How Quality Metrics Affect Value-Based Care Reimbursement

June 29, 2016 - In today’s changing healthcare landscape, public and private health payers are attempting to investigate new payment models in order to reduce the continually rising medical spending. Whether it’s bundled payments or accountable care organizations, payers and providers seek to move from fee-for-service payment strategies to more value-based care reimbursement protocols.

When attempting to negotiate contracts based on a value-based care reimbursement model, healthcare providers will need to bring more focus toward population health management and attempt to meet quality performance benchmarks such as a reduction in hospital readmission rates.

Value-based care reimbursement has made a strong impact on not only smaller health payers but the major health insurance companies as well. Cigna, for example, has been leading the movement toward value-based care, according to Mark Slitt, Spokesman and Public Relations Manager at Cigna.

“Cigna has been a leader in value-based care reimbursement since 2008 and we are well on the way to having value-based reimbursements represent the majority of our arrangements with providers by 2018,” Slitt told HealthPayerIntelligence.com.

“This is fundamentally changing the relationship between payers and providers by making the relationship much more collaborative. There is now much more focus on working together to improve quality and affordability so that the customers/patients we jointly serve have better outcomes and enjoy a better experience.”

In order to succeed effectively in a value-based care environment, it is also essential for providers to pursue risk when negotiating contracts. Jeff Rivkin, Research Director for Healthcare Payer IT Strategies at IDC Health Insights, spoke with HealthPayerIntelligence.com about the role risk plays in value-based care reimbursement as well as the prevalence of alternative payment models among payers.

“A portion of the provider’s total potential payment is tied to the provider’s performance on cost efficiency and quality performance measures,” Rivkin noted. “While providers may still be paid a fee for service for a portion of their payments, they may also be paid a bonus or have payments withheld. For value-based contracts, this bonus is not paid unless the providers meet cost efficiency and/or quality targets.”

“Clinical integration fees paid to providers are contingent on the providers engaging in practice transformation to adopt technology and processes that alter the manner in which they deliver care,” added Rivkin. “Provider goals include accountability to their patients, creation of advanced care teams to include nurse care managers and pharmacists, and implementation of automated processes to address prevention and wellness.”

With the Department of Health and Human Services (HHS) bringing more focus toward value-based care and alternative payment models, it is understandable why private payers are embracing new reimbursement strategies. Public payers have often led the way in new and improved healthcare initiatives like the bundled payment models or accountable care organizations.

“Alternative payment models generally make doctors and hospitals attentive to the total costs of treating a patient at a high level of quality, giving clinicians the opportunity to focus on quality, patient-centered care,” Rivkin continued.

“This is prevalent because Medicare has established official value-based care reimbursement goals by the end of year 2016 and 2018. In 2011, Medicare made almost no payments to providers through alternative payment models, but today, such payments represent approximately 20 percent of Medicare payments,” he pointed out.

Cheri Bankston, Director of Clinical Advisory Services at Curaspan, also offered her perspective on value-based care reimbursement, quality metrics, and population health management.

When asked how providers can improve population health management and meet quality performance benchmarks in a value-based care environment, Bankston replied, ““In as far as what types of tools or things that they can do to prepare for and function within managing provider networks including bundled care and ACO opportunities, there is a lot out there.”

Bankston went on to discuss some of the challenges that payers and providers seem to come up against when operating through a value-based care reimbursement model.

“Some of the pinpoints is the ability to manage and communicate when you do narrow the network or develop a network of providers that is participating in risk. The struggle is how you manage it from the standpoint of ‘How do I evaluate different providers and determine which providers are giving the highest quality-based outcomes that I’d want to include in my network?’” Bankston asked.

“How do I put this information about these quality metrics of the network in the hands of the case manager that sits at the bedside with the patient? How do I communicate to the case management staff the background behind this program and how it’s driving better patient outcomes? How do I give them the tools to effectively communicate that to the patient?” she posed further questions.

“We’ve done a lot at Curaspan to try and automate that process. What we’re able to do is provide metrics on the individual provider performance. We recommend looking at things like the provider response time for referrals, acceptance rate, readmission rate, and the CMS star ratings.”

Bankston outlined how payers will likely increase their use of the CMS star ratings, which may become a more common way of improving transparency and choosing the best quality care at an affordable price.

“I think we’re going to see the star rating explode in as far as we’ll have additional metrics for providers as well as the overall star ratings will begin to see much more detail for new quality measures,” she continued.

With regard to population health management within a value-based care environment, Bankston addressed how health payers and their subsequent provider network could meet the needs of a diverse patient population.

It is important to “bring providers back to the table,” she continued. “One of the things when you get ready to manage a population that you have to understand is the demographics of that population and the socioeconomic level and diversity of the population that you’re trying to manage.”

“You have to be realistic about the scope of needs,” Bankston concluded. “Then that helps you have a better conversation with the providers about that population and, working with clinical staff, you can determine the scope, the breadth, and the depth of services you need to provide to that patient population to drive the best outcomes and the highest quality of care.”

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