LUMINA Insights Blog

Most health system executives have referral leakage on their minds. They wonder why their patients seek care elsewhere, especially after they have spent millions of dollars to draw them to their facilities through ad campaigns, purchased high-end equipment, and invested in employed medical groups that lose money in operational isolation.

Perhaps we should reconsider our use of the term “referral leakage.” It implies that patients are somehow confined. Confinement is one of the top reasons the public largely rejected HMOs. In contrast, in acknowledgement of patient consumerism and demand for choice, emerging payment models are often based on “attribution.” Attributed PPO patients may vote with their feet, and they often self-refer. The concept of referral leakage implies entitlement—and having a sense of entitlement may be a part of the problem.

By now, almost all healthcare providers have been affected by the shift to value-based care and are either working with or are aware of HCC coding.

It is practically impossible to participate in Medicare and not be subject to the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), the Consumer Assessment of Health Providers and Systems (CAHPS), or other programs that adjust payment based on quality and cost.

With this change, it can be difficult to manage the clinical documentation and diagnosis coding that impacts the population risk-adjustment factors that improve financial opportunity.

Unfortunately, most physicians and practice managers understand only part of the fee-for-value (FFV) equation. While they know the quality data they report to payers under FFV will affect their reimbursement, many do not understand exactly how payers use this data to adjust payment.

What is the missing piece of the equation? Patient risk scoring.

Several years ago, I was working with a client reviewing quality and cost measures when we identified an individual who was a “frequent flyer,” or high utilizer, of the emergency department (ED). Upon further investigation, we learned that this person was seeking shelter and a hot meal, and he found the ED to be the best place to access both.

Each time this individual visited the ED and the providers asked him what was ailing him, he would vaguely declare, “I have pain!” It took many conversations to get to the root of his suffering: homelessness.

His misuse of the ED posed a problem to the healthcare providers who tended to his needs each time he paid a visit because it inflated the cost, or the medical spend, for this patient. They were running unnecessary tests on his behalf.