Ensure you have clear insight into your practice’s financial picture
The healthcare payments shift away from fee for service to value-based payment models are showing great promise. However, to adopt these new payment models, providers need to take a close look at their businesses, beyond just looking at the bottom line. The best way to obtain a complete financial picture is through comparative analytics. Quality data can help uncover information such as which costs can be controlled, which payers have the highest denials, which claims are being rejected altogether, and other valuable insights.
To best prepare for shifting payment models, practices need to have a clear understanding of their financial picture, and consider the impact an emerging payment model agreement will have on your practice.
The American Medical Association’s “Evaluating and Negotiating Emerging Payment Options” (2012) provides some practical tips and resources that practices should consider as they evaluate proposals, negotiate agreements and manage the revenue cycle associated with a specific payment model. Robert Barbour’s chapter, “How to establish baseline costs,” offers some excellent recommendations and steps on where to begin.
Points to consider:
- Establish baseline costs and know your true costs of conducting business. As you consider risk-based payment models, your practice may require more sophisticated accounting practices than are required under fee-for-service. Be sure to calculate your true cost of doing business as your baseline for assuming risk.
- Analyze your practice’s revenue cycle. Analyze service costs and reimbursements for each, to determine if you are in-line with your peers.
- By payer, determine whether there are issues in reimbursement for specific payers or if the problem is broader in nature. For example: was there a sudden drop-off in payments from a specific payer? Looking at the data can help solve that mystery.
- Capture data analysis for practice improvement. With emerging payment models, practices not only will need staff with expertise in evaluating data, but also with knowledge in how to make business adjustments necessary to keep the practice profitable. For example, if your costs are exceeding your reimbursements, you’ll need data to prove to payers that your costs cannot be further reduced, reporting that proves your practice is meeting quality and outcome requirements, and potentially reasons for cost discrepancies in what the payer is willing to pay, and what your practice can accept.
Healthcare comparative analytics can help analyze your practice’s financial health by providing insights into how your practice compares to your peers. Do you have a higher percentage of denied claims for a specific service than your peers? Ensuring your business finances are in-line will help ensure success for new payment models. As you consider alternative payment models presented to your practice by payers, take a close look at each, and compare with your revenue cycle to determine whether you can afford to participate in a specific payment program.