino@ge.com.
 

Topics: HHS, Bundled Payments, Department of Health and Human Services, Value-Based Reimbursement, Value-Based Care, Daniel J. Marino

Five Ways Medical Groups Can Prepare for Value

Posted by Matthew Smith on Sep 8, 2015 1:52:07 PM

By Marc Mertz, MHA, FACMPE, Vice President, The Camden Group

Value, Medical Group, The Camden GroupHealthcare payment is transitioning from fee-for-service to value-based. Although individual markets and organizations are at different stages of this transition, recent actions of the Centers for Medicare & Medicaid Services and commercial payers clearly indicate that the industry is moving in a single direction.

Here are five things that medical groups should be doing right now to prepare for value.

1. Reduce Costs

To prepare for success under value-based payment models, including risk-based contracts, medical groups need to take a critical look at their costs. The majority of medical group operating costs are in just a few areas: physicians and other providers, staff, facilities, equipment, and supplies. Physician compensation warrants its own discussion (see below), but groups should develop cost-accounting capabilities to evaluate and monitor the other cost categories. Each category of expense should be regularly compared against industry benchmarks. As outliers are identified, groups should quickly develop action plans to bring the expenses in line.

As groups advance into value-based models (including shared savings and risk-based models) they will be held accountable for the cost of care provided. Groups should prepare for this scenario now by collecting total claims data from payers and implementing systems for monitoring and reporting costs by clinical category and by physician.

2. Evaluate Contracting Opportunities

Medical groups are responding to the industry’s shift to value by beginning to develop population health management and care coordination capabilities. While these new approaches are largely about eliminating waste and providing the appropriate care at the right time, they may reduce a group’s payment under a fee-for-service contract. Any reductions in utilization or costs may help the patient, and certainly the payer’s bottom line, but do little to compensate the medical group that has invested in the care model redesign, IT, and staffing necessary to implement population health management.

Medical groups should take a more aggressive and proactive approach to payer contracting. Rather than waiting for health plans to offer new payment models while they invest in care redesign, groups should identify opportunities to negotiate care management payments or shared savings arrangements that allow the group to share in the cost reductions it generates. As the group gains experience, it can consider more advanced models, including risk-based models.

3. Update Physician Compensation and Incentives

As payment models change, medical groups should consider redesigning physician compensation models. Most physician compensation plans are predominantly based on volume—work relative value units, revenue, or charges. As groups progress down the path to value, they will need to implement performance measures such as patient satisfaction, access to care, quality scores, and other indicators that support population health management. Rewarding the behavior changes and the clinical cultural transformation necessary for success in the new value-based models is critical.

Consider the use of a physician compensation committee to ensure compensation plan design and performance measures reflect the objectives and values of the group, and to gain buy-in and support. The committee should include administrators and a representative number of primary care, specialty, and hospital-based physicians.

A new compensation plan should be implemented in a way that allows physicians to modify behaviors based on the new incentives. Consider a phased-in approach or “shadowing” process, in which physicians are paid under the old model but receive reports regarding projected performance under the new model.

4. Create Dashboard Reports to Monitor Performance

Ready access to data allows an organization to quickly respond to opportunities and to correct underperformance before it becomes a major issue. During the transition to value, medical groups should continue to monitor traditional key performance indicators such as physician productivity, revenue cycle performance, and operating costs while beginning to track value-based indicators such as cost of care, quality, patient satisfaction, patient access, and gaps in care. To facilitate this level of monitoring, the organization must develop dashboard reports that quickly indicate group performance relative to targets, and that highlight deficiencies. These reports should be shared often, and action plans developed to address any instances of underperformance.

5. Evaluate Your Fee Schedule

Groups should be aware that price transparency is increasing at a rapid pace. Reporting organizations are collecting charge data from medical groups and sharing it with the public via websites and other forums. Meanwhile, the prevalence of high-deductible health plans is increasing and patients are taking a more active role in deciding what care they receive and where they receive it. Groups with high published rates may very well see patients avoiding their services.

Hospital-based clinics that charge a facility fee in addition to professional fees should evaluate whether the high payment is being offset by decreased volume and higher patient dissatisfaction. All medical groups should evaluate their fees in the wider context of their market and consider how patients would view those fees. Groups then should consider promoting transparency by posting the prices for common services on their websites.


Mr. Mertz is a vice president with The Camden Group and has 18 years of healthcare management experience. He has 15 years of experience in medical group development and management, physician-hospital alignment strategies, physician practice operational improvement, practice mergers and acquisitions, medical group governance and organizational design, clinical integration, and physician compensation plan design. Mr. Mertz has managed private practices, hospital-affiliated practices, and academic physician practices. The Medical Group Management Association (“MGMA”) has identified practices under his management as “Best Performing.” He may be reached at mmertz@thecamdengroup.com or 310-320-3990.    

Topics: Value-Based Reimbursement, Physician Compensation, Payment-for-Value, Marc Mertz

Senate Passes SGR Fix, Embraces Value-Based Reimbursement

Posted by Matthew Smith on Apr 15, 2015 2:45:32 PM

senateThe fix for Medicare’s Sustainable Growth Rate (“SGR”) is finally in as the Senate approved the previously House-passed healthcare reform package (“H.R. 2”). The fix repeals Medicare’s SGR physician payment formula after previous passage of 17 short-term bills since 2003 to block cuts to physician payments. President Obama had previously pledged to sign the bill as soon as it passed the Senate.

