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Analytics Are Key to Transition to Value-Based Care

By Jay Sultan

Both the Centers for Medicare & Medicaid Services and commercial payers are rapidly advancing new payment methods that cannot easily be administered. Under most value-based care (VBC) agreements, health care organizations are paid on a combination of service utilization (volume) and the quality and efficiency of the care provided (value). Measuring the value components requires new data sources and new calculation methodologies. This impacts every part of the revenue cycle. Additionally, the lack of standard approaches and measures in VBC agreements creates significant challenges for revenue cycle management (RCM).

Payers and providers alike are developing new analytical capabilities and new workflows to improve their management, measurement, and delivery of value. During the last few years, much of the analytics development has been focused on care delivery transformation in the form of population health management, new models of care and disease management, and the adoption of value considerations into EMR workflows. But the industry is already at a point where the adoption of VBC agreements has far surpassed the ability for either payer or provider to administer the revenue cycle for them to scale. The same type of tools being added to the transformation of care delivery need to be incorporated into RCM.

Analytical tools needed by RCM may include dashboards, risk adjustment and stratification, quality measurement, registries, predictive modeling, and utilization analysis. Many providers have invested in such tools to impact care delivery, but their use must be extended into the administrative realm of RCM. In addition, audit or reconciliation tools (which will be a mix of analytics and workflow) focusing specifically on the new payment models will be needed.

When thinking about your operational impact, divide the effort into the following areas:

• the work needed to submit the performance of the provider to the payer; and
• the work needed to calculate and validate the correct payment based on value.

Existing analytics tools used by a provider to impact care delivery can be leveraged in both areas but will not be sufficient.

Providers will invest in new capabilities to send performance information (eg, quality and outcomes) to the payer; this is now added to the traditional job of submitting a claim with all supporting attachments, detail, and correct coding. The detail and effort that has traditionally been placed on ensuring the correct/optimal coding for claims must now be applied to the submission of this “nonclaim” performance information. Additionally, providers will need new capabilities to calculate their expected value-based payments for audit and internal reconciliation. Finally, some forms of new payment (such as prospective payment bundles or partial capitation) disrupt the claims stream and require new capabilities to infer when a claim is correctly not paid by a payer or to even process claims to and from other providers.

Payers face many of the same new challenges: ingesting performance data, calculating correct payments, handling the complexity of self-funded employers and patients getting care away from their home through extended networks.

The lack of a single approach to payment reform makes the task far more difficult. We are two to three years into a 10-year process of experimentation around new models and the end may not select a single approach but multiple. For providers, this creates a significant “multipayer” problem of different calculations, quality measures, or inputs into value. The same is true for payers, who have great difficulty getting two different provider organizations to agree upon common contract terms. Thus, a key characteristic to the analytics needed to support payment reform in the revenue cycle is configurability. The analytics tools must scale, be adaptable, and be systematic in the way they ingest data and calculate performance.

Another challenge is aggregation of information from disparate sources. In most agreements, measuring performance cannot be done from a single system or even from data you have within your entity. It is common for providers to be evaluated based on the performances of other providers. Thus, an accountable care organization or medical home needs to aggregate claims or encounters across multiple sources, as well as select clinical data. For most provider organizations, aggregation is difficult, but it is needed.

Finally, too many organizations are attempting to develop these analytics capabilities internally. Few have the needed expertise or business intelligence capacity to sustain the growth of these programs and the resulting (and changing) requirements. Organizations should create strategies that combine the following:

• existing analytics products used for impacting care delivery;
• point solutions from new vendors that can address best-of-breed capabilities for tasks such as aggregation of data from other providers or audit/reconciliation support;
• organic development; and
• existing revenue cycle workflow systems and analysis.

There is too much risk (and delay) in picking a single one of these approaches; just as no one vendor will provide an end-to-end RCM solution for VBC, it is unrealistic to think that a fraction of an organization’s existing IT staff can do so.

The scale of payment reform adoption requires the immediate attention from revenue cycle executives. SAS reports and spreadsheets cannot meet the current nor future needs. The payment made to providers for value must have the same level of assurance, automation, and scrutiny as does the processing of claims.

— Jay Sultan is principal strategy advisor at Edifecs.