The financial landscape for post-acute care (PAC) providers is shifting, with alternative payment models steadily replacing traditional fee-for-service models. The transition started in 2015, when the Centers for Medicare & Medicaid Services (CMS) announced its intention to tie 30 percent of all Medicare payments to alternative payment models – a goal it reached one year ahead of schedule. Now, CMS is closing in on its second goal: 50 percent of payments transitioned by the end of 2018.
Data to support care outcomes
The traditional fee-for-service models are based on sheer volume; alternative payment models are based on the value and quality of care. The change from fee-for-service to alternative payment models could have a major impact on financial performance if PAC providers are not well-versed in the new models and their requirements.
This is where data comes into the conversation. The availability of comprehensive data will help PAC providers support their outcomes of care and translate quality of care into more dollars for providers.
One alternative: Bundled payment model
There are many alternative payment models out there, but let’s take a look at one for an example of how data is key to successful compensation. The bundled payment model, currently being tested by CMS, provides one payment for the range of services a patient receives during one episode of care that may occur at multiple settings. Bundled payment arrangements are incredibly dependent on highly supportive cost and outcomes data, because each provider will have to produce data to demonstrate the outcomes yielded by different points of care. Data will also be essential to determining the internal cost of providing different levels of care.
Financial leaders of PAC providers confronted with a bundled payment model must compile substantial data to support the care provided in their settings, with the goal of demonstrating favorable outcomes and reasonable costs. Data will also help ensure that payments are properly divided between providers in these payment models. It will require collaboration between the financial and clinical aspects of care to ensure that expenses and treatment are clearly outlined and supporting data are assembled. This will go a long way to help PAC providers get their fair share when payments are allocated.
Focus on improving health outcomes
The United States is higher in per capital health care spending than other developed nations like England, Germany and Japan, yet U.S. life expectancy trails many other nations by several years. While the shift to alternative payment models may not rectify this statistical disparity, a focus on improved care and reduced costs is definitely progress.
RKL’s Senior Living Consulting Group can help providers understand and prepare for the transition to alternative payment models. Contact one of our local offices today.
Contributed by James M. Spencer, CPA, MBA, Manager in RKL’s Senior Living Services Consulting Group. Jamie specializes in the preparation of financial models and analysis, including projections and forecasts, financial feasibility studies and transaction due diligence.