Value Based Payment News

Volume 2, Issue 15

August First Edition 2017

Coding Takes on New Importance in Value-Based Reimbursement by Rodger Smith, SVP of Payment Integrity, SCIO Health Analytics

I

t’s hard to fit the complexities of a neonate in intensive care into a box – even harder to fit them into the seven boxes available through the legacy DRG classification system developed for Medicare. Medical professionals pointed out for years that because individual MS-DRGs cover such a broad spectrum of patients and care, they don’t really draw distinctions among certain populations -- including newborns -- with varying levels of risk. One unintended result: Reimbursement did not align well with the true cost of care. Enter All-Patient Refined DRGs. Instead of just seven boxes for newborns, APR-DRGs offer 28. The good news is they offer plenty of opportunity to get it right -- making it possible to code for additional complexity and more accurate reimbursement. On the other edge of the sword, in a cashstrapped world of hospitals with declining bed days and nursing shortages that increase staffing costs, APR-DRGs offer plenty of opportunity to get it wrong – paying for a higher level of care than actually rendered. In the legacy fee-for-service world, coding errors cause obvious conflicts and problems. For example, while providers have an incentive to maximize both the quality of services as well as the level of code billed (and therefore revenue), payers have the opposite incentive – to reduce utilization of services and pay the lowest level based on the information documented about care rendered. As our system transitions to value-based care, many believe that this conflict will diminish, and payers’ and providers’ incentives will be more aligned in delivering quality and efficient care. This is an error. Many have not truly appreciated the importance of accurate coding in this new model. One of the core concepts of value-based care is to provide a reward and incentive for care that correctly addresses the complexity and uniqueness of a specific patient’s condition. This assumes the ability to distinguish between different groups and individuals. (continued on page 4)

KPMG, AMA See Physician Frustration with Mounting MACRA Pressures KPMG and the American Medical Association wanted to know: “Are physicians ready for MACRA/QPP?” So they conducted a survey, and found the short answer is, “Nope.” Here are details.

“W

e are well into the first performance year,” the researchers wrote, “and little is known about physicians’ preparation for and operationalization of reporting requirements.” Except this: “There remains a significant QPP knowledge gap among physicians.”

Some of the key findings from physicians involved in practice decision making tell the story. • • •

51% are “somewhat knowledgeable” about MACRA or QPP 8% feel “deeply knowledgeable” about QPP and its requirements 41% have heard of MACRA or QPP, but don’t consider themselves knowledgeable

Level of physician knowledge of MACRA/QPP by practice setting

(continued on page 2) published by Health Policy Publishing, LLC

209.577.4888

www.ValueBasedPaymentNews.com

2

Value Based Payment News


KPMG, AMA See Physician Frustration with Mounting MACRA Pressures…continued from page 1 The main implication, the report authors note, is this: “Physicians, especially those in small practices, need more help in preparing.” Specifically, the survey uncovered considerable trepidation about long-term MACRA performance and reported that physicians “remain deeply concerned about long-term financial success under QPP.”

Respondents indicated they need help In the following areas:

Physicians who have value-based payment reporting experience are “more prepared and more confident about their performance,” the researchers found, but just one in four of them feel wellprepared. • •

Over one-quarter believe they are “not at all prepared” for long-term financial success Less than one in 10 feel “very prepared” for it

Although physicians may view long-term financial success differently depending on their risk tolerance and expectations for how they may perform relative to today, their level of concern “suggests that a lot of uncertainty and pessimism remain about how QPP will affect physicians for the foreseeable future.” Some of the challenges that physicians face, according to the survey -- particularly the time required to accurately capture and report performance data, understanding QPP requirements, understanding the mechanisms of reporting, the cost burden of performance reporting and the organizational infrastructure needed to report performance -- are universal, regardless of practice size, specialty or previous value-based care experience. • •

28% of practices say time requirements are the most significant challenge 48% believe time requirements will continue to be a challenge going forward

Concerns about those issues are important to address, the report points out, because “knowing how to collect and report performance data is central to success under MIPS.”

Impact of Meaningful Use and PQRS on MIPS Participation Levels for 2017

(continued on page 3) Value-Based Payment News August First Edition 2017 Volume 2 Issue 15 ISSN Print (2327-7335) ISSN Electronic (2327-7343) Publisher: Clive Riddle, President, MCOL Editor: Russell A. Jackson Value-Based Payment News is published monthly by Health Policy Publishing LLC. Newsletter publication administration is provided by MCOL.

