Transition to Value-Based Care Taking Its Time

Passed in 2010, the Affordable Care Act (ACA) defined value-based healthcare as delivering the best patient health outcomes at the lowest possible cost.

It requires organizing health care around patient needs rather than around the services physicians provide. This moves providers away from the traditional fee-for-service payment model. For providers, this means instead of being paid based on the volume of procedures and tests they perform, providers will be compensated based on the quality of care delivered.

Payment Reform Timing

In January 2015, former Health and Human Services (HHS) Secretary Sylvia Burwell announced new target dates for the transition from fee-for-service payment to value-based payment:

85 percent of Medicare fee-for-service payments should be tied to quality or value by 2016, with 30 percent of those tied to quality or value through Alternative Payment Models (APMs).

By 2018, the value-based percentage through APMs should increase to 50 percent.

By the end of 2018, 90 percent of traditional Medicare payments should be converted into value-based reimbursement through Accountable Care Organizations (ACOS), bundled payments, or hospital quality programs.

Studies released by PricewaterhouseCoopers (PwC) in late 2015, by the Healthcare Payment Learning & Action Network (LAN) in late 2016, and by the Deloitte Center for Health Solutions in late 2017 documented that the transition from fee-for-service to value-based reimbursement is taking longer than former HHS Secretary Burwell projected.

When interviewed by Healthcare Finance in October 2015, a partner with the PwC’s Healthcare Industries Advisory practice suggested the target three-year time window for reinventing payment practices for our complex healthcare industry might be unrealistic. At that time, 53 percent of physician revenue was still based on fee-for-service payments with APMs making up only a small percentage of the remaining 47 percent.

In October 2016, RevCycle Intelligence reported on the LAN survey of more than 70 commercial, Medicare Advantage, and Medicaid health plans. They projected that only a quarter of 2016 healthcare payments would be connected to an APM with population-based accountability.

In October 2017, RevCycle Intelligence highlighted the Deloitte survey indicating the transition to value-based reimbursement is still taking more time than expected. The primary cause for recent delays? A lack of APM availability from health insurers.

“Commercial payers have been less aggressive with shifting to value-based reimbursement compared to Medicare and Medicaid,” the publication reported. An AMGA analysis showed that about 18 percent of provider-organization leaders said no payer offered risk-based alternative payment model products in their market in 2016, according to RevCycle Intelligence. “Another 46 percent of leaders said only 1 to 19 percent of health plans in their market had risk-based models,” the publication reported.

Despite slow progress in transitioning to value-based reimbursement, providers are still moving toward APMs. However, the changeover in presidential administrations has prompted renewed debate about healthcare reform that likely has given some providers pause.

Medical Billing Industry Effects

What does all of this mean for the medical billing industry?

Honestly, it’s hard to say. Some billers fear a massive shift accompanying value-based reimbursement will disrupt revenue cycle management for years to come. Others anticipate unprecedented growth in demand for outsourced billing services that could leave medical billers short-handed. PracticeAdmin is staying current with the shifts to APMs and will continue to provide software solutions that stay ahead of the industry trends.

However, given the slow movement toward value-based reimbursement to date, it’s unlikely that either will be the case. As with transformation of other industries like financial services or information technology, lasting change tends to evolve slowly over time. Stay tuned as the massive transitions in healthcare reimbursement trickle down to healthcare providers, requiring gradual process changes from you.

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