Preparing for Value-Based Reimbursement - Adapting Revenue Cycle Strategies for the Future
In today’s evolving healthcare landscape, more providers are shifting to value-based care (VBC). VBC has quickly grown into a $500 billion enterprise and is well on its way to $1 trillion.
Value-based care is indeed the future of healthcare delivery. It’s a model that values both the patient and the healthcare provider.
However, transitioning to a value-based model is not without its hurdles. The biggest challenge is navigating revenue cycle management (RCM). Poor revenue cycle management in VBC is a critical financial risk.
This article explores effective value-based RCM strategies. It touches on the benefits, challenges, and best practices of value-based RCM. We’ll also share expert tips for a successful transition to value-based RCM.
Read on and learn how to prepare your practice for value-based reimbursement.
FROM ONE OF OUR PARTNERS What Is Value-Based Care, and What Does It Mean for Providers?
Value-Based Care vs. Fee for Service
What is the difference between value-based care and fee-for-service (FFS) care? And which of the two models is better?
Under the FSS model, healthcare providers are reimbursed for each service they provide to patients. This straightforward model has dominated the US healthcare industry for many years.
However, the FSS model is often, and sometimes rightfully, criticized for ignoring quality of care and patient outcomes. It commoditizes healthcare, which may incentivize providers to render more services with little focus on the patient’s overall health or well-being.
On the plus side, FSS reimbursement can benefit patients requiring several services or procedures. The model also simplifies and stabilizes cash flow for healthcare providers.
Value-based care, on the other hand, is centered around quality rather than quantity. Under the VBS model, providers are paid based on quality of care and patients’ outcomes. You essentially get rewarded for helping patients feel healthier. This system seeks to improve healthcare quality while making services more affordable.
At first glance, VBC seems biased toward the patient. However, healthcare providers also benefit massively from offering value-based services. According to McKinsey and Co., healthcare providers can reduce costs by up to 20% by switching from FSS to VBC. Additionally, VBC is highly financially rewarding. It also improves patient satisfaction and the organization’s overall performance.
Value-based care is built on five fundamental principles:
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Patient outcomes. VBC prioritizes patient outcomes such as better health/well-being, greater quality of life, longevity, and lower chance of re-admission.
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Pay for performance (P4P). Healthcare providers are paid based on their performance, not the services rendered. This performance is measured against predefined quality indicators or objectives. These include efficiency, accuracy, speed, and effectiveness. Healthcare providers are also penalized for sub-par performance.
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Collaboration. VBC fosters coordination between multiple teams to ensure patients receive high-quality, comprehensive care.
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Data-driven decision-making. Value-based care relies heavily on data and analytics. It’s essential for tracking patient outcomes, establishing performance metrics, managing revenue cycles, informing care decisions, and identifying areas of improvement.
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Proactive care. VBC is more of a proactive approach than a reactive one. Quality care often entails dealing with health issues before they happen. Proactive care aims to minimize adverse or unnecessary procedures and medications while tending to better patient outcomes.
The Challenge of Value-Based RCM for Healthcare Providers
Shifting from a fee-for-service RCM to value-based billing is a huge jump. It means migrating to a new revenue model. Billing patients and claiming reimbursement in an FFS model involves rather basic accounting. Value-based RCM is more nuanced, and several factors need to be considered.
Below are the top five challenges of effective RCM for healthcare practices on the value-based care model:
FROM ONE OF OUR PARTNERS Revenue Cycle Management Challenges Facing Healthcare Providers Today
Measuring Performance and Quality of Care
Value-based care is billed on quality rather than volume. So, healthcare providers must determine and track the various key performance indicators. These performance or quality indicators must also be coded and logged appropriately to qualify for reimbursement.
Success in value-based care is primarily measured in “quality,” which is itself a multi-dimensional metric. Measurable components of healthcare quality include:
- Patient centeredness
- Efficiency
- Effectiveness
- Safety
- Equity
- Time cautiousness
Tracking and reporting such metrics can be pretty challenging. But it’s a necessary challenge since your income relies on your ability to measure and prove quality.
Integrating Data
Value-based RCM is a data-intensive exercise. You must pool performance data from every possible patient touchpoint, such as medical procedures, visits, and patient feedback. To do so, you require a comprehensive patient engagement system that can accurately track, report, and bill quality of care.
Gathering, organizing, and analyzing VBC data for every patient can’t be done using pen and paper. You’ll need a robust digital RCM solution to quickly consolidate data from patient portals, electronic health records (EHRs), and insurance systems. For example, DrChrono’s Revenue Cycle Management takes the guesswork, inconsistencies, errors, and tedious workload out of VBC billing.
Managing Denials and Appeals
In a recent survey, 90% of healthcare providers said denials were the biggest challenge for their RCM teams. What’s more, denial rates have risen considerably since the COVID-19 pandemic.
Denials and appeals are constant revenue loss pain points for healthcare providers. Dealing with them is also tedious and time-consuming. Denial management in VBC billing involves four things:
- Responding promptly to denials
- Investigating the root causes of denials
- Protesting denials
- Implementing measures to prevent denials in the future
All that takes valuable time and staffing.