Value-Based Payment News

1101 Standiford Avenue, Suite C-3, Modesto CA 95350 Phone: 209-577-4888 [email protected] Copyright  2017 by Health Policy Publishing LLC. All rights reserved. No part of this publication may be reproduced or transmitted by any means, electronic or mechanical, including photocopy, fax or electronic delivery, without the prior written permission of the publisher.

to subscribe: visit www.ValueBasedPaymentNews.com or call 209-577-4888

page 2


Value Based Payment News

3

KPMG, AMA See Physician Frustration with Mounting MACRA Pressures…continued from page 1 Physicians’ perceived lack of that knowledge “suggests that another transition year may be necessary to allow more time to educate all physicians and, more importantly, additional time for practices to prepare.” Indeed, the report says, “policy makers must consider existing challenges when crafting future policies and QPP requirements.”

Impact of Meaningful Use and PQRS on perceived preparedness for MIPS

For one thing, the survey found, “physicians want more alternative payment model options.” In addition, it says, “to better educate physicians about QPP, its requirements and what is needed to prepare, there are some potential approaches that could help.” • • •

providing additional flexibility or a longer period of time for transition timely reports to participants from the Centers for Medicare and Medicaid Services or others on progress and how physicians are being impacted more education and transparency around how payment updates are calculated

Although some groups of physicians – larger and multispecialty practices and those with experience in value-based reporting programs – appear “somewhat more prepared and optimistic about their performance in MIPS,” the survey report concludes, “a majority of physicians across practice sizes, practice settings and specialties perceive MIPS requirements as burdensome.” As well, the report confirms, “there exists a need for more alternative payment models to help physicians and the broader healthcare system move more quickly toward value-based care models. Given the gaps in knowledge and uncertainty about how best to prepare for success, there is considerable opportunity for CMS, medical societies and other interested stakeholders to help better educate and prepare all physicians.” Visit kpmg.com and ama-assn.org.

Industry News

VillageMD Expands into Northern Indiana VillageMD, a national primary care provider, reports expanding into Northern Indiana to “help primary care physicians across the region deliver higher-value care.” VillageMD-Northern Indiana will “provide solutions and services to its provider partners,” according to a statement, “to improve clinical outcomes, enhance patient and physician satisfaction and lower the total cost of care.” High-quality primary care “requires a deep engagement between doctor and patient,” the company adds, so the doctor group will “leverage data analytics, physician-based care coordination and on-the-ground support resources, all of which have demonstrated significantly greater clinical improvements at a lower cost.” The company’s clinical care model “aids its physician partners in providing more personalized attention, education and support,” the statement says, “via integrated care teams of coaches, diabetes educators, pharmacists and resource coordinators to address patients’ medical, emotional and social needs. Practices that use it have been recognized by CMS for high quality.” Visit villagemd.com.

WellCare, St. Elizabeth Healthcare Form ValueBased Care Partnership WellCare of Kentucky, a subsidiary of WellCare Health Plans Inc. (NYSE:WCG), reports forming “a new valuebased care partnership with St. Elizabeth Healthcare, the largest health system in northern Kentucky.” The stated goal: “drive quality and improve health outcomes for Medicaid and Medicare Advantage members.” Under the deal, incentives are “tied to performance improvements and quality outcomes that are based on respected healthcare performance measurement tools,” a statement adds. WellCare will collaborate with St. Elizabeth’s physicians to “drive quality-based improvements in certain Healthcare Effectiveness Data and Information Set measures,” it says, and will “focus on quality and performance measures set by the Centers for Medicare and Medicaid Services’ five-star quality rating system.” St. Elizabeth operates three acute care facilities and a critical access hospital and now manages care for about 17,000 WellCare members. Visit stelizabeth.com and wellcare.com.

