Posted on February 28, 2023 | 4 min read

Risk for Reward: Strategies Every Provider Should Adopt in Value-Based Arrangements


Financial Optimization

Healthcare Data

Value Based Care

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Value-Based Arrangement Strategies for Providers

It’s no secret that something needs to be done in order to curb the unsustainable increase in Medicare spending. In 2021, overall Medicare cost grew 8.4%, or 21% of total national health expenditure, greatly exceeding the pace of economic expansion and in turn threatening the long-term financial viability of the program. The Centers for Medicare & Medicaid Services (CMS) believes that value-based healthcare delivery will decrease costs and improve outcomes and has promised additional models this year to continue the shift from traditional fee-for-service models.  Although the industry has started to incorporate proactive care delivery and collaborative strategies like interoperability, providers have been slow to adopt value-based care in part because of revenue uncertainty.   

In a new bipartisan bill, the U.S. Senate proposed a 2-year extension on the 5% bonus to providers that participate in alternative payment models. This move is an important one to prevent value-based care (VBC) program attrition, but additional steps are needed to further incentivize provider participation. In lieu of new policy that will increase bonuses and revenue, providers can take strategic measures at the organizational level to put themselves in a position that rewards them financially and reciprocally for the risk they assume in value-based care. 

Here are three ways to boost revenue in the current healthcare environment: 

  1. Sharpen the patient’s digital portrait
    For the sake of their patients and their own vocational satisfaction, a clinician’s focus on examining and treating patients is paramount. They’re experts in medicine and in achieving the highest quality outcomes. And yet, clinicians have been inordinately designated to meticulously document based on outdated documentation and coding guidelines. CMS has recently revised Evaluation & Management documentation standards to more fairly address this inequity. Evaluation and subsequent medical documentation can only be as good as the information available to them in the electronic medical record (EMR) and other readily accessible sources. Complementary information found in unstructured historical charts, claims, labs, and more are often unaccounted for and disassociated with an encounter. Visibility into the global patient record allows the provider to make the most appropriate care decisions. By equipping the care delivery team with the patient’s full background, and tools that facilitate communication and collaboration, provider groups have a greater ability to achieve accurate compensation for exceptional care.
  2. Plan and execute stair step progression to higher levels of risk
    All provider organizations have opportunities to progress to higher levels of risk, and therefore revenue, if they take the strategic steps appropriate for their operational capabilities, patient demographic, and provider network. Start small, with coding automation, professional outsourcing, or upside-risk only contracts. As the organization matures and value-based payment model participation increases, a population payment system that is built for value-based arrangements and can templatize contract terms, limit financial exposure, and allow more agility which all offer considerable advantages.
  3. Strengthen competitiveness in ACOs and shared saving models
    Mergers and acquisitions have become in vogue as a diversification strategy and a means to improve care coordination and reduce costs. Combined entities have the potential to break down the traditional adversarial relationships between health plans and providers, and they can create new pressure on competing providers that still operate in the traditional model. Two avenues exist for providers to grow revenue without resorting to vertical integration. First, even providers that do well on quality measures often fall short on financial targets, and as a result receive no shared-savings bonus. By introducing tools that monitor and offer visibility into contract performance, organizations can course correct in real time. Second, controlling costs is an often-over-weighted variable in succeeding in value-based arrangements. Benchmarks, on the other hand, are often shrouded in mystery and seemingly uncontrollable. In fact, providers play an instrumental role in establishing benchmarks through risk adjustment and other means. As an example, introducing technology or workflows in pre-visit planning can help identify chronic diseases, close care gaps, and increase a patient’s risk adjustment factor (RAF) score.  With greater benchmarking accuracy, providers earn more in shared savings, which translates into more financial capital for their business.  

The benefits of value-based care can be shared by all constituencies in healthcare. The government stands to stifle the swelling cost of Medicare and Medicaid programs. Health plans can improve cost controls by sharing financial risk with their provider networks. Beneficiaries can enjoy greater health and lower costs. However, it all hinges on our provider community coming to the table. The methodology will inevitably shift to include more incentives and fewer risks, which will progress the industry forward. Until then, provider organizations can engage in strategic operational initiatives to optimize financial performance in the current environment, which will simultaneously prepare them for even greater success in the future. 


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