The Medical Group Management Association’s most recent MGMA Stat poll asked healthcare leaders: What percent of your commercial payer contracts are value based? The majority (68%) answered “1%-10%,” 14% responded “11%-25%,” 11% indicated “26%-50%” and 7% said “greater than 50%.”
The poll was conducted February 11. 2020, with 493 applicable responses.
A recent joint research study report from MGMA and Humana, Value-based Care in the Primary Care Environment, took a closer look at successful strategies for investing in value-based payment arrangements.
Defining value-based reimbursement
In contrast to fee-for-service, value-based models tie reimbursement to measurable health outcomes and an assessment of associated costs. The onus is on healthcare providers to refocus on measurable patient results, rather than quantity of services and procedures performed. Essential to this approach, however, is care collaboration and integration of data.
In primary care, this often entails relying on dashboards, upgraded software and/or increased staffing. In some cases, this can also involve participation in accountable care organizations (ACOs) — networks of providers working together to provide Medicare patients with the best quality care, while sharing risks and rewards.
Embracing value-based arrangements with payers, both governmental and commercial, can require significant reallocation of resources and investment in terms of technologies and staffing. Weighing the benefits versus costs of such changes requires careful analysis of the available data.
To better understand the impact of value-based reimbursement in the primary care environment, MGMA conducted a survey of 100 primary care practice managers focusing on several important issues, including:
- Percentage of revenue from value-based contracts
- Duration of participation in this model of reimbursement
- Paid resources, staff and technologies to accommodate the shift to value-based reimbursement
- Percentage increases in annual operating expenses
- Positive impacts of paid resources, staff and technologies on patient outcomes
- Financial advantages of paid resources, staff and technologies added due to value-based reimbursement.
Key takeaways: Achieving ROI in value-based contracts
- Primary financial factors improving ROI for participating primary care practices related to medical coding: G-codes for annual wellness visits (AWVs), and hierarchical condition category (HCC) coding for patients with chronic conditions were found to boost population health management.
- Several practice managers noted financial benefits of shared-savings programs through participation in an ACO. By coordinating care through a dedicated network of providers, outcomes improved, reducing costs paid by Medicare. These savings were then shared with providers as a bonus.
- Changes in the culture of the practice due to adoption of a value-based model led to improved patient care, more effective population health management and improved staff morale and engagement.
- Value-based models were reported to increase quality of care by emphasizing more clinical interaction with patients and prompting health systems to provide better patient access.
Implementing more care coordinators, employing data analytics staff and nurse care managers allowed better monitoring and communication between practice and patient between visits; this reduced emergency department utilization and increased use of community mental health resources.
Lessons to learn
It is important to note that the upfront and ongoing investment to succeed in value-based payment models is significant, and every practice does not have the ability to take on full risk. As evidenced by the research, ROI can be achieved by practices that have the means to move away from fee-for-service.
With proper incentives and implementation, value-based care strategies can encourage the development of a more collaborative, nurturing and patient-centric environment. When that happens, it’s a win for staff, too, ensuring that personnel on every level become more effective and better able to do their part to deliver needed, high-quality care.
Additional resources:
- What is value-based healthcare? (NEJM Catalyst)
- 2018 APM Measurement Report (Health Care Payment Learning & Action Network)
Would you like to join our polling panel to voice your opinion on important practice management topics? MGMA Stat is a national poll that addresses practice management issues, the impact of new legislation and related topics. Participation is open to all healthcare leaders. Results of other polls and information on how to participate in MGMA Stat are available at: mgma.com/stat
MGMA Consulting can help you optimize organizational performance in a value-based environment. If you have questions for our consultants, send a message to consulting@mgma.com.