Impact on Physicians

  • Stabilizes payment increases from 2015 to 2019 with 0.5 percent increase per year with 0.0 percent payment adjustment between 2020 to 2025
  • Moves to pay-for-value in 2019
    • Incentive bonuses (5 percent annually) to providers who “receive a significant portion (25 percent+) of their Medicare revenue” from an alternative payment model, including patient-centered medical homes and accountable care organizations (“ACOs”) between 2019 to 2024
  • Combines the various current incentive payments and streamlines the current Merit-Based Incentive System (“MIPS”) beginning in 2019 to reward physicians for quality, resource utilization, clinical practice improvement activities, and meaningful use of the electronic health record (“EHR”)

Medical Group Must Dos

The SGR fix doesn’t eliminate challenges for medical groups, whether they are independently or hospital/health system owned. To be successful, medical groups need to be taking action on a number of fronts, including the following:

  • Re-examine your physician compensation plan and add incentives for quality, patient satisfaction, and efficiency
  • Maximize operational efficiency
    • Assess work flows
    • Maximize patient throughput
    • Effectively use care team members to maximize physician effectiveness
    • Improve patient access so you can meet quality and efficiency standards
  • Participate in Medicare’s current value-based payment initiatives
    • Participate in Medicare’s Physician Quality Reporting System (“PQRS”)
    • Attest for EHR meaningful use
    • Analyze your performance on quality and cost and develop a performance improvement action plan now

Other Key Provisions

H.R.2 also extends the Children’s Health Insurance program through September 30, 2017 and includes provisions on hospitals and post-acute providers. Other provisions include:

  • Delays disproportionate share payment cuts to safety net hospitals until 2018 and extends the DSH policy through 2025
  • Delays until September 30 changes in the two midnight rule on inpatient billing that were set to take effect at the end of this month
  • Increases Medicare payments to post-acute facilities by no more than 1 percent in 2018
  • $7.2 billion in additional funding for community health centers
  • Permanently extends Medicare’s Qualifying Individual program for low income seniors and the Transitional Medical Assistance program that helps families with Medicaid keep their coverage as they transition from welfare to work

Only about one-third of the $200 billion-plus package was offset by spending cuts. To help offset new spending, H.R. 2 provides for means testing for Medicare recipients. Higher-income beneficiaries will pay higher premiums for physician services and prescription drugs; some Medi-Gap plans will see limits on first-dollar coverage.

Although the bill’s passage was welcomed, some expressed caution and suggested that the legislation should not be considered a permanent solution. Additional payment updates and bonuses are currently set to expire in 2025 so there will be a need to re-examine the physician payment methodology again in the future.

Topics: Value-Based Reimbursement, Medicare, Physician Compensation, Operational Efficiency, Physician Group Practices, Sustainable Growth Rate, SGR

Moving from Volume to Value: The Time for Change is at Hand

Posted by Matthew Smith on Jan 28, 2015 4:24:00 PM

By Daniel J. Marino, MBA, MHA
Senior Vice President, The Camden Group

volume valueThe Department of Health and Human Services’ (HHS) press release on Monday announcing its fundamental shift in reimbursement, moving from volume to value in Medicare payments, reinforced the shift to value-based care. As discussed in our “Top Ten Healthcare Trends to Watch in 2015,” organizations that begin to incorporate strategies around the “value proposition” will be in the best position to meet industry demands for value-based reimbursement. This will require a dedicated strategic “call to action” across organizations and their provider community.

Even with the HHS announcement, there remains a fundamental question regarding how quick an organization should move to value-based care and controlling the momentum of change. Although some of the drivers are market dependent, others are based on embracing key concepts around the “triple-aim principles” and preparing the organization for the future. High-performing organizations are building their clinically integrated networks, forming ACOs, and incorporating reimbursement programs around bundled payments and minimal risk-based contracts, while still reaping some opportunities from the current fee-for-service contracts. 

The transition into value-based care is a paradigm shift of culture, care model redesign, reimbursement, and quality outcomes that takes time. Organizations that begin to plot the “value-based care” path now, while fee-for-service is still their predominant reimbursement, will be in the best position to refine their care delivery models and protect their revenue streams. It will come down to embracing the concepts of patient-centered care while focusing on improving access and reducing the cost curve. Health systems must begin to squeeze operating costs out of the system and incorporate patient-centered care models focusing on an “ambulatory-focused” model of care that carefully manages transitions across the continuum.

HHS will begin to set clear goals and a timeline that guide their movement from fee-for-service to fee-for-value for Medicare reimbursement. Many commercial payers in some markets have already begun the transition, with many more to follow.  A strong value proposition along with creating the patient-centered strategy is key to finding the right “change momentum” for your organization. Focusing on providing the value proposition, engaging physicians to lead the care redesign, and incorporating programs such as bundled payments and shared savings help to make sure organizations appropriately embrace the pace of change within their market. It also ensures the organization can maintain a steady forward pace by balancing appropriate risk with solid potential for clinical and financial gains.

Daniel J. Marino, The Camden GroupMr. Marino is a senior vice president with The Camden Group with more than 25 years of experience in the healthcare field. Mr. Marino specializes in shaping strategic initiatives for healthcare organizations and senior healthcare leaders in key areas such as population health management, clinical integration, physician alignment, and health information technology. He may be reached at dmarino@thecamdengroup.com or 312-775-1701.

Topics: HHS, Bundled Payments, Department of Health and Human Services, Value-Based Reimbursement, Value-Based Care, Daniel J. Marino

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