Aligning with value-based reimbursement

The stakes have been raised for payers and providers already besieged by a rapidly changing market. Last month HHS Secretary Sylvia M. Burwell announced an initiative to make alternative payment the standard for 50 percent of Medicare reimbursement by 2018.

That’s the first time HHS set established goals for alternative payment models for Medicare. HHS wants 30 percent of fee-for-service payments to be tied to quality or value through ACOs, bundled payment, or other VBR models by 2016, increasing to 50 percent of reimbursement by 2018.

Is your organization ready? There are two aspects to value-based reimbursement (VBR) readiness. The first involves modernizing healthcare IT from its current fee-for-service (FFS) basis to one that can support mixed reimbursement models—that is, a complex mix of fee-for-service and value-based models.

FFS isn’t going away. It’s important to capitalize on your core IT assets while transforming your operational model from volume to value. You don’t want to create more IT silos. Rather, you need to evolve an integrated system that’s capable of efficiently scaling both FFS and VBR.

In addition to an IT focus, there’s an industry focus. Here are ten steps payers and providers can take today to speed their ability to align with value-based models. These activities should be considered now because, with this new imperative from CMS, there’s simply no time left to delay.

1. Take the plunge together. Value-based delivery changes depend on value-based payment changes. HHS made the first move. Now you have to make the next move. If payers wait until the new care delivery system is in place or if providers wait until they know they’ll be paid for value, we have a stalemate. Payers and providers need to come together now to take steps towards enabling value-based models.
2. Build a critical mass. Multiple payers in a region are needed to make it worthwhile for providers to participate in VBR in an efficient, automated fashion. Find several local partners and align with other payers, hospital systems, and employers. Also, payers are well positioned to bring providers together to discuss new payment models, their goals, requirements, and benefits.
3. Find a neutral party. Convening an open forum for stakeholders to speak freely about ideas, models, and plans facilitated by a neutral party can be effective. For example, the neutral party could be a local non-profit organization, or a state or county agency. In some cases, you can participate in federal initiatives, such as the CPCI program or the State Innovation Models.
4. Reach out to employers. Employers are embracing value-based arrangements, particularly bundled payment. They’re interested in health plan strategies that use financial incentives to hold providers accountable and improve care quality. Engage with them in the discussion about value-based care and payment. And everyone—employers, providers, and payers—needs to educate employees about value-based care to help them support it.
5. Find seed money. Look for federal, state, and foundation grants for pilot projects on delivery system design reform. For example, CMS’s State Innovation Models Initiative makes $665 million available for states for payment and delivery reform initiatives. The National Academy for State Health Policy and the National Association of Community Health Centers provide resource directories and assistance. Consult your local medical association and reach out to local payers. Seek out philanthropists or foundations (e.g., community health foundations, family foundations, corporate foundations, etc.). And review opportunities in the healthcare category on Grants.gov.
6. Stay focused. When getting started with VBR, it’s crucial to focus on one or two areas of reform to get value. Don’t try to do everything at once. Land and expand instead. Do an analysis to find out what your organization’s pain points are and zero in on the top one. For example, some organizations start by focusing on using episode-of-care for hip and knee replacements. Once that’s working, they focus on their next innovation.
7. Have a five-year plan. McKesson research found VBR will outpace FFS by 2019—and that was before HHS announced it wants 50 percent of Medicare reimbursement to be based on quality and value measures by 2018. Providers tend to think shorter term, one pilot at a time. Now you need to plan longer term. Moving from pilot to standard operations requires scale, and healthcare IT is the enabler of scalability. Create a plan that establishes where your organization must be in five years and how it’s going to get there. Be sure the plan is flexible, because (as we saw in January) the environment can change overnight. Revisit the plan annually.
8. Educate your organization. Find VBR evangelists in your organization (such as medical directors) who have a key leadership role and are skilled in building coalitions. You will also need data and proof points to share. Marketplace trends, pilot study outcomes, and benchmark data will help convince people across your organization that this is a real opportunity.
9. Adopt the new technology. Healthcare delivery change is happening now is because we finally have the technology that can support it. VBR models, especially when implemented as mixed reimbursement models—the unavoidable industry direction—are too complex and costly to design, administer, manage, measure, and scale without the right technology in four areas: process reengineering and automation, connectivity, analytics, and decision support. To scale VBR, FFS processes must be reengineered. Hand-offs that might be manual must be automated. Connectivity synchronizes and streamlines processes for payers and providers, and facilitates communication with stakeholders sharing information and clinical and financial risk. Analytics supports continual improvement by identifying problem areas and assessing trends in the organization and in interactions with external stakeholders. Decision support helps stakeholders use clinical evidence, as well as provider network and cost implications, to make informed decisions about care delivery.
10. Choose the right partner. The only way to confidently scale VBR models is to automate the end-to-end process associated with them. Most organizations can’t do this alone. It’s critical to find an experienced partner who understands the challenges payers, providers, and clinicians face in the transition to value-based models.

Carolyn J. Wukitch is senior vice president and general manager for network and financial management at McKesson Health Solutions. Andrei Gonzales, MD, is director of value based reimbursement initiatives at McKesson Health Solutions.