What You Need to Know About Value Based Reimbursements: A Guide From MHS

by | Oct 12, 2016 | MIPS, Value Based Reimbursements

There’s no doubt the healthcare landscape is changing — and changing quickly. In order to keep up with these changes, many organizations are moving from volume-based care (fee-for-service) to a value-based reimbursement structure (fee-for-value). This population health approach provides benefits to all involved: the patient, the healthcare provider and the payer, prompting healthcare providers to offer the best care at the lowest cost to patients. Better care with better value is the name of the game here.

So how does reimbursement happen with this type of approach? What must be done in order to transition to a value-based reimbursement model? Here are some key points:

  • Changing from the traditional care model to a network care model
  • Increased need for acquiring, aggregating and analyzing data across networks
  • Integrated platform for standardized view
  • Reorganization of structure to account for value-based payments in an effort to cut operating costs and increase efficiency
  • Align common goals with physician engagement along with a structure of incentive to achieve those goals
  • Creation of new clinical and operational processes that encourage ongoing behavioral changes

It’s no secret that patient populations are changing. Their needs are evolving, their health care needs must be met, and the current structure can’t support those needs. Value-based reimbursement can assist healthcare providers in preparing for:

  • Increased care access
  • A higher number of chronic diseases for treatment
  • An aging population
  • Sicker patients with several chronic conditions
  • Patients who want more access and insight into their care, backed by more value for their money
  • An Increase in market share that offers people more choices

Where Does MIPS Come In?

First off, MIPS stands for Merit-Based Payment Incentive System. This is a big piece of the Value Based Reimbursement puzzle. In a nutshell, MIPS is the new Medicare physician reimbursement program slated to begin in 2019.Formerly, approach was to set base payment rates; that is being replaced with automatic increases for all doctors between 2015 through 2019. There will be no automatic increases for six years after that, and instead doctors’ rates will be changed based on their performance under a Merit-Based Payment Incentive System (MIPS).

MIPS combines three existing pay-for-performance programs plus one more. While the new incentive structure would be budget neutral, current penalties under these programs will be repealed. There are four categories or metrics of assessment:

Those doctors with the lowest performances will see their payments reduced by up to nine percent. Congress will be the ones in charge, setting the payments for the years 2026 and beyond. Doctors will have to participate in Advance Payment Models (APMs), where their pay increases will be determined. Basically, their composite performance scores (CPS) in a given performance year determine MIPS payment adjustments in the second calendar year. In addition, doctors’ annual CPS performance will be made available to the public.

Why Value-Based Reimbursements?

As the healthcare industry shifts from fee-for-care to value-based reimbursements, it’s important to understand WHY this is happening. With the overall Medicare margin on a downward spiral starting in 2000, those margins are understandably being challenged — a no-brainer since Medicare represents 30 to 40 percent of healthcare business. When that number goes into the negative, things get dicey and the consensus is that things must change in order to reverse that trend.

Thus, value-based reimbursement is moving to the doctor community, with physicians not only required to meet quality cost standards but report them as well. Commercial payers are also affected, with a majority of hospitals already making the shift to a mix of value-based reimbursement and fee-for-service. Experts believe that in the next five years, fee-for-service will decrease from 56 percent to 32 percent to enable a greater shift towards Value Based Reimbursements.

Contact Medical Healthcare Solutions

We can help you prepare for changes occurring as part of Value Based Reimbursements and MIPS. Call Medical Healthcare Solutions at 800-762-9800 Or email Stephen J. Brighton at SJBrighton@mhs-inc.com for more information. Backed by decades of medical billing experience, we provide the most efficient, effective, and professional service possible as we work with our clients to ensure effective and rapidly evolving services available to the practice.

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