Optimizing Value-Based Reimbursement

Tammy Lunceford, CMPE, CPC,

Now that we're into the third year of the Merit-based Incentive Payment System (MIPS), how are Alabama providers doing in making the changes necessary to succeed in the new environment?

"It runs the gamut," Tammy Lunceford, CMPE, CPC, said. She and Maddox Casey, CPA, of Warren Averett CPAs and Advisors, specialize in healthcare accounting and counseling providers on how to keep their finances healthy while they work to protect the health of their patients.

"The larger practices have geared up with the technology and training necessary to capture the information required to document a comprehensive picture of the patient's condition and use it to support diagnosis codes in billing to be reimbursed appropriately," Lunceford said. "However, in small and solo practices where the daily work load doesn't leave much time for study, we are seeing providers who are losing ground in understanding what they need to do to get paid fairly. Some still think value-based reimbursement is only related to Medicare. It has been adopted by virtually all health insurance carriers, who are very interested in keeping patients as healthy as possible and bringing costs down."

Maddox Casey, CPA

The first year of MIPS was relatively simple, with only three quality metrics to meet to be reimbursed at the usual level. The second year was more complex and added some cost tracking. In the third year, cost is 15 percent of the program and robust tracking of co-morbidities and chronic conditions has become an essential part of documenting to support diagnosis codes and to give insurers the data sets they need to allocate sufficient funds to pay for the care patients need.

"Physicians and all staff directly involved in care need to understand their role in capturing information necessary to document diagnostic code levels," Casey said. "Co-morbidities like obesity, COPD, diabetes and other chronic conditions affect outcomes. Insurers need a clear picture of how sick a patient is to know how to budget. If insurers don't have this information, they are likely to see you as a high-cost provider with outcomes below the norm."

Lunceford added that practices that aren't tracking co-morbidities and giving insurers a full picture of the patient's health are already running into problems. "One practice told me they had been asked for 1400 charts so the insurer could put together health profiles themselves to make sure they were allocating sufficient funds to pay for the care these patients would likely need," she said.

"It also isn't enough to simply collect the data. Your office staff, particularly those in billing and coding, need to know how to use this information correctly in filing claims," Casey said. "One practice had made a lot of progress in documenting and couldn't understand why reimbursements weren't improving. Then they found that their billing clerk was still filing claims the old way because no one had shown her why the additional information was important and how to use it."

"We've also been seeing offices with two different work flows," Lunceford said. "For Medicare claims, they pass on documentation to support diagnostic codes. For private insurance, they don't use the information. They should pass it on with all claims to be properly reimbursed. Patient health profiles should also be reevaluated and updated every year."

Looking ahead, Lunceford and Casey expect to see more large companies, especially those who self insure, start negotiating contracts with providers who rank highest in outcomes and value for specific procedures such as knee replacement or chronic conditions like congestive heart failure. This could be good news for those at the top of rankings, but not so good for those who come in farther down the line.

"Macro data on how well physicians are doing with their Medicare and Medicaid patients will be available on the Physiciancompare website sometime in July," Casey said.

It should be a priority to keep your ranking in a good position. You may want to check outcomes date when making referrals. Specialists like to receive referrals from physicians who keep their patients healthy with preventive care, screenings and promoting wellness behaviors. Primary physicians also like to refer patients to specialists with a record for better outcomes so they get a healthier patient back.

As practices become comfortable with the new environment, Lunceford expects to see more value-based contracts and shared savings agreements that would allow providers to be rewarded with a piece of the pie when costs go down.

In coming years, a number of providers may shift to Advanced Payment Models as a different way to participate in value-based reimbursement. This is particularly true for providers who offer a highly specialized service such as care for end stage renal disease.

An important change in diagnosis coding levels is expected to go into effect in January 2021. "We presently have five coding levels," Casey said. "The change will combine levels 2, 3 and 4 so that there will be only three levels. Practices that do a lot of level two care will likely come out better. Those who do a lot of level 4 now may see their reimbursements reduced and may want to start thinking about strategies to manage it."

Patient satisfaction plays a small role in rankings, but it remains a big factor in the overall health of reimbursements, since patients decide if they come back, while online rankings can influence other potential patients.

"One difficulty that is becoming more of an issue in customer satisfaction is the increase in surprise bills." Lunceford said. "Even with diligent preapprovals, it's difficult to get a definite answer on what patients can expect to pay out of pocket. In general, employers and insurers are shifting more of the costs to the patient, which can come as a surprise."

When there is an unexpected bill, patients need to be able to call in and reach someone who can explain what is happening and correct errors if there are any. A bill that a patient understands is more likely to be paid without the expense of a collections agency,

On the positive side, Lunceford says that one of the greatest opportunities for providers is to invest in wellness.

"The healthier your patients are when they need a procedure, the better their outcomes are likely to be. This improves your outcomes numbers, increases patient satisfaction and can help you grow your patient base," Lunceford said.


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diagnosis coding, medical billing; Tammie Lunceford; Maddox Casey; Warren Averett, medical claims, Merit-based Incentive Payment Program, MIPS, reimbursement, Value-based reimbursement


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