The shift in healthcare from the current fee-for-service (FFS) model to value-based care (VBC) has been unfolding over the past decade. Rather than reimburse providers per service rendered, VBC payment models reimburse providers for the overall value of the care they give select patient populations based on quality measures, spending, and outcomes. At the center of the value-based care movement are risk-bearing entities (RBEs), which are healthcare organizations that assume financial risk when delivering or covering cost of care for patients.
For RBEs that are delivering care to patients, having health information technology solutions in place to support better reporting, care coordination, and reduced readmissions can improve quality measures to increase revenue capture. In this article, we will explain how VBC payment models work, types of RBEs, and how health IT can support RBEs in value-based arrangements.
What are Alternative Payment Models in Value-Based Care?
From a clinical standpoint, value-based care is an approach to treating patients that focuses on preventive care and long-term health outcomes, with the goal of driving down healthcare costs while improving the overall health and well-being of patients. The Centers for Medicare & Medicaid Services (CMS) has been a driving force behind the VBC transition and in 2021 stated that by 2030, their objective is to have all Medicare beneficiaries in a value-based care relationship.
VBC reimbursements, called Alternative Payment Models (APMs), align those clinical goals to financial incentives or penalties, paying providers based on their ability to hit benchmarks for quality measures and cost-efficient care. There are few types of APMs that may be applied in VBC arrangements, depending on the amount of risk an organization is able to assume:
- Pay for Performance (P4P) – Pay for performance is a financial incentive or add-on payment that is given in addition to a base payment model, which is typically fee-for-service. Providers must hit certain performance targets to receive the additional payment, but they are not penalized for missing those targets.
- Bundled payments – Bundled payments is a program from CMS in which financial incentives are aligned to quality measure targets for an episode of care beginning from an inpatient admission at a hospital to 90 days after the event. The bundled payments program applies to Medicare patients and only for select clinical episodes.
- Capitation Models – In capitation models, providers are paid a fixed amount per patient based on the average expected utilization of designated beneficiary groups. There are partial capitation models in which only certain services, like primary care, are capitated, and there are global capitation models that cover all services. Providers can earn more by keeping the amount spent per patient low, which is designed to incentivize them to provide high-quality, cost-effective care.
- Medicare Shared Savings Program (MSSP) – The Shared Savings Program or MSSP helps providers to create accountable care organizations (ACOs), allowing them to choose from different levels of risk. Participants in the MSSP share in savings generated from providing quality, cost-effective care.
Types of Risk-Bearing Entities
Risk-bearing entities are healthcare organizations that assume financial risk by participating in an APM or risk-based contract with a payer in which they can be financially rewarded or penalized based on the care quality and outcomes they achieve for select patient populations. RBEs that deliver care to patients have been a critical part of the shift to value-based care models. Payers in healthcare have always assumed risk when covering the cost of patient care, but in VBC contracts, the providers of care assume risk when treating patients.
Common types of RBEs in the value-based care arena include the following:
- ACOs – Accountable care organizations (ACOs) are a group of providers that are organized to be accountable for quality, cost, and patient experience for an assigned Medicare fee-for-service beneficiary population. ACOs could be made up of doctors, hospitals, and other healthcare providers. ACOs can create risk-based contracts with multiple payers including Medicare, Medicaid and commercial payers to be responsible for an assigned group of beneficiaries.
- MCOs – Managed Care Organizations (MCOs) are networks of healthcare providers that organize to deliver coordinated care with a focus on preventive care and improved outcomes by working within a designated provider network for enhanced care collaboration. MCOs may contract with state Medicaid agencies to receive capitated payments for care delivery to defined patient populations.
- IPAs – Independent Physician Associations (IPAs), sometimes called Independent Practice Associations, are groups of physician practices that form a network to contract with health plans, ACOs, or MCOs to access more resources for managing operating costs in order to refocus attention on quality care delivery.
- IDNs – Integrated Delivery Networks (IDNs) are health systems intended to reduce fragmentation in the care continuum by creating a coordinated network of providers that may include hospitals, post-acute care, ambulatory services, imaging providers, healthcare clinics, and physical therapy providers. Some IDNs may also offer insurance plans to beneficiaries, assuming the role of “payvider.”
Regardless of the type, all RBEs depend on quality measures and data about their patient populations in order to meet the targets established in their contracts with providers.
Why Are Quality Measures Key for RBEs in VBC Arrangements?
Risk-bearing entities must track quality measures as part of the reporting requirements for the APM they participate in. Because value-based care arrangements focus on the quality, not the quantity, of services provided to patients, there must be a way to measure these more qualitative outcomes. An RBE must leverage data sources to track and report quality measures that are compared to the national benchmarks of the APM contract they are involved in to rate their performance and outcomes.
