August 8, 2017

New Reimbursement Models: Is the Juice Worth the Squeeze?

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It's apparent that the traditional fee-for-service model for reimbursement cannot be sustained. New concepts have been introduced in the industry and some have "died on the vine,” others such as bundled payments are evolving, and new models have erupted, such as those outlined in the Medicare Access and Chip Reauthorization Act of 2015 (MACRA).

No matter how you frame it, reimbursement to health systems will change in the future and, paramount to that transition, will be the impact on clinicians, coders, clinical documentation improvement (CDI), case management, and finance.  There is no change to the value proposition that compensation will be based on quality, outcomes, and cost. The two "hot" reimbursement models on the street (bundled payments and MACRA) have their challenges. But the foundation of both compensation methods is documentation and coding.

In a recent July survey with KPMG-AMA, 50 percent of healthcare systems had no knowledge of MACRA.   That would seem to make sense since it is a new model from the Centers for Medicare & Medicaid Services. and everyone is keeping an eye on it but not prepared to react.  The problem is that there are already changes in motion to the reimbursement, and most are not prepared.

Just to take a few moments to outline for you the challenges of MACRA and bundled reimbursement:

The transition to either compensation model is not easy:

  • A bundled payment does not mean full payment.
  • The cost to administer a packaged payment is at minimum twice the traditional fee for service payment.
  • Post-acute care at this time is lost in both the bundled and MACRA concepts.
  • There are two tracks in the Quality Payment Program (QPP): Advanced Alternative Payment Models (APMs) and the Merit-Based Incentive Payment System (MIPS). Neither are understood by the industry.
  • Health systems’ integrations are not in sync with assuming a co-ordination of care shared-risk model.
  • Information-technology costs associated with the change models are incongruent with the demand.
  • Investing in change is a concern, and the healthcare sector is hesitating to invest in the cost and energy.
  • Data analytics is weak inside and outside the system and is instrumental to moving to a value-based care payment landscape.

In summary, healthcare is in constant change and never more so than now is the transparency between clinical, coding, operations, and finance on a track to more integration after the adoption of ICD-10.

But the real question remains: when do you pull the trigger, and is the juice worth the squeeze?
Disclaimer: Every reasonable effort was made to ensure the accuracy of this information at the time it was published. However, due to the nature of industry changes over time we cannot guarantee its validity after the year it was published.
Lyman Sornberger, MBA

President and CEO for LGS Health Care and Chief Health Care Strategy Officer for Capio Partners. Prior to his roles at LGS Healthcare and Capio Partners, Sornberger was the Executive Director of Revenue Cycle Management for Cleveland Clinic Health Systems (CCHS) from 2006 – 2012. This role comprised of the Revenue Cycle Management for all 11 Cleveland Clinic Health Systems Ohio and Florida Hospitals and 1,800 Foundation Physicians. His responsibilities included all CCHS Patient Access Services, Health Information Management and Billing. Prior to his affiliation with CCHS Mr. Sornberger was with the University of Pittsburgh Medical Center for 22 years as a leader in revenue cycle management. Sornberger is a graduate from the University of Pittsburgh with a BS and Masters Degree in Business.

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