The shift in the healthcare reimbursement structure from doctors and hospitals getting paid for the volume of services they provide to one in which they get paid for the value of the care they deliver has put many patient care organizations in an unfamiliar position.
For one, many providers still have feet in both of these payment buckets, making it more complicated to engage in risk-based contracts with payers. What’s more, most industry experts would agree that a strong commitment to data and analytics is necessary to be successful in this shift. As such, when the Department of Health and Human Services (HHS) announced a plan two years ago to tie 30 percent of traditional fee-for-service, Medicare payments to quality or value through alternative payment models such as accountable care organizations (ACOs) and bundled payments by 2016, many folks saw that goal as too aggressive.
Nevertheless, at the 2016 HIMSS conference, HHS said that they hit that goal ahead of its target, with an actuarial analysis to back it up. Other examinations, however, have shown different findings. A June 2016 survey from analytics vendor Health Catalyst revealed that just 3 percent of health systems met that target set by federal health officials. Only 23 percent expect to meet it by 2019, just a year after HHS had hoped that half of all Medicare reimbursements would be value-based. That particular survey of healthcare executives represented 190 U.S. hospitals.
Undoubtedly, there is mixed sentiment in the industry regarding two core ideas: how providers truly feel about shifting towards value-based payment models; and how quickly entities can make this transition. Regarding the first point, in a May MGMA (the Medical Group Management Association) Stat poll, only 11 percent of physicians reported having positive sentiment around the shift towards value-based payment models, and 49 percent of physicians are split.
One person who is right at the core of all of this is Emad Rizk, M.D., a seasoned healthcare industry senior executive with more than 25 years of experience working closely with payers and government entities. Dr. Rizk is currently the CEO of Waltham, Mass.-based analytics company Verscend Technologies (formerly Verisk Health). Before that, he was president at McKesson Health Solutions and has been on lists such as the “Top 100 Most Powerful People in Healthcare.” Rizk recently was interviewed by Healthcare Informatics about how healthcare organizations are progressing in their shift to value-based care, what the biggest challenges are, and how IT is playing a role. Below are excerpts of that discussion.
Emad Rizk, M.D.
How do you see this shift from fee-for-service to value-based care progressing? At what speed and pace do you see entities making this transition?
Boy, that’s an interesting question and it depends on a lot of people and who you talk to, how they define value and how they define the move away from FFS. I’ll give you an example—if you add a quality metric or if you add a utilization metric, so let’s say no [avoidable hospital] readmissions within 30 days, some people will say that you’ve already shifted from FFS to fee-for-value. If you add certain compliance with drugs or compliance with blood tests, like hemoglobin A1C for a diabetic, they might say that is true fee-for-value.
I think, frankly, that to get to true fee-for-value, you have to have full accountability and risk that will be borne by the provider, which would mean to some extent population risk. So, instead of just adding a few outcomes, they will start taking risk for a specific population of congestive heart failure patients and get a PMPM [per member per month] or PMPY [per member per year] payment for the entire year.
So depending on how you answer it, I know a lot of people say we’re moving very quickly, but I would tell you that it has not moved as quickly as we say in the healthcare industry, and I would definitely know because it cannot really be administered by providers on their own. It needs to be administered by payers, and payers do not have the systems yet to be able to pay for a bundled payment.
I think people just really talk at 20,000 feet, but just think about it in terms of this: if you start to pay a bundled amount for a knee replacement, and that includes everything (orthopedic, etc.), that has to be a single payment, and the provider has to coordinate all those payments. Given the broader definition [of value], we’re probably somewhere between 20 to 30 percent; the narrower definition has been a little bit bipolar, really in the Boston area and in California. And in the middle, there has been nothing.
Regarding the sentiment around shifting to value-based payment models, do you think there’s enough motivation there on the part of payers and providers? Is this an issue?
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