Revenue Cycle

Health System Management • January 2017

15 WWW.HEALTHSYSTEMMGMT.COM “The concept of downside risk isn’t new. In theory, downside risk arrangements are a way to reduce the cost of care while preserving quality and emphasizing preventative care.” viders to assume downside risk can lead to better patient outcomes, because making a medical practice or hospital potentially less financially stable seems an unlikely recipe for better care. That characterization, however, is unfair. Risk-based contracts seek to align the financial incentives of high-quality care with payments. That’s something that fee-for-service models haven’t always done well. When a hospital is at financial risk if a patient is readmitted to the hospital, the organization will do what it can to emphasize prevention. Though the study period1 predates some of the biggest changes to the value-based care initiatives we’ve seen — such as bundled payments — it remains an important contribution to the discussion, because it creates a window into both public and private payers. It clarifies the state of risk contracting across public and private payers and shows us how far the industry has to go to get value-based care right. REFERENCE 1. Mechanic RE and Zinner D. “Risk Contracting and Operational Capabilities in Large Medical Groups During National Healthcare Reform.” Am J Manag Care. 2016;22(6):441-6. en’t been good at encouraging providers to accept risks. CMS will likely find new ways to incentivize movement toward downside risk and intermediate stages that assist providers in moving toward risk. We should expect CMS to put more resources into BPCI 2.0 in the short-term, and they may create additional mandatory bundles as well, expanding the effort seen under the Comprehensive Care for Joint Replacement (CJR) and cardiac Episode Payment Model (EPM) models. MORE RISK, BUT BETTER PREPARED The Brandeis researchers found that, despite slow growth, practices with a high proportion of risk contracts were much further along in implementing management and IT strategies that improve quality of care and reduce care inefficiencies such as needless hospitalizations.1 These groups are well-positioned to avoid disruption as Medicare and private payers turn away from fee-for-service payments and into models that emphasize value. These management strategies, on the whole, took two big forms. The first was a hard look at whether physician compensation was really aligned to provide quality care. Risk-focused practices tended to structure physician compensation packages to emphasize salary and patient outcomes — taking an emphasis off of volume and productivity. Risk-focused hospitals also invested in IT infrastructure to support PAC transitions. Spending on PAC has outpaced both inflation and the increase in overall health spending. Quality in that space varies widely. Payers are increasingly looking for ways to build networks of high-quality, efficient PAC providers. Practices with a higher proportion of risk-based contracts were also more likely to have implemented clinical decision support tools along with systems that better manage post-acute care and high-risk patients. It might seem counterintuitive that asking pro- WEBEXTRA For further discussion on the challenges of transitioning to the value based care model, read “Overcoming Obstacles in Value-Based Care Adoption” at www.HealthSystemMgmt.com


Health System Management • January 2017
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