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News & Resources

Leadership Corner

Changing Standards of Care Ushers Providers Into Confusing New Territory

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April 14, 2016

Over the last few years, most hospitals and health care networks have found themselves being shuffled into and through the pipeline of new standards in patient care—a transition sparked by The Centers for Medicare and Medicaid Services (CMS) and commercial payers from a quantity-based to a quality-based system. The reasoning for the change is a no-brainer: What was once thought to be a money-saving, revenue-generating method of care (treating a higher volume of patients, and faster) has backfired, resulting in costly repeat hospital and specialist visits and coding errors resulting in billions of lost government and payer dollars.

CMS and payers are now redoubling efforts to scrutinize claim codes and recuperate money paid out to claims without sufficient documentation, or made in error. In 2010 alone it’s estimated that $10 billion was paid out in error. The result has been a ramped-up intensity in auditing and recovery by an “acronym army” of programs—RACs, MICs, MACs, ZPICs—that have cropped up to make rules for, oversee, and enforce compliance with these new standards. 

As part of this effort, incentives for implementing electronic medical records were offered to participating providers to help standardize care and reduce redundancy. It was a diminishing dangling carrot theory: the maximum incentive was $44,000 per eligible professional and was reduced each year and ended in 2014

On the heels of the RAC and EHR movements were meaningful use (MU) protocols, PQRS, and VBP, which link payments to increased provider performance. This system holds providers accountable for both the cost and the quality of care they provide, and rewards the best-performing providers. A similar diminishing dangling carrot method was employed here as well to gain compliance among providers. 

CMS is now moving away from Medicare Fee for Service, and has locked its rates at 2015 pricing, which means provider revenue will not increase during the lock period even as expenses most certainly will. This lockdown forces providers to choose one of two new payment systems: Alternative Payment Models (APM) and Merit-Based Incentive Payment Systems (MIPS).

The APM model rewards providers in risk-oriented contracts. Examples are ACOs, patient-centered medical homes, and bundled payment models. In this model, the cost to the payer is fixed, which means no risk. The cost to the provider is variable, which means risk.

With MIPS, provider performance will be measured by quality, resource use, clinical practice improvement, and meaningful use of certified EHR technology, and payments will reflect their scores in these areas. Portions of PQRS, MU, and VBP will be incorporated into this new model, but as standalone programs they’ll sunset in 2019.

MIPS encourages providers to adopt care coordination and chronic care management through its performance value score. Your annual MIPS score will determine to what extent your Medicare reimbursement adjustment will be up or down by 9%. Your score will be publicly reported by the government via the Physician Compare website for patient observation and best provider selection.

Providers and health systems are moving through this pipeline with incentives—both positive and negative. It’s complex to navigate, but a necessary change in an industry that has been too long focused on health care as a factory model. The new paradigm of reducing costs while improving quality of healthcare is one few can argue with, but growth and progress require change. Hospitals, health networks, and physicians who seek out the smartest technologies and partnerships that will help them adapt quickly to these changes, minimize risk of non-compliance with new regulations, and maximize revenue potential through new incentives will have an advantage over those who go it alone or cling to the status quo.

Since we opened our doors 23 years ago, Fi-Med has been helping physicians, labs, hospitals, and health networks of all sizes across the U.S. stay ahead of these bumps and curves in the road to optimal, compliant health care management. It’s likely that you’re reading this because you, too, are concerned about the changes and want to put your organization in the best possible position to navigate their pitfalls and take advantage of their opportunities. This is what we do—it’s all we do—and we’d love to welcome you to our family of clients, too.



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