In the past, reimbursement models were based on a fee-for-service plan (FFS), but as the implementation date of MACRA quickly approaches, payers have already started to shift to the fee-for-value (FFV) model required under the new legislation.
The two main reasons for this shift: rising healthcare costs and logistical flaws with the current reimbursement process.
The current reimbursement process
For the last several decades, healthcare has been operating on a fee-for-service payment model. Here’s how it works: The patient visits a provider, that provider performs a service, the provider sends a claim to the payer, then the payer reimburses the provider. Two main problems can, and have, surfaced through this system: 1. Providers are often inadequately reimbursed in a timely manner and 2. Providers may charge too much or too little for their services.
When it comes to issues with receiving reimbursements, a reimbursement may be delayed when a claim has inaccurate or missing information. In this case, the provider has to submit additional or corrected information, and often must wait another pay cycle in order to be compensated. If a claim is denied, the appeal process is often long, meaning the provider experiences even more delay in getting paid.
Another common issue is over- or under-charging for a service. This could be intentional — in which case the provider is committing fraud — or unintentional. Sometimes providers make mistakes when recording what services they provided during an appointment, or they forget to use negotiated rates for certain payers. But no matter what the provider’s intention, inaccuracies like this can be costly and difficult to correct because they often continue for multiple payment cycles.
As we shift from an FFS to an FFV reimbursement model, payers may experience problems due to outdated systems. For instance, the recent transition to ICD-10 has slowed the reimbursement process for payers and providers. Additionally, most payers are currently using platforms designed for the FFS model, and this technology cannot efficiently process the types of claims providers and patients are filing today.
An FFV model is also going to require more detailed record-keeping of care and services, which will take more time and resources than the documentation required for the FFS model. This will likely produce more delays in the reimbursement process.
The impact on payers and providers
Correcting incomplete or inaccurate claims is costly for both payers and providers. One study by the Medical Group Management Association found that correcting a single claim can cost up to $30. For some hospitals, that adds up to $13,200 per year.
When a provider does not receive payment in a timely manner, that disruption to their cash flow has real consequences. Over time, delayed payments can inhibit a provider’s ability to perform top-quality services.
Reimbursement issues can also negatively impact patient satisfaction. Patients have to take extra steps to contact their payer or provider, or both, when their claims are denied. This can be frustrating for patients, and make them displeased with the service they receive from both parties.
In order to address all of these issues, payers and providers must change their strategies and best practices.
New provider strategies
A good first step for providers is to start using revenue cycle management (RCM) tools. These software systems can predict which claims are likely to be denied and make necessary corrections to claims before the provider submits them. This will increase the number of claims approved the first time around.
Providers can also use predictive analytics to ensure they do not accidentally over- or under-charge. Predictive analytics can improve the way providers code their services, so their records will always accurately reflect the treatments they provided and the exams they performed. Providers must also train their billing staff to interpret the codes properly and consistently.
New payer strategies
Payers can also use RCM tools and provider data to measure whether providers are submitting fair and accurate claims. If providers are having problems in specific areas, payers can reach out to them and suggest solutions. For example, one national payer recently came up with a plan to reduce abusive coding practices for Evaluation & Management areas of care. The payer identified roughly 17,000 doctors who were coding 80 percent or more office visits as levels 4 and 5, which is excessive. Rather than using a costly auditing service, the payer contacted the providers directly and told them their coding practices fell outside the norm. In response, 99 percent of those 17,000 providers modified their coding practices, saving the payer money.
A collaborative approach
Healthcare costs are expected to rise as the industry expands and becomes more complex. Providers and payers have a key role to play in reducing costs, but they will only be successful if they work together and employ RCM technology and data analytics. These strategies can make the relationship between payers and providers more transparent, reduce mistakes, save money, and improve patient experiences.