Healthcare Information Technology and the Shift to Value-Based Care

Healthcare Information Technology and the Shift to Value-Based Care 0

The US health care market is rapidly changing the way it compensates providers for medical services and this trend has significant consequences for healthcare information technology companies. In 2016 according to a reputable study (Health Care Payment Learning & Action Network ), 29% of payments to providers used alternative payment models (APM), including shared savings and risk, bundled and population-based payments, and another 28% of payments included pay-for-performance and care coordination bonuses on top of the legacy fee-for-service (FFS) compensation. Only 43% of 2016 payments were traditional fee-for-service plans which was a significant decline from the prior year when FFS accounted for 62% of provider payments. It is expected that APM payments will account for about 50% of the health care payment market in 2018 and traditional FFS plans will be reduced to well below 50% of the market. This dramatic and rapid shift has important consequences for the health care information technology industry.
Revenue cycle management (RCM) systems used by providers are generally excellent at transaction processing and financial recordkeeping but lack the ability to analyze practice, cost and efficiency trends throughout patient populations. This ability is necessary to have beneficial conversations with payers. Claim management systems have similar shortcomings and further lack a comprehensive view of the financial picture of the patient’s care. Both systems struggle to interact with the growing number of third parties, such as repricing or analytic entities that play critical roles in emerging value-based care and compensation models. In the near future, hybrids of combined RCM and claims management systems will likely emerge to improve efficiency and analytics and reduce costs. For example, a gated, network only plan (a micro-single payer) could provide a simple cloud-based platform with today’s technology for documentation and reimbursement. This solution would give the payer visibility in the care process and the provider certainty and ease of reimbursement.
In addition to converging provider/payer transaction systems, there are very powerful benefits in bringing electronic health record data into the value “conversation”. The patient’s condition and expected course are the most powerful determinants of cost. Harnessing this information in the analytic process makes value determinations possible. After all, spending nickels to save dollars still shows current costs against invisible financial benefits. Realizing these benefits will require far more integration of EHR and RCM systems as well as data analytics that bridge the clinical and financial dimensions.
The final “big picture” implication for transaction platforms is to provide exchanges that are as open and free of friction as possible. Most claims transaction use electronic claim and remittance modes in 837/835 format. However, there are many providers and payers using paper or image-based submission and reporting and they will need to be accommodated in the hybrid settlement system. In addition, direct claim submission using a payer sponsored platform is a growing mode in which many providers and payers see advantages. Finally, the information needs of independent third parties need to be accommodated and they can have varying modes of transaction capabilities and preferences that include 837/835, HL-7, XLM and csv, among others. All of these transaction and communication modes will need to be accommodated.
The rapid growth in the healthcare reimbursement market share for Alternative Payment Models and other value-based modes means that intermediaries processing the claims will need to develop technologies that connect and communicate with providers and payers in new ways. The access to clinical and transactional information will leverage the value of analytic tools that can reduce care costs and improve outcomes and increase provider compensation at the same time. The healthcare reimbursement marketplace is changing rapidly; faster than the HIT industry, but it is possible to catch up with a reconfiguration of existing systems.

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