Providers slow to enact risk-based reimbursement model

Baptist Health South Florida

The change from a fee-for-service healthcare model to a value-based approach might be inevitable, but that doesn’t mean it’s happening quickly. In fact, the majority of providers facing a host of preparations for enacting value-based systems remain tied to the old model.

“It’s going to be a difficult transition for everyone as we go from pure fee-for-service to a mixture of fee-for-service and value-based contracting,” said Jim Riopelle, medical director of care management for St. Louis-based Lumeris, a provider of population health management services and technology to hospitals and health systems. “But I think we’re ultimately going to go to almost exclusively value-based contracting.”

The new value, or risk-based model, is said to emphasize improved patient care delivered at lower cost since reimbursements are not tied directly to the services patients receive.

This is a significant challenge that all organizations in healthcare are going to have to undertake.

There are a number of hurdles to consider when adopting a risk-based model, according to Ralph Lawson, executive vice president and CFO of Miami-based Baptist Health South Florida. First, you must get buy-in from doctors.

“None of this works without physicians,” Lawson said. “The physicians also need to share in the savings, and they need to share in the savings first before the hospital or other providers. If the doctors aren’t incentivized and on the same page as the insurer and the other providers, it just doesn’t happen.”

That’s not easy, either. Many physicians who are happy with the way they’ve been paid in the past may not be interested in change, Lawson said.

[See also: 5 keys to value-based purchasing.]

On the other hand, others just want to do what best serves the patient.

“Most people who go into medicine do so because they love people and they want to do good things in their career,” he said. “Most doctors can be convinced to embrace population management. It’s a matter of education.”

“In a risk environment, the healthier you can make the population, the more profitable you are,” Riopelle said. “We’ve got to compensate providers for providing quality measures. There’s very little direct reward for quality in fee-for-service medicine, whereas in a population health environment, you have identified quality measures that are specifically financially rewarded.”

Those measures would include colon cancer screening rates and other wellness and preventative procedures designed to keep patients healthy and out of hospitals, which provide the most expensive form of healthcare.

In addition to educating physicians about value-based care, hospital CFOs should establish a timeframe for transitioning to the new model, raise board awareness of value-based payments and build partnerships with insurers to improve healthcare services and outcomes while reducing costs.

That last one is important, Lawson said.

“We just reached out to payers,” he said. “Most national payers are interested in discussions on this topic. That has educated me a lot, just sitting down with payers and saying, ‘OK, if we did do this, how is this thing going to work? What about this? What about that?’ There’s nothing like healthy face-to-face dialogue. It really changes the relationship between payers and providers – which in the past has often been combative – in a really healthy way.”

Lawson says 8 percent to 9 percent of Baptist Health’s business next year will likely come from some form of risk-based contract, a percentage he expects to climb even higher in 2016.

“I used to not get too involved in meetings with the commercial payers, but I do now,” he said. “It keeps everyone on the same page about lowering costs and improving care.”

Riopelle said the switchover will take a lot of planning, and a lot more effort.

“You need to pick really high-quality, long-term partners. This is a significant challenge that all organizations in healthcare are going to have to undertake.”