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Chargemaster focus needed in transition to value payments



Jon Melling, a partner and IT consultant at Pivot Point Consulting, spoke with  Becker’s Hospital Review about how hospitals are transitioning from fee-for-service to value-based billing.

“The two [systems] are so fundamentally different that you can’t just flick a switch and move from one to the other,”  noted Mr. Melling, and hospitals and health systems face many challenges in bridging the gap.

The reimbursement that hospitals are getting now has  fallen, in part because of the the rise in popularity of high-deductible health plans, Mr. Melling told Becker’s. “And under value-based billing there is likely to be a further decline in the level of revenue accrued.”

Becker’s noted: “The onus is on hospitals to find other avenues of revenue to mitigate loss, and successfully manage the health of their patient populations in a cost-effective way.”

Becker’s paraphrases Mr. Melling as saying: “To successfully manage their patient populations, providers will need to seriously invest in powerful, quality analytics engines as well as market-particular wellness initiatives, such as requiring mammograms and prostate exams for those over a certain age.”

This financial incentive to better identify and manage at-risk populations has sparked new conversations between insurance plans and care providers. “There is and will be a substantially increased amount of crossover between physician groups, payers and hospitals,” Mr. Melling added.

“If you’re a provider in a network, you have to work very closely with the payer to make sure you’re clear about the parameters and the criteria for care, and come to an agreement about the level of reimbursement for specific conditions, or what the overall payment will be if you are taking on a population,” he said.

As hospitals  navigate between volume and value, Mr. Melling pointed out  core revenue-cycle areas demanding provider attention.

Becker’s summarized his views on this point as: “Hospitals will need to pay increased attention to their chargemaster, potentially managing separate chargemasters where one cannot manage both value-based and fee-for-service charges….{and} Denials management will continue to be a key indicator of revenue cycle performance, with an increased focus to denial prevention.”

He added: “{I}t surprises me sometimes the level of understanding within organizations surrounding revenue cycle processes.”  Executives and staff will need lots of education as they move deeper into the payment-for-value world.

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