Avoiding and Mitigating Risk
Value-based care changes the payment model entirely, which can introduce some financial risks. For instance, more patients are now responsible for a more significant portion of their healthcare expenses. This can make it difficult to collect payments using value justification. Patients with higher deductibles may need help to meet their financial obligations. Such issues inevitably lead to an unhealthy increase in account receivables and bad debts.
Navigating the Complex Regulatory Landscape
Value-based healthcare providers must comply with several regulatory standards. Top of the list include the Affordable Care Act, the HITECH Act, and the HIPAA Privacy Rule. Failure to abide by these strict regulations attracts heavy fines and other crippling penalties.
The problem is that the healthcare regulation landscape keeps evolving. This makes it difficult and expensive to remain compliant.
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3 Revenue Cycle Strategies for Value-Based Care
Transitioning to a value-based healthcare service model will significantly affect your revenue cycle management. How you do it will determine if it changes for the better or the worse. Here are three essential strategies for successful value-based RCM:
Focus on Patient Engagement
The value-based approach is customer-centric. Patient experiences and the quality of care directly determine earnings. In other words, the better the patient experiences and outcomes, the more bargaining power you have.
So, how do you improve patient outcomes? The answer lies in putting the patient’s health and well-being first. Doing so calls for strong patient engagement.
Patient engagement begins the moment a patient registers or requests a service. Keep close tabs on each patient throughout their journey. More importantly, a system that follows up with patients after every interaction is needed.
Collect as much feedback as possible from every patient and reinforce that feedback using clinical data. Going above and beyond with patient engagement yields valuable RCM data. As a bonus, it helps inform care delivery and boost patient satisfaction.
Empower Your Staff Through Training
Value-based care changes RCM and redefines what it means to provide healthcare services. It’s a methodology that affects the entire organization, not just the RCM team. Everyone has a role to play when it comes to improving quality care. So, every department and team should be primed to deliver high-quality VBC.
Bring everyone on the same page through training programs. Educate medical and non-medical staff on the meaning and importance of value-based care. These training programs also cover the complexities of navigating value-based RCM and maximizing the benefits of the model.
- Equip your staff with skills and knowledge in the following areas:
- The principles of value-based RCM
- Insurance processing
- Effective value-based billing
- Handling and avoiding denials
- Managing claims
- Collaborating to improve the quality of care
- Risk identification and avoidance
- Meeting compliance requirements
- Utilizing the various tools for value-based RCM
- Finding and seizing opportunities for value-based RCM
Embrace the Power of Technology
Data is the basic currency in value-based RCM. Managing and analyzing data using a digital RCM system streamlines value-based RCM processes. An integrated solution consolidates data from multiple sources and facilitates seamless data exchanges between systems. Additionally, these systems provide valuable insights into service quality and performance indicators.
By leveraging digital technologies, healthcare providers can improve accuracy, quality of care, and financial management in the value-based model.
DrChrono’s Revenue Cycle Management does all that and much more. It’s a powerful RCM solution with EHR integration, hands-off billing, practice management, denial resolution, and telehealth support. DrChrono handles all the intricate RCM administration so you can focus on delivering quality healthcare services.
Benefits of Effective RCM for Medical Practices
RCM is a vital element in the success of any healthcare organization. It helps you keep the lights on and the doors open for new patients. A well-implemented RCM process can even boost the quality of care and patient outcomes.
Practical RCM benefits medical practices in the following ways:
Increases the Number of Claims Paid After First Submission
Claim denial rates typically range between 6% and 13% upon first submission. Many of these denials happen due to clerical or technical errors. These mainly include patient registration, insurance verification, and coding errors. Proper RCM prevents such mistakes, lowering the chances of claim denial.
Improves Cash Flow
Effective revenue cycle management is essential for improving cash flow. It minimizes denials, reduces account receivables, accelerates the claim process, and ensures timely and ample reimbursement, all of which help keep cash flow strong.
Informs Data-Driven Decisions
RCM processes generate vast volumes of valuable information. Once analyzed, that information yields actionable insights that inform crucial organizational decisions. By leveraging RCM data, healthcare providers can improve financial performance, competitiveness, and patient experience.
Reduces Operational Costs
A well-orchestrated RCM process enhances operational efficiency by reducing errors and speeding things up. That saves time, energy, and money. Digital RCM systems such as DrChrono are specially designed for cost savings.
Drives Patient Satisfaction
RCM brings value-based care full circle. If you manage revenue cycles in VBC effectively, it will, in turn, boost patient outcomes and satisfaction. More accurate billing, faster response times, and lower financial risks make delivering high-quality care and experiences much more accessible.
Next Steps: Adapting Value-Based RCM to Your Practice
- Understand the value-based care approach and check if it would be a good fit for your practice.
- Analyze your current FFS approach and identify areas that need adjusting to align with VBC.
- Determine the relevant quality metrics.
- Adopt a digital RCM system to measure, track, and report quality performance and patient outcomes.
- Train your staff on every aspect of value-based RCM.