Medicare pay reform, population health will disrupt RCM

Small physician practices that participate in programs like the Merit-based Incentive Payment System (MIPS), or population health initiatives will suffer revenue cycle disruptions, as well as lost revenues as they seek to improve their pay-for- performance operations.

This is according to David Nash, MD, MBA, dean of the Jefferson College of Population Health at Thomas Jefferson University in Philadelphia, Pennsylvania.

Reflecting on the fact that both programs are based on variables that can change during the course of an episode of care such as cost, patient outcomes and quality of care, Nash said physician practices are left with a high degree of uncertainty about how much they’ll get paid after insurers analyze their performance metrics.

“Unpredictability is the theme moving forward,” Nash said. “In both MIPS and population health initiatives, the revenue will be tied to outcome measures and the outcome measures are going to be complicated.”

In the case of population health, which monitors and treats groups of patients with specific illnesses to improve outcomes among the group, Nash said the measures are going to be based on which insurance company’s population health program the physician practice joins.

In the case of MIPS, he said we still don’t know how the Centers for Medicare & Medicaid Services (CMS) will score practices performance measures and what the impact will be on small practices and their revenue cycles. MIPS is one payment track under the Medicare Access & CHIP Reauthorization Act of 2015 (MACRA).

Physicians participating in MIPS, will send data to Medicare beginning January 1, 2018, and no later than March 31, 2018 to qualify for a positive or neutral payment adjustment, affecting their 2019 Medicare Part B payments, helping them avoid up to a 4% negative payment adjustment in 2019.

As small practices seek to follow groups of patients more closely, collect data and change business processes to meet the components of MIPS  ̶  quality, improvement activities, advancing care information and cost  ̶   small practices will have to redesign their operations to meet performance standards.

Next: Change means making investments

Change means making investments

According to Nash, raising the performance of a physician’s practice requires investments in skills and technology, and he foresees practices that participate in pay-for-performance programs losing money in the near-term.

“Overall, revenue will decrease for at least another year or two as small practices build the inter-professional skills necessary to practice population-based care or improve the quality of care that’s required under MIPS,” Nash said.

He noted that it’s not farfetched to think that practices will, for example, hire a care coordinator in 2017, employ a diabetes nurse educator in 2018 and in 2019 hire a nutritionist.

“Practices will have to add professional staff if they want to meet performance measures and that will be expensive and will create a decrease in revenue,” Nash said.

What is also expected to change is the control that physicians had on predicting revenues. 

Nash noted that in a fee-for-service system the calculation was easy: The number of patients times the number of visits times the amount of time spent with the patient.

“You can implement a pretty good revenue cycle management system if you know how many patients you’re going to see in what period of time and what their average co-payment is. That's easy,” Nash said. “It's much harder when the physician is forced to hit these performance measures which sometimes are a year away. It becomes a much bigger challenge and setting an annual target income for the practice is near impossible.”

Next: Meeting the measures

Meeting the measures

One good thing about value-based initiatives, Nash said, is that many share the same goals of reducing costs, enhancing the quality of care and improving patient outcomes. With this in mind, Nash said physician practices can leverage their systems and participate in multiple value-based initiatives to drive a practice’s overall performance and raise revenues.

There are several key areas that practices should focus on as they meet MIPS and population health measures while improving revenue cycle management systems, Nash said.

For example, small physician practices have to improve office efficiency in many areas such as improving data capture, patient registration and pre-registration, as well as engaging patients with patient portals, mobile apps and other technology.

He added that claim submissions, remittance processing, coding, patient collections and other tasks related to medical billing and payment require well trained office staff with the proper skills to handle these activities.

Nash also said physician offices must create a patient registry function to track how well or poorly they are taking care of populations of patients that have, for example, diabetes. He added that a registry function can also help physician offices address MIPS measures on advancing care information about patients.