Staying Ahead of Healthcare Reimbursement Reforms

As you may know, the nation’s healthcare reimbursement model is pivoting from one that incentivizes the number of visits provided to one that rewards health outcomes of patient populations instead. While some payors have already made this switch, we are seeing a significant trend in the marketplace for public and private payors to shift reimbursement methodologies as well. Many payors now want to see fewer visits, fewer patients on medications, fewer emergency calls, and improved health metrics within common risk areas, such as patient Body Mass Index (BMI) and blood pressure. The better your metrics, the greater your financial incentives and bonus payments will be. For organizations not yet affected by this change or just getting started, it is critical to begin preparations now given its enormity and complexity.

As you prepare, ask yourself:

  • When office visits no longer directly generate revenue, how could you determine a new method for measuring success?
  • Could you continue to use your existing infrastructure to provide the same level of care without added visits?
  • How could you leverage current staffing models in a way that most benefits patient health?
  • What Key Performance Indicators will help you measure financial success and patient health?
  • How could you cut costs, if needed?
  • And what might you learn from the forerunners who have succeeded before you?

Many of today’s healthcare facilities are simply not equipped to track outcome statistics nor have they ever tied health outcomes to financial performance. Likewise, financial personnel are not accustomed to running patient health metrics or reports nor do they liaise with medical teams to ensure the right data is being recorded and tracked for reimbursement.

AAFCPAs has been consulting with healthcare organizations since the outset, designing new strategies, capturing the right data, and capitalizing on this emerging opportunity. We help to answer the following questions and more.

  • Where do you start?
  • What do you need to look at?
  • What are some considerations for budgeting in the future?
  • How are you measuring data?
  • Do you understand what data you need to measure?
  • How are you redefining what makes your organization profitable and successful so you can start tracking that going forward?

Where to start.

When migrating to the new reimbursement model, organizations will need to identify requisite data, pull the right information from medical records and EMR systems, learn how to run new reports, and establish new dashboards. AAFCPAs assists with this process, pairing the value of healthcare industry insight within our Healthcare Practice with data consulting, data analytics, and data visualization within our Business Process and IT Consulting Practice.

Another consideration is the way patient data is collected and recorded in order to provide insurance companies with the metrics they need. If patients no longer visit the office as often, healthcare organizations will need new ways to pull monthly wellness statistics like a patient’s blood pressure and weight. This is an area that could be managed virtually and visually confirmed by a practitioner, or it could be uploaded to a patient portal system. It is important to first understand the patient demographic, however, to determine whether those patients have sufficient access to the technology and tools they will need to record and provide that data to you, such as a blood pressure system and a computer.

When it comes to payer metrics, it’s worth noting that many payers provide some room for negotiation. In other words, healthcare organizations might have the ability to discuss areas of risk within a certain patient population and work with payers to target those metrics. Some payers have offered add-on funds for more at-risk patient panels, as well. Chief Medical Officers will simply need to know where their patients are weak, where they have room to grow, and where they can negotiate with payers going forward.

How do you measure up?

In time, CMOs will need to reconcile and analyze how revenue levels would have looked under the old methodology versus the new on a month-to-month basis. This will help to determine whether the cost of care is over or under based on a specific profitability model. Once you know where you stand, you can adjust your business model accordingly. If revenue has declined under the new model, you will need to look at new ways to reduce the cost of care.

Should your bottom line decline, you might want to look into alternative service structures such as an Elder Services Program (ESP) to see if it aligns with your organization. The 340B Drug Pricing Program is another option that might make up for some of the losses that naturally occur during such a significant change. To maximize profitability under 340B, take a look at your patient population and the types of drugs provided to target the highest cost drugs to the greatest number of patients. Since this is an area where healthcare organizations can save a tremendous amount of money, AAFCPAs can work with you to identify the pharmacy structure most beneficial to your business. We can also take a deep dive into contract structure to pinpoint where you could save the most.

As you continue to analyze and refine operations, ask yourself:

  • How does your infrastructure look?
  • Can you still afford this infrastructure under the new payment methodology?
  • How would your patient panel need to look to meet the same profitability you had prior to the switch?
  • Is there a potential to grow into an assigned patient panel size? If not, there might be other options, such as cost cutting or modifications in the way care is being delivered.

How we help.

AAFCPAs has been collaborating with healthcare organizations for more than 50 years to reform processes, meet new standards, and optimize profitability. We provide the consulting, vision, data analytics, and data visualization required to make that transition as efficient and seamless as possible.

If you have questions, please contact Courtney McFarland, CPA, MSA, 340B ACE, Partner at 774.512.4051 or—or your AAFCPAs Partner.

About the Author

Courtney McFarland
Courtney is an audit partner in the firm’s Healthcare Practice with over 15 years of assurance experience and a comprehensive understanding of the nuances of the healthcare industry. She delivers a full range of solutions solving the challenges that AAFCPAs’ healthcare clients face, including: audits in accordance with Uniform Guidance/Single Audit and Government Auditing Standards, 340B pharmacy program requirements, best practices for reconciliation & analysis of statistical and programmatic data, tracking and monitoring risk-based contracts, maximizing reimbursements, and guidance on healthcare reform. Courtney is a member of AAFCPAs’ Revenue Recognition Task Force, dedicated to helping the firm and clients understand best practices for an efficient and effective implementation of the robust new framework.