Providers say they’re not ready for the transition to value-based care

To succeed under new contracts, healthcare organizations will need technology and cost accounting capabilities that many don’t have, according to results of a HIMSS survey.

The nation is on a fast-track in shifting to value-based care payment models, and to an extent, providers are moving faster than they’re able to adapt.

Providers need to make progress on a variety of fronts to succeed under value-based care, involving both the use of technology and other operational changes. Many organizations, while in transition, are still in the early phases of demonstrating key capabilities, such as determining their costs and tracking financial information.

Given the rapid shift, it’s no surprise that providers aren’t comfortable with their readiness for the move to value-based care, and that was confirmed in a recent survey by HIMSS on cost accounting, released last week.

In large part, the profound shift in reimbursement is being led by the Department of Health and Human Services, which last year set the goal of having 30 percent of Medicare payments tied to value-based reimbursement by the end of 2016. The transition is happening faster than anyone thought possible, with HHS recently reporting that its goal was met this month.

Providers are making the shift, but generally they are not feeling comfortable with or adept at handling the new challenges of value-based care, says Pam Jodock, senior director of health business solutions at the Healthcare Information and Management Systems Society.

In the HIMSS analysis of results, only 3 percent of respondents said they believe their organization is highly prepared to make the transition to pay for value from the current reimbursement approach of fee-for-service.

Many providers have forged ahead with value-based contracts, hoping to figure things out with Medicare as they go along, Jodock says. Statistics bear out her contention—a total of 477 accountable care organizations are now participating in the Medicare Shared Savings and Pioneer ACO programs.

However, she notes that regulators and providers need to be thoughtful about how quickly providers can make changes, if they can put the appropriate infrastructure in place to be successful in the long-term. For instance, providers still struggle in sharing information electronically within the same delivery system, much less with outside providers.

Further, some of the technologies needed to facilitate value-based care aren’t yet widely available. For example, Medicare wants hospitals to manage an episode of care across provider sites across the continuum of care, but to do that, facilities need consolidated billing functions to manage the entire episode of care. Under bundled payment arrangements, Medicare will reimburse the hospital, which then dispenses payments to various units of the hospital as well as to outside providers.

Even the idea of establishing costs is a challenge for providers. The survey found that while many healthcare organizations have a formal process for determining healthcare costs, only 39 percent regularly review those costs to ensure that information is current.

In future models that include risk-sharing arrangements, hospitals also will be responsible for assessing losses and sharing rewards among providers responsible for an episode of care, Jodock says. “We currently don’t have those processes in place.”

Respondents to a new HIMSS cost accounting survey also have concerns that there are no consistent definitions of the services to be included in a bundled episode of care.

While HIMSS supports the move toward value-based payments, it would like the transition to occur more cautiously, and that Medicare take into consideration findings from the cost accounting survey before moving into an implementation phase that could include assessing financial penalties.

The survey found that in the short-term, vendors need to work on solutions to let disparate systems better share data, and hospitals and other providers need to create ways to handle data exchange in the interim.

Healthcare providers use an array of factors when determining service prices with profit margin necessary to maintain financial health and actual cost to deliver the care emerging as the most important factors. But, fewer than one-third of respondents to the HIMSS survey said they have the ability to evaluate these costs in an automated fashion, even though many have plans to expand price transparency efforts.

Provider organizations are looking for tools to share and track quality and financial information between providers and for consistent definitions and business practices that can be applied in all settings, regardless of who the payer may be.

The fear is that just as the electronic health records meaningful use program required providers to use technology that’s not yet available, the same scenario is playing out again to some degree under value-based payments.

“The point of the survey is to make sure the train is not derailed down the road,” Jodock says. If the end result is that providers meet cost savings goals on clinical treatment but triple their administrative costs to collect and analyze data, process claims and make payments, “then you haven’t really achieved your goals,” she adds.

The intent of the survey, she emphasizes, is not to be critical and not to short-change the clinical cost savings that can be achieved through alternative payment models, but there is a complimentary administrative side as well that must be considered.

An executive summary of the HIMSS cost accounting report is available here and the full report is available here to HIMSS members.

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