Hospitals are under immense pressure to develop newer models of care as the mandate for transitioning to value-based reimbursement, one of the greatest financial challenges faced by health systems, draws closer. This has caused care providers to make changes in the way they bill for their services. Instead of hospitals being reimbursed on the basis of volume or number of patients and tests they order, their payments are now determined based on the value or quality of care they deliver.

This has already started steering improvements in the delivery of care by driving providers to deliver better care at a lower cost. However, the CMS has mandated significant financial penalties for providers that fail to achieve the required scores. Providers are making all efforts to be spared from penalties as lower reimbursements will lead to enormous financial losses.

Value-Based Reimbursement: Identifying and measuring Core Quality Measures

Most of the value-based incentives and penalties are based on quality measures. In the past providers have been submitting quality measures for programs such as Hospital Inpatient Quality Reporting (IQR), Hospital Outpatient Quality Reporting (OQR), and Physician Quality Reporting System (PQRS). However, these measures are now linked to penalties and incentives, and hence carry a lot more weight than they did before. Under the new value-based reimbursement model providers will need to establish that they meet the recommended quality standards at the same or lower cost as before.

In order to be able to rightly identify the metrics or quality measures and accurately monitor and measure them, providers are increasingly relying on advanced analytics solutions. Such tools assist providers to evaluate their scores in the early stages, understand the underlying triggers for poor scores and initiate process improvements well on time to be able to control financial losses.

Providers need to identify clinical, financial and operational metrics using which they can continuously monitor and measure the performance of the core quality measures. Understanding underlying reason for variations in scores helps them to follow best practices and consistently meet quality standards across DRGs and facilities.

The number of measures a health system must track for every DRG is enormous and hospitals must resort to analytics and automation if they are to be successful. Let’s understand this in the context of an important area of performance measurement, 30-day readmissions.

As mandated by Medicare, hospitals are required to track their 30-day readmissions rates for heart attack, heart failure, sepsis, pneumonia and some more diseases. It is not being seen that many private payers also insist that health systems track this specific measure for populations covered in their contracts. Some payers also mandate the tracking of 90-day readmission rates. For hospitals to be able to do this accurately and without errors, they need to track and quantify the performance for the measure using a reliable analytics solution that can manage large volumes of clinical data with ease to draw actionable information.

It is critical to note that CMS has now increased the penalty for higher readmission rates up from 2% to 3%. For providers already struggling with other low-performance scores and mandatory improvement initiatives such as meaningful use and value-based purchasing, this additional financial burden has put even greater pressure on them to engage actively with stakeholders including clinicians to improve their measures.

Honestly speaking, the transitions are expected to be chaotic and mismanaged in the short run as the hospitals are expected to err and fail to comply with the measures and recommended performance scores. Over time providers will realize that the key to successfully transitioning to value-based reimbursement model is to keep making ongoing efforts to cut costs. While reimbursement and revenues fall in the next few years, cost-cutting initiatives will help providers improve margins to keep themselves profitable.

To be able to cut costs without impacting the quality of care, hospitals need to focus their resources and efforts on the following:

  1. Expanding patient base: Hospitals will be able to attract, engage with and retain a large volume of patient population as they develop best practices for identifying and minimizing wasteful clinical expenditures, improving care quality and reducing costs. Payers will be motivated to cover better performing hospitals with larger patient volume in their networks.
  2. Efficiently managing shared savings programs: Managing shared savings contracts well will help hospital get the maximum possible reimbursements, while also being able to maintain high standards of care.
  3. Improving operating costs:A 2012 study estimates wasteful clinical services comprised between $476 -$992 billion or 18-37% of approximately $2.8 trillion annual total US health spending in 2011. Hospitals that are successful in containing their operational costs, wasteful expenditure and maximizing resource utilization can stay ahead of their peers in terms of bottom lines and margins. For this, it is imperative that hospitals link their clinical metrics to financial metrics to be able to accurately evaluate their ROI.

How Analytics can help manage the transition to Value-Based Reimbursement

Hospitals are increasingly relying on analytics to get deeper insights into their clinical programs and processes. With AcesoCloud’s SepsisAnalytics software healthcare providers can quickly assess their ongoing sepsis programs and identify process gaps to improve sepsis mortality and costs. They can draw valuable insights on the effectiveness and efficiency of their sepsis programs and understand if they need to implement process improvements in order to improve outcomes. SepsisAnalytics helps providers evaluate patient, provider and institutional variability using existing compilation of EHRs and other records. It also enables process improvement staff to analyze the historical financial and clinical data, which in turn helps them design or modify initiatives for improvement.

Using analytics providers can:

  • Get granular insight into the cost structure
  • Track and measure quality measures
  • Compare performance scores
  • Improve performance
  • Detect outliers
  • Reduce waste
  • Improve bottom lines and margins

Questions for you:

  • What are the top three challenges that your hospital faces?
  • Are you equipped with the right tools, people and resources to transit from your conventional model to the new value-based reimbursement model?