Reckoning …
A day of reckoning is coming (cue ominous music). For over a decade now, the healthcare industry has been talking about and sometimes working on the move from volume-based fee for service medicine to value-based care, where payers and providers (and sometimes patients) are at risk for the premium dollars needed to care for Medicare and commercially insured members / patients.
Many organizations have applied a tremendous amount of resources to conventional Medicare and Medicare Advantage populations to appropriately improve Risk Coding - the documentation of a patient’s current burden of illness that increases their likelihood to decompensate and require additional resources in their care compared to patients without a similar burden of illness.
In my opinion, CMS got it right when they determined that, since every patient doesn’t require the same amount of care due to differences in the health conditions they experience, they need to set aside different amounts of money to care for patients based on their health risks and likelihood to need medical services. This is a great budgeting tool that applies actuarial insight. If my patients are “sicker,” they’ll need more resources to care for them, a higher benchmark of expected expenses.
Risk Coding has gained increased attention because of the shared savings and risk arrangements providers have been entering into these past few years. As providers contract to keep more and more of the healthcare dollars saved compared to the benchmark that’s been set, they’ve seen the benefit of appropriate Risk Coding and the higher benchmarks it can bring. Many businesses have been started based solely on this principle, and some organizations consider their entire focus of value-based care and population health to be centered on appropriate Risk Coding.
Unfortunately, this is only half of the equation.
Providers that care for a higher acuity population should certainly be given the opportunity to save more money if they perform well in optimizing their population’s health and well-being. Risk Coding, though, only impacts the revenue available. The true creation of value involves improving (or at least maintaining) quality while appropriately decreasing medical expenses. (Experience is important, too, but less directly related to this topic.) Without bringing medical costs under control, we simply replicate the notions of fee for service care by solely relying on increased revenue from more members assigned to our providers. It’s not much different from the fee for service churn-and-burn mentality where providers simply increase the encounters to increase revenue. Perhaps more importantly, this tactic does not bring with it the sustainability of true value-based care.
Medical expenses need to be reined in through avoiding unnecessary testing, eliminating variations in care that don’t positively impact outcomes, and improving our advocacy and guidance of patients as they wind their way through their healthcare journeys - especially the rising risk patients and those with fragile chronic conditions (aka Ambulatory Sensitive Conditions).
Healthcare costs money, and dollars must be spent in the pursuit of the highest quality care and outcomes. However, if we don’t address the wasted resources in our healthcare delivery and move the expenditure of time, effort, and money to the prevention of chronic diseases or the circumstances that lead to their decompensation, healthcare delivery will continue to take a disproportionate and unsustainable bite out of our nation’s GDP and our individual wallets. Meanwhile, we’ll still fail to truly create value. We’ll only increase revenue in the short run until CMS changes its Risk Coding rules, or the system implodes in bankruptcy. Yes, a day of reckoning is coming!
