FPM Supplement Series Offers Intro to Value-based Payment

More Academy Resources on VBP in the Pipeline

March 18, 2021, 3:59 p.m. News Staff ― At its most basic level, value-based payment is about accountability. It describes a scenario in which accountability ― for quality as well as cost of care ― is shared among all who deliver that care: physicians, other clinicians and a range of health care organizations.

The series’ second supplement, “Keys to High-Quality, Low-Cost Care: Empanelment, Attribution, and Risk Stratification,” discusses the two mechanisms used to assign patients to a physician or practice during the course of the year: attribution and empanelment.

Attribution occurs at the payer level, with payers assigning patients to physicians or practices that are then held accountable for the care those patients receive, as well as the costs that care incurs. Attribution is broken down into two types: prospective and retrospective.

In a prospective attribution model, physicians know which patients are assigned to them or their practice at the beginning of the measurement period, typically 12-24 months. With retrospective attribution, the payer notifies physicians which patients were attributed to them at the end of the year and measures their performance over a specified look-back period ― usually 12-24 months.

Although attribution methods differ by payer and contract, most use a combination of patient choice (voluntary attribution) and/or a claims-based algorithm to assign patients. Claims-based attribution methodologies vary, with some payers assigning patients based on which physician was primarily responsible for a patient’s care and others based on which physician conducted the patient’s most recent wellness or other care visit.

Empanelment offers a way to recognize and maintain ongoing patient-physician relationships by identifying and assigning patients with specific care needs to appropriate primary care physicians or care teams. Initial panels may be identified by reviewing a list of patients seen during a given look-back period ― usually 18-24 months. Panels may be refined based clinician input, ideal panel size or makeup, or other factors.

Once the ideal patient panel has been identified, clinicians should turn their focus to patient risk stratification. Risk-stratified care management involves assigning a health-risk status to a patient, after which care team members collaborate with the patient to develop and implement an individualized care plan. RSCM is intended to support continuing care management and allocate practice resources and services according to patients’ risk-associated care needs.

It’s essential that physicians and practices understand which patients they are responsible for managing so they can ensure those patients receive high-quality, low-cost care from all sources. Otherwise, revenues for small, solo, and/or independent practices may be negatively impacted, as might employed physicians’ ability to earn performance bonuses or share in savings.

The third VBP supplement, “Understanding and Improving Risk Adjustment in Team-Based Care,” focuses on risk adjustment, which it describes as “an actuarial tool to predict health care costs.” Risk-adjustment models use a patient’s demographic data combined with their diagnoses to determine a risk score. Payers use that risk score to calculate the probable cost of insuring that patient.

CMS uses one such risk-adjustment model, hierarchical condition category coding, to project Medicare beneficiaries’ financial risk and adjust capitation payments accordingly.

It works like this: Physicians report diagnoses using ICD-10 codes, which may, in turn, map to a single HCC. Not all ICD-10 codes map to an HCC; of the more than 70,000 ICD-10 codes, fewer than 10,000 map to an HCC. Acute illness and injury are not reliable predictors of ongoing care costs, for example, so those types of ICD-10 codes do not map to HCCs. Codes for chronic and long-term conditions such as diabetes, asthma and certain heart conditions, on the other hand, do map to specific HCCs.

Those HCCs, along with various demographic factors (e.g., age, gender, disability status), are used to assign each patient a risk-adjustment factor. Payers then use algorithms to predict costs based on a patient’s RAF.

Medicare calculates each beneficiary’s RAF on an annual basis, yielding a cost per beneficiary per year. The patient’s RAF ― 1.000 is considered the norm, but scores generally range between 0.9 and 1.7 ― is multiplied by a set dollar amount to determine the amount Medicare expects to spend on that patient.

Some commercial payers use a similar system, Clinical Risk Groups, to calculate the likely spend for patients on a per member per month basis, which is then converted to an annual total.

By offering a way to account for patient complexity and associated cost across an entire panel or population, it’s clear that risk-adjustment strategies can be advantageous in VBP arrangements. Accurate coding and documentation are essential as the foundation of such models, because if patient RAFs aren’t accurate (i.e., if they don’t fully portray patient complexity), cost and quality metrics won’t be appropriately adjusted and payment will be lower than what should be received based on the level of patient complexity. Similarly, wise utilization of the data gleaned from using HCCs to calculate individual patient RAFs can allow the physician to better track and guide ongoing care.

The most recent FPM supplement, “Paving the Path to Value: Care Management and Coordination,” focuses on aligning care services with patients’ individual needs. It emphasizes the need for practices and health systems to implement a patient-centric, outcome-driven approach to care, as well as to appropriately incentivize physicians and care teams to achieve that goal.

The supplement outlines a handful of core concepts to help physicians and care teams optimize patients’ health outcomes and improve performance in their VBP contracts.

• Patient education ― Educating and activating patients to help manage their own chronic health conditions is an essential part of care management and can be accomplished via various mechanisms.
• Care planning ― Comprehensive care planning brings patients, caregivers, clinicians and care teams together to develop care goals and action steps to reach those goals. This process helps align practice goals of improved patient care and better performance on quality and resource utilization.
• Managing medications ― Multistep medication management is a necessary and ongoing process. With prescription prices spiraling, proper management can keep costs down, help avoid ER visits and hospital utilization, and lead to better patient outcomes.
• Risk-stratifying populations and managing data ― Risk stratification supports longitudinal care management and allows clinicians to allocate practice resources and services that are risk-based and proportionate to patients’ needs.
• Coordinating care across the health system ― Care management and coordination require extensive communication. Physicians and care teams discuss patient care with specialists and hospitals, incorporate that input into care plans, and engage with patients about ongoing care management via the patient portal and other methods. Care coordination spans the health care system, with care teams reviewing hospital and ER visits, tracking tests and referrals, and providing community resources and patient education.

Ultimately, VBP is expected to improve patient outcomes and allow physicians the flexibility to provide care the way they want to and be appropriately compensated for it. Implementing care management and coordination moves physicians toward that goal.

Stay tuned as the AAFP continues to roll out resources and tools to help family physicians thrive in an increasingly value-based health care system.