With the healthcare industry rapidly shifting to value-based payment approaches, providers are finding that they are not technologically and organizationally prepared for the dramatic changes from traditional fee-for-service reimbursement.

By the end of this year, at least 30 percent of all Medicare payments made to hospitals and physicians will be based on pay-for-value payment models, and by the end of 2018, that percentage will increase to 50 percent.

However, a recent survey conducted by the Healthcare Information and Management Systems Society found that only 3 percent of respondents believe their organization is highly prepared to make the transition to pay-for-value payment models, which are typically reimbursed based on patient outcomes rather than the volume of services delivered.

“The challenge is that providers don’t have the infrastructure or business processes in place to support the transition happening as rapidly as it is, and that means those organizations are feeling ill-prepared to do this well,” says Pamela Jodock, senior director for health business solutions at HIMSS. “Everybody seems to be in a very reactive mode, learning as they go and developing one-off solutions.”

Respondents to the 2016 HIMSS Cost Accounting Survey indicated that the following are their top three areas of need:

  • Tools to track and evaluate quality of care
  • Better communication between disparate providers
  • Consistent definition of quality by specific types of disease

National Coordinator for Health IT Karen DeSalvo, MD, has argued that the new payment models do not incentivize technology per se but rather outcomes-based rewards. “It’s really more about knowledge that can come from that data as opposed to thinking about the adoption of platforms themselves,” DeSalvo contends.

Toward that end, healthcare organizations are seeking technologies that can help them improve patient outcomes and efficiencies as well as lower costs. Clyde Wesp Jr., MD, executive clinical strategist for Jacobus Consulting and adjunct professor at USC Sol Price School of Public Policy, recommends that they fully leverage HIT to succeed under emerging value-based models.

Clinical documentation in particular is vital for the success of providers, according to Wesp, who contends that clinical information collected as part of the electronic health record will become increasingly important as organizations seek to improve the health of patients and populations under value-based care models.

“It really does come down to documentation at the EHR level,” says Wesp. “To be able to provide the information that Medicare or health plans want, you have to have the information in a discrete format so you can give them what they need as these metrics develop.”

The ability to capture the data and organize it might seem rudimentary, but it is fundamental to success in the post-fee-for-service environment, argues Jodock. “Clinical documentation is critically important and is the cornerstone of value-based care.”

She believes providers are looking for help to develop the necessary tools to share and track quality of care as well as financial information between providers, and to provide consistent definitions/business practices that can be applied in all settings, regardless of who the payer may be.

“How you define quality in many instances depends on who you are talking to, so provider organizations may have a spreadsheet of metrics that all apply to quality and are tracking a variety of items under that term because there’s not a national standard of how we define quality, which is administratively cumbersome, time-consuming and expensive,” explains Jodock.

As the industry transitions to value-based payment, providers must be able to better understand the costs of delivering care and how to price services if they are to be financially viable in this new payment environment, says Jodock. While the HIMSS survey found that 72 percent of respondents reported the ability to formally establish costs, few regularly do in fact review them, and that must change, she says.

Providers operating in the new value-based world need cost assessment and revenue cycle management tools that enable them to accurately capture or predict a wide range of factors influencing their clinical and operational costs.

“We still have hospitals that don’t have good cost accounting systems, and so they don’t know what something really costs to deliver their care,” adds Wesp. “Knowing your costs is going to be so critical for the future.”

Historically, the chargemaster has been the measuring stick for setting prices. But, with changes in the marketplace and regulations it is less a reflection of what it costs to deliver care and more a reflection of what payers have been willing to pay for that care—and the two are not always the same, according to Jodock.

“The chargemaster is a holdover from the fee-for-service model to establish price,” she contends. “During the fee-for-service age, providers negotiated contracts with payers annually and looked at their costs once a year and then they wouldn’t look at them again until it was time for contract negotiations. In an alternative payment model world, we’re still determining what you’re going to be paid for a bundle of services, for example, and it’s sort of a moving target.”

Providers are being asked to be more efficient with their dollars. As a result, Jodock advises that it’s very important for them to routinely examine what it costs them to deliver services versus the price they are being paid for those same services.

She says that chargemasters are a part of determining costs, but organizations also have to look at their overhead expenses. For instance, an item master is the inventory tool that providers can use to track the amount paid for materials and supplies to “keep the lights on,” and Jodock recommends that both should be a part of establishing the cost of delivering care.

Jodock asserts that providers must manage the exchange of clinical and financial information between all parties involved in an episode of care, regardless of whether or not they are part of the same healthcare delivery system. Yet, she acknowledges that interoperability remains a challenge for the industry as it moves to value-based care.

A new report from the Workgroup for Electronic Data Interchange finds that automated data exchange is critical to the successful coordination, delivery and payment of value-based care. According to WEDI, the problem is that the lack of interoperability remains a significant barrier to fully leveraging health IT to assist team-based care coordination across the healthcare continuum, making gaps in care a critical issue that will only continue to grow in importance as value-based care efforts mature.

“Many providers are unable to seamlessly access or share patient health information electronically with other organizations,” states the report. “As a result, they are unable to efficiently identify patients in need of healthcare services or deliver services according to evidence-based guidelines in a timely manner. Not closing these gaps in care significantly affects the quality and cost of care by contributing to adverse patient outcomes and inappropriate care.”

At the same time, Wesp makes the case for an increased need for multi-directional communication and collaboration not just between organizations but within organizations, particularly between clinicians and financial staff members. Oftentimes, one area of a hospital is not communicating with another, operating in siloes.

Value-based care requires organizations to adopt a matrix structure and do away with individual or departmental goals and objectives, he argues, with each functional component of an organization needing to know what the others are doing and all staff members required to operate under a coordinated vision, clearly articulated common goals and objectives, as well as business strategies.

“So much of the data feeds all of the disciplines as you put information in front of people to help them make clinical and financial decisions—these things all have to come together,” concludes Wesp. “Unless your organization is united at the executive level, it will be fragmented and you will waste resources.”

Register or login for access to this item and much more

All Health Data Management content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access