I recently received a phone call from a Senior Vice President of Contracts at a large health system in New England. The health system was engaging in a new contract with a payer in the area. The payer wanted this health system to serve over 15,000 Medicare patients. In a pre-healthcare reform world this would have been welcome news for the health system. Unfortunately, the payer had stringent payment terms for the health system. Rather than paying for every service performed on the patients, the payer wanted the health system to manage the patients for a fixed per member per month price. The VP was enquiring if we had a billing system that could help track such new payment arrangements before he signed the contract. Over the next two hours, we went into a discussion that not only informed him that we could help but also forced him to think about situations he did not predict. The most important question we discussed was “Who is my target patient?”
The above scenario is not uncommon in the new world of healthcare reform. Risk-based contracts or value based reimbursements differ from traditional payment methodologies. Providers receive payment for the services delivered if they pledge to take complete responsibility of high quality care across the lifecycle of the patient than just care for specific services delivered. For example, in the old world, a hospital delivered care for a specific condition and received payment for it. In the new world, the hospital is responsible for cure/treatment of the complete disease rather than only a specific condition.
Due to a lack of human resources and specifically clinical staff, providers need to get a very clear understanding of the top 5% of patients (According to a recent Oliver Wyman study, top 5% of polychromic patients cost 45% expenditure). This expenditure could be due to emergency room visits, non-compliance to medications, over utilization of services, or high variation of care across the continuum. It is often tricky to identify the risky patients. Fortunately, development in technology solutions can help the providers. Evolving analytic solutions accept claims, clinical, pharmacy, and other unstructured data sources to run algorithms and identify the top 5% risky patients.
The VP of Contracts and I spent a good amount of time laying out the ground work of data sources we would need to build such intelligence. This is probably the toughest part of analyzing a risky population. The next step would technically be to bucket the patient population based upon the level of risk. Once the population is risk stratified, he could use that for two purposes. First, to allocate dedicated care managers to ensure close care coordination for high risk patients. Second, to better negotiate the contract with the payer. The discussion went on for over two hours but we both hung up satisfied that there was hope to navigate this changing reimbursement model.
It is interesting to observe how the changing dynamics of healthcare industry is forcing providers to think beyond the routine billing and clinical documentation functions. Analytics today and moving forward is not only a great capability to have but may be a game changer for a provider. The challenges associated with performing some of these new functions seem daunting for providers, but a smart provider would see this as an opportunity to tackle the impossible.
“We need to believe in the impossible and remove the improbable”~ Oscar Wilde
 Source: Oliver Wyman 2012