Focus On Data in Era of Value-Based Models of Reimbursement

“Despite the continued prevalence of the traditional fee for service reimbursement models as the primary method of payment, over time healthcare’s reimbursement will give way to value-based models of reimbursement.”

That prediction made by longtime friend and consultant Russell Foster surrounding the need for accurate data as value-based models of reimbursement continue to emerge has come true.

You know that valued-based reimbursement today is a significant focus. Payer reimbursement strategies are tipping in favor of providers who can deliver the clinical and financial goods. In the mix are bundled payments, shared savings, pay for performance and bonuses.

Payment Bundling, PHO Shared Savings, and Pay for Performance are all in the mix of emerging models of episode-based payments, physician-hospital organizations and physician bonus structures.

One major health payer’s 6,300 enrolled primary care physicians can earn bonus payments across six measure sets — a broad spectrum of measures from clinical and quality measures to prescribing habits, access to care and level of technology use.

And, practices can also qualify for a bonus payment based on development or improvement of a Best Practice evidence-based quality improvement project.


The Guide to Physician Performance-Based Reimbursement: Payoffs from Incentives, Data Sharing and Clinical Integration

This 68-page special report explores newly minted reimbursement formulas at two health plans and two independent practice associations (IPAs), providing payer and provider perspectives on the formula development process; clinical, quality and efficiency measures in use; physician incentive payments and program outcomes. The report also examines the collection and sharing of physician performance data by these four organizations and the impact of data sharing on physician engagement, health outcomes, utilization and cost.


But, for a value based reimbursement model to be developed and succeed, it will require a fair amount of data, Foster, a leading expert on payer and provider contracting predicted back in 2009.

“We believe that integrated delivery systems that have access to hospital data, ancillary department data, outpatient professional data are going to be the best suited organizations to be able to help define what episodes of care funding should be,” said Foster, at the time a principal with pmpm Consulting Group.

Providers will require that level of data for the matching of revenues and expenses to make sure that the reimbursement which is received under such a model is equitable and covers the cost of services.

Russell also believes organizations that are not integrated and do not have access to the data in those hospital records are “going to be put in a position of needing to align with partner hospitals and with other providers and ancillary providers to be able to attract and gather the data elements that are needed to be able to understand and define what a case rate might be or a bundled payment amount might be to be successful.”

It will be difficult to end up with an all-inclusive case rate that includes inpatient claims, outpatient claims, and ancillary claims, if providers cannot access the data elements needed to define what those costs should be, he said then.

Today, five years later, there are many practical challenges and considerations for creating a culture of collaboration.

Section 3007 of the Affordable Care Act mandates that, by 2015, CMS begin applying a value modifier under the Medicare Physician Fee Schedule (MPFS). “Both cost and quality data are to be included in calculating payments for physicians,” CMS said.

  • Physicians in group practices of 100 or more eligible professionals (EPs) who submit claims to Medicare under a single tax identification number (TIN) will be subject to the value modifier in 2015, based on their performance in calendar year 2013.
  • Physicians in group practices of 10 or more EPs who participate in Fee-For Service Medicare under a single TIN will be subject to the value modifier in 2016, based on their performance in calendar year 2014.
  • For 2015 and 2016, the Value Modifier does not apply to groups of physicians in which any of the group practice’s physicians participate in the Medicare Shared Savings Program, Pioneer ACOs, or the Comprehensive Primary Care Initiative.
  • All physicians who participate in Fee-For-Service Medicare will be affected by the value modifier starting in 2017.

CMS offers current information on how things are changing. Follow this link for information on Value-Based Payment Modifiers, Quality Resource and Use Reports, Quality Tiering Option, and, Quality Benchmarks for the 2015 Value Modifier.

Another reference resource on value-based reimbursement is the “Guide to Value-Based Reimbursement: Profiting from Payment Bundling, PHO Shared Savings, and Pay for Performance.”

The 80-page report explores emerging models of episode-based payments, physician-hospital organizations and physician bonus structures, including a Blueprint for Bundled Payments, 7 Key Elements for PHO Success, and, Physician Pay-for-Performance and Bonus Structure.

Details on this guide are available at





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