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What We Learned (part 1): 7 points on new reimbursement methods that every revenue management team needs to know
Greg Kay

By: Greg Kay on July 20th, 2017

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What We Learned (part 1): 7 points on new reimbursement methods that every revenue management team needs to know

Webinar recap: "Adapting to New Reimbursement Models: How to Maximize Payer Performance and Maximize Revenue"

Well, if there’s one thing we’ve learned from this webinar, it’s that without a set plan for incorporating the newly-added methods of reimbursement into your organization, your revenue management team could be in for a tough road ahead. New reimbursement methodologies means new data to record, new strategies for modeling payer contracts, new methods for reporting your payer performance, and, ultimately, raised standards on the quality of care a patient receives. This change in methodology will undoubtedly require a learning curve, but the sooner you begin leading and educating your team on new methodologies, the sooner your staff will be able to carry on with their roles as usual.

Here’s a recap of what we learned about the upcoming changes in hospital reimbursement:

  1. Centers for Medicare and Medicaid Services (CMS) will shift the bulk of reimbursement to value base-based methodologies.
  2. Modeling the effective discount rate of the various rates and terms using your historical billing data provides the ability to understand the net revenue impact on a side-by-side comparison of one proposed payer contractual arrangement to another.
  3. Examples of current methods of reimbursement include Discount from Billed Charges and Fee-for-Service. Examples of the new methods include Value-Based Reimbursement, Bundled Payment, and Shared Savings.
  4. To maximize reimbursement from the payer contracts, staff should be aware of the impact that the proposed terms have on the bottom-line before the new contract is even signed.
  5. As a leader, don’t be afraid to incorporate manageable risk into your management style. The higher the (manageable) risk, the higher the reward.
  6. In the Bundled Payment model, healthcare providers are reimbursed for specific episodes of care. It is much broader in the coordination of care than the traditional case-rate reimbursement. This method encourages greater coordination of care and can prevent redundant or medically unnecessary services.
  7. The Shared Savings model provides upside incentives and lowers risk for providers to improve the coordination of care and outcomes with an identified patient population. A pre-determined percentage of net savings may be further negotiated with the providers as an upside incentive.

As you can see, learning and adapting to the ins and outs of new reimbursement methods largely depends on a team’s leadership and their ability to work cohesively with the payer. And by incorporating the four step framework of payer contract governance into your contract negotiations, your organization can be assured that your calculations are accurate and provide insight as to how you can maintain financial growth in the future.

Stay tuned for insight from the webinar attendees on where their organization stands on payer performance and reimbursement negotiations.

About Greg Kay

Greg has managed and consulted in healthcare for 28 years. He has been with PMMC for the past 20 years and prior to that was the VP of Sales for PCA (Beverly Enterprises’ pharmacy division). Greg has experience in multisite operations management, managed care negotiation from a healthcare provider’s vantage point, and product development/implementation. Greg is a University of South Carolina finance and marketing graduate. Greg was recognized in 2012 as a Business Leader Top 50 Entrepreneur.