Quality measures have been an evolving tool in VBC arrangements for years, along with risk adjustments based on the risk scores of beneficiaries with chronic health conditions or high-acuity needs. Risk adjustments to quality measures were implemented to reduce the risk of marginalizing beneficiaries with more complex health needs that could drive up costs and reduce quality scores of providers.
The quality measures an RBE selects are critical to success because they are tied to payments, so they should be carefully chosen. Some examples of quality measures might include things like total cost reduction, timeliness, plan all-cause readmissions, emergency department utilization, hospitalization for potentially preventable complications, and many others.
There are national benchmarks that may be used depending on the APM and type of RBE, including
- MIPS – Merit-based Incentive Payment System (MIPS) was created by CMS to measure and reward Medicare clinicians for meeting their performance standards and to reduce payments to providers who do not meet those standards. MIPS is measured across 4 areas: cost, quality, improvement activities, and promoting interoperability.
- eCQMs – Electronic clinical quality measures (eCQMs) were established by CMS and measure many aspects of patient care, including patient and family engagement, patient safety, care coordination, population/public health, clinical process/effectiveness, and efficient use of healthcare resources.
- HEDIS – The Healthcare Effectiveness Data and Information Set (HEDIS) was created by the National Committee for Quality Assurance (NCQA) to track the clinical quality of health plans. While this is not used to track provider performance, it can be important for RBEs contracting with certain health plans that are working to improve HEDIS scores.
- HCAHPS – The Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) Survey, also known as the CAHPS® Hospital Survey, is a national, standardized, publicly reported survey of patients’ perspectives of hospital care used to measure patient experience in a hospital setting.
Why Do Risk-Bearing Entities Need Strong Health IT Solutions?
Health information technology is important for RBEs to support accurate reporting of quality measures and to facilitate better care coordination that can reduce readmissions, lower total cost of care, increase timely reporting and outreach, enhance patient engagement, and ultimately, increase revenue in risk-based contracts.
When it comes to data RBEs need, they can use claims data and clinical data from their electronic health record (EHR) for reporting and tracking select patient populations. Claims data is ideal for longitudinal understanding of patient health history and utilization, but one drawback to claims data is that it can be delayed and slow-moving. Once a service is provided, that claim may take weeks or months to process and reflect in the health record, making it less than ideal for timely outreach and adjustment to improve outcomes. Supplementing claims data with clinical data from an EHR contextualizes the billing codes from claims to give providers a fuller picture of patient health needs and medical history than claims data may be able to offer.
However, combining claims data and clinical data, with real-time encounter notifications can support a more robust understanding of provider performance and adjustments needed for improvement. For example, RBEs can work with a health IT provider to set up admission, discharge, transfer (ADT) alerts for beneficiaries covered by a risk-based contract with a payer. When those patients are admitted to an emergency department (ED) or inpatient hospitalization, their care team can receive a notification to work on coordinating care and aftercare planning right away. For improved quality measures, having real-time updates for patients is key to ensure they receive coordinated care and reduce the risk of a readmission. This drives down cost and improves outcomes for patients by keeping them out of the hospital where the risk of health complications or catching a hospital-acquired infection is higher. Healthier patients are happier patients, so having real-time alerts and better care coordination can lead to higher patient satisfaction scores.
To illustrate this, when Palm Beach ACO in Florida began working with Florida HIE and Audacious Inquiry, a Point Click Care Company, to deliver ADT alerts through the Encounter Notification Service® (ENS®), they were able to reduce readmissions and increase quality scores. This is because these real-time notifications supported timely outreach and better reporting for the Transitional Care Management (TCM) program by CMS, designed to reduce readmissions. TCM operates on tight timing requirements for reporting, so when Palm Beach ACO was able to know in real time when patients were hospitalized and needed transitional care coordination support, they could not only reduce the risk of readmissions but also capture those TCM billing opportunities. After just one year, Palm Beach ACO became a top earner of the MSSP and earned $30 million in savings. As a result of more proactive coordinated care and timely follow-up with patients, the Palm Beach ACO patient satisfaction score was 96.2% that year, and they were ranked #4 out of the ACOs in Florida for quality of care.
The success Palm Beach ACO was able to achieve demonstrates the power of health IT solutions for risk-bearing entities. By improving follow-up and care coordination, RBEs can work to increase quality measures and greater revenue capture. Health IT solutions can help RBEs to work towards the “Quadruple Aim” of value-based care: improving patient experience, improving population health, reducing cost of care, and improving provider experience for better performance. The shift of risk from payers to providers is the main driver behind the VBC transition, and RBEs are the leaders in this movement to create a better, more affordable healthcare system for all.
To learn more about Audacious Inquiry’s solutions and how we can help, contact us today. For more in-depth understanding of how acute care encounter notifications can support better care coordination throughout the continuum of care, download our free guide to real-time ADT data!
About the Author
Diana Bauza is a content writer based in the Greater Philadelphia area. She writes about products and services in the health and technology industries, with the goal of empowering consumers with quality information to help them make decisions that best serve their needs