Value-Based and Alternative Payment Methodologies Require a New Approach to Data Analysis, Reporting

Since the inception of electronic medical records and practice management systems, healthcare facility finance teams have had an overwhelming amount of data at their disposal that has gone largely underutilized.

With the emergence of Accountable Care Organizations (ACOs) and other alternative payment methodologies (APMs), providers have been asked to become more patient-focused, implementing care management teams, assessing patient panels and related risk corridors, and slowly transitioning from a volume to value mindset.  These changes require provider organizations to stay on top of patient outcomes and the related data. It requires tracking and reporting on patient and financial data beyond the typical profit & loss and balance sheet reporting focus of the past.

Here are four areas critical in the transformation from volume to value:

Quality Measurements and Incentives

Many APMs incorporate quality metrics that could result in incentive payments. These metrics vary by APM, but include areas such as preventative screenings, Emergency Department utilization rates, chronic disease management, and patient experience.  Provider organizations should be establishing systems to measure these quality metrics to compare them to what is ultimately reported by third-party payers.  This will support financial planning as well as monitoring and reporting on patient / quality performance.

Risk Sharing

One of the key components in the ACO environment is the sharing of risks by healthcare providers for costly healthcare needs of covered patients (downside risk) and, conversely, the benefits of keeping patients healthy. Many provider organizations are relying on patient outreach and clinical efforts to minimize potential downside risk; however, financial analysis by provider organizations is critical as well. How do providers know payer or ACO reported metrics are accurate? AAFCPAs advises clients participating in ACOs to calculate and monitor total cost of care metrics to develop a baseline of whether ACO reported data is accurate and reliable.

Revenue and Cash Optimization

The switch from a fee-for-service environment to a value-based reimbursement environment is not happening overnight. Many provider organizations continue to be reimbursed largely on a fee-for-service basis, and there are key metrics that should be measured to assess performance and provide opportunities for enhanced revenue. Some of those metrics include: appointment no-shows, preventable denials, pharmacy capture rates, and provider productivity measures, to name a few.  AAFCPAs advises management to include these operational metrics in their finance dashboard or reporting package. This will help identify areas for operational improvements and will become valuable for assessing patient engagement/outreach as the shift from volume to value matures.

Reporting Tools

In order to capture, synthesize, and report on these critical metrics, provider organizations should assess their practice management systems to determine whether advanced reporting tools exist that have otherwise been underutilized, such as dashboarding modules and other analytics tools. Provider organizations should incorporate data analytics into their reporting systems to help improve performance and identify trends in clinical areas, patient and payer behaviors, and to identify targeted patient outreach needs. A key aspect of a successful transition from volume to value will involve significantly more collaboration between providers and administration/finance.  AAFCPAs advises provider organizations to use alternative reporting methods such as a provider-specific dashboard, visualization tools, and real-time calculated metrics to engage providers and demonstrate results of their efforts.

AAFCPAs’ Healthcare practice and integrated Business & IT Consulting practice assist clients in assessing the metrics critical to a successful transition to new APMs.  We analyze and interpret data to identify revenue enhancement opportunities, assess performance, and streamline reporting systems.

If you have questions please contact: Charlie Webb, CPA, CHFP at 774.512.4046, cwebb@nullaafcpa.comJames Jumes at 774.512.4062,;  or your AAFCPAs Partner.

About the Authors

Charlie specializes in providing assurance solutions to sophisticated nonprofit organizations, including: community health centers, home health agencies, nursing homes & senior care living organizations.  Charlie also has substantial experience providing assurance solutions to Massachusetts charter schools and has conducted trainings to charter school and community health center industry groups, including the Massachusetts Charter Public School Association and the Massachusetts League of Community Health Centers.  Charlie excels in audits in accordance with generally accepted auditing standards, Uniform Guidance/Single Audit and Government Auditing Standards.
James Jumes
James joined AAFCPAs in 2013 to lead the Business Consulting Services practice. He has more than 25 years of experience working with information technology systems and diverse business operational processes. James is highly experienced in IT controls and assurance, SOX 404, and Service Organization Control (SOC) reports: SOC 1 (SSAE 18), SOC 2, SOC 2+ and 3 attestation reporting.  James developed a unique methodology to delivering SOC reporting services, and he is an AICPA-approved Peer Review SOC Specialist, assisting peer review teams to review SOC 1, 2, 2+ and 3 engagements. He is a HITRUST Certified Common Security Framework (CSF) Practitioner, providing HITRUST CSF self-assessment consulting, or SOC 2 + HITRUST for assessing against the evolving compliance landscape shaped by HITECH, HIPAA, CMS and various other federal, state and business requirements.