© 2017, Health Policy Publishing, LLC. All rights reserved. No reproduction or electronic forwarding without permission.

page 3

4

www.ValueBasedPaymentNews.com Coding Takes on New Importance in Value-Based Reimbursement…continued from page 1 One excellent example of this is the Hierarchical Condition Category system used by CMS to represent the complexity of the conditions among Medicare patients. Different HCCs have different weights, and then CMS uses those weights to provide additional payments in situations where a given individual is sicker than the average beneficiary. Nowhere is this issue more important than with inpatient services, if for no other reason than that they are the largest area of medical spend. As evidenced by continuing billing errors, the diagnosis-related group classification system -- the predominant reimbursement methodology for inpatient care -- has always been challenging. And since it was originally developed for Medicare populations, this is especially so when dealing with a non-elderly population. Neonates in Intensive Care Show Coding Challenges Take the complexities of coding for a neonate in intensive care, for example. Under the legacy Medicare system, there are seven different coding options available for intensive care. Having so few options makes sense for Medicare patients. It does not, however, begin to offer the granularity required to describe the complex conditions of the most premature babies, whose risk and acuity can vary significantly. The same can be said about other demographic groups, such as economically disadvantaged patients who rely on Medicaid for their care. The needs and circumstances of these various populations differ considerably from most Medicare patients -- a fact medical professionals have pointed out for years. Yet many such individual legacy DRG codes are so broad that clinicians and coders are often unable to draw distinctions among certain populations that have many more layers of risk and acuity. The result was reimbursement that really didn’t align with the true cost of care healthcare professionals provided. The key to the above is the complexity of patients, in terms of co-morbid conditions, risk of experiencing various acute (and very expensive) events and related items. In a value-based reimbursement world, where payments are increasingly tied to acuity and outcomes and providers are taking on more risk, not being able to detail the subtleties and small difference in care can severely reduce accurate reimbursement for the resources required to treat a patient. More Coding Options: Double-Edged Sword Fortunately, things like All-Patient Refined DRGs are available to help correct this issue. Rather than offering only seven categories for newborns, for example, APR-DRGs have 28. These expanded options make it possible for provider organizations to reflect the details of their patients’ needs and risks far more accurately. By being able to code for additional complexity, healthcare organizations have more opportunity to reflect the full nature of care that was provided, and to be reimbursed appropriately for it. There is a downside to having more DRG codes available, however. It is easier for providers to make a mistake in coding, becoming confused as to exactly which code they should use. There is also the temptation to intentionally try to “game” the system to make up for lost revenue due to declining bed days and nurse shortages that increase staffing costs. The result is they submit documentation for reimbursement at a higher level of care than was actually rendered. Advanced analytics can help payers detect these issues and ensure that providers are being reimbursed according to the level of care they actually deliver. Here are three key areas that can easily be miscoded. Reduced levels of care as an episode progresses. Anytime there is an acute event, the level of care will tend to be high. In the case of neonatal patients, there are many risks initially that require expensive support and monitoring equipment as well as resource-intensive staffing in the NICU. As the episode proceeds, however, the newborn will often improve significantly, growing strong, beginning to breathe on its own, etc., enabling it to be “stepped down” to less-intensive care. The baby may even be moved out of the NICU entirely and into a different part of the hospital. Sometimes providers neglect to account for this improvement and continue to code as though the higher level of care is still being rendered. Analytics can compare all the care that was delivered to the DRG codes both for the specific member as well as across the provider’s patients more generally to catch these discrepancies and enable corrections. • Incorrect coding for conditions included elsewhere. Certain conditions may be an outgrowth of a larger issue and thus should not be coded separately. If a baby is small for its gestational age, this information should be reflected in the coding. Yet small babies by definition also have some level of malnutrition. Since that is the case, the provider should not be coding for malnutrition separately because it is understood to be part of the larger issue. Including coding for malnourishment improperly increases the acuity of the claim. Of course, such coding is appropriate if the baby is malnourished beyond what is typical for its small size. Analytics can detect these issues and determine if the higher level coding is justified. • Testing versus treating. If there is concern a patient has a certain condition, such as sepsis, a physician may order tests to evaluate the situation. While this is the proper procedure, it is improper for the provider to code for the condition even when the tests come back negative. The only time they should code for the condition is when the tests confirm it is present. Advanced analytics will catch these differences and flag them for review. Coding has always been a challenge for providers and payers. But in an era of value-based payments, where both sides are accepting more risk, the need to get it right has grown. By using advanced analytics, payers can ensure providers are entering the proper DRG codes for the services they’re delivering, streamlining the reimbursement process while improving the relationship on both sides. Contact Smith via Brandon Glenn at 216-233-4357 or at [email protected]. •

published by Health Policy Publishing, LLC

209.577.4888

www.ValueBasedPaymentNews.com