LUMINA Insights Blog

Healthcare industry veterans Daniel Marino and Lucy Zielinski have co-founded Lumina Health Partners, a Chicago-based consulting firm that offers business advisory and leadership solutions to healthcare organizations.

The firm’s experienced team of consultants works hand-in-hand with clients to develop transformative results for the most difficult value-based strategy, digital innovation and analytics, clinical transformation, and leadership and governance challenges. Using a “lead to support” approach, the firm’s consultants create and activate strategies and plans that enable medical groups, hospitals, and health systems to realize measurable strategic, financial, clinical, and operational goals.

With recent changes to the Medicare Shared Savings Program (MSSP), all accountable care organizations (ACOs) need to pay closer attention to their compliance obligations and be prepared to make changes quickly. Each time the Centers for Medicare and Medicaid Services (CMS) updates its MSSP rules, as it did in 2016, it frequently follows these changes by auditing ACOs to determine whether all its rules are being followed. As in 2016, ACOs that identified potential compliance concerns and operationally addressed these concerns limited their potential exposure.

The Centers for Medicare & Medicaid Services (CMS) published its Medicare Shared Savings Program (MSSP) final rule in December 2018, and the final rule overhauls the MSSP and takes a new approach to transitioning providers to performance-based risk arrangements under accountable care models. A National Association of ACOs survey released in May 2018 indicated that 71 percent of the 82 ACOs that had been participating in Track 1 since 2012 or 2013 were likely to drop out of the MSSP before 2019, when they would be forced to enter a two-sided risk model (Track 1+, 2, or 3).

The U.S. healthcare system is steadily transitioning from fee-for-service (FFS) reimbursement to fee-for-value (FFV) payment. This change has already started to affect medical practice revenue, and it will have an even bigger impact in the years ahead.

Unfortunately, most physicians and practice managers understand only part of the FFV equation. Under FFV, they know the quality data they report to payers will affect their reimbursement, but many do not understand exactly how payers use these data to adjust payment.

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

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.

The implementation and use of clinically integrated networks (CIN) continues to be an essential strategy in the journey to value-based care. The healthcare delivery system continues to become more and more complex, with new technologies, ongoing changes in the competitive landscape with mergers, acquisitions, and partnerships, and challenging payer contracts that are heading to real risk-based contracts in multiple episodes and larger populations.

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.

Financial challenges again rank No. 1 on the list of hospital CEOs’ top concerns, according to the American College of Healthcare Executives’ annual survey of top issues confronting hospitals. In addition, Moody’s recently confirmed its negative outlook for nonprofit hospitals, citing weak volume, reimbursement constriction, and increased numbers of Medicare patients.

Financial issues are especially challenging for tertiary and quaternary hospitals, whose financial success is dependent upon referrals to their advanced care services. Because mergers can often prove impractical or might even be prohibited, Lumina Health Partners and the law firm Hogan Marren Babbo & Rose have developed a strategy to for tertiary and quaternary hospitals to integrate clinical programs with current or potential referring partners. This approach involves service line integration among hospitals and physicians, focusing on quality and “best site of care” principles.

The next opportunity to join the MSSP will be in January 2020, when the program returns to its typical schedule of ACOs joining at the start of the calendar year. You can find more information about the application process, which opened July 1, on the CMS website.

For providers considering joining Pathways to Success for the first time and current ACOs considering whether to continue in the program, here are some questions to consider:

1. What can we do to forecast our potential financial outcomes (savings or losses)?
2. How can we prepare to obtain shared savings, and, if applicable, minimize our losses?
3. Overall, how can we prepare for success in the Pathways program?

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.