NFMGMA May 2014 Educational Session – How Practices Can Prepare for Value-Based Contracting

John P. Schmitt, Ph.D. – Reliance Consulting Group 

by Richard Stokes

Dr. John Schmitt is the President and CEO of Reliance Consulting Group, LLC – a payer contracting and consulting services firm in Atlanta, Georgia.  John has more than 30 years’ experience in healthcare, has been published in many trade journals and often speaks on current healthcare management topics.

I have to admit that prior to meeting with John last week, my knowledge of ‘Value-Based Contracting’ and what an Accountable Care Organization (ACO) is, was minimal.  In fact, I’d even go so far as to say that I considered the term ‘ACO’ to be just another acronym that is getting excessively kicked around along with all the other acronyms that we have in healthcare.

But in talking with John and getting a better understanding of both ideas, it really opened my eyes as to what is coming and how the healthcare industry is going to change whether you are a solo practitioner or a large hospital system.

The traditional healthcare delivery model has been ‘fee for service’: patient gets sick, he/she comes to your office for care and you get reimbursed for the visit either by the patient directly, or by filing a claim with their insurance carrier(sometimes both).

Value Based Contracting image 2An ACO is a group of doctors, hospitals and healthcare providers that are collectively responsible for delivering and coordinating care to a group of patients.  John tells me that under the Medicare program we are seeing a shift towards a value-based contracting model whereby ACO’s get compensated by a fixed dollar amount from the insurance company for each patient whom they are serving.

So, if an ACO is responsible for 5000 Medicare patients, then the ACO receives a monthly payment of 5000 x $(payer rate).  Within that budget the ACO is then responsible for delivering and coordinating care to all of these patients.  They then get measured on the quality of care delivered, the results achieved and the actual cost ($$) of delivering service.  Furthermore, if the ACO can demonstrate that they are driving the cost to deliver care down and keeping their population healthy then there are incentives that will pay the providers more.

Although John is going to describe this in more detail and give us information on how to start transitioning to this model, the important thing to note is the direction healthcare is headed.  This important trend is going to affect every provider in the healthcare system.

To give you some perspective, at the end of 2010 there were 41 ACOs.  At the end of 2013 the number rose over 1,400% to 606.  This number will to continue to rise in 2014.

Aside from getting a better understanding of what value-based contracting is, some of the things that John wants you to leave with are:

  • Identify if you have a strategy in place to be able to move to a value based care model
    • If so, clearly understand where you are in that strategy
    • If not, understand how to assess yourself and put a plan in place
    • A better understanding of areas in your practice that would need to change in order to accommodate value-based contract requirements

John highly encourages your interaction so please ask questions during the meeting.  He also says that there is some great information and tools out there for you to check out:

As ever, this is going to be a very informative session so make sure you register today.  Feel free to share this with your peers and colleagues and invite them to attend as well.  North Fulton MGMA

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Richard Stokes: As the Director of Sales for Network 1, Richard identifies “future” clients that can benefit from the support of an experienced, outsourced IT team. He helps clients and prospects find technology solutions they need to achieve better productivity and efficiency so they can focus on making money and growing their businesses.

Network 1 designs, builds and supports the IT you need to run your business more securely, productively and successfully. Whether you want to outsource all of your IT needs to a reliable, responsive, service-oriented company, or need to supplement the work of your internal IT staff, we will carefully evaluate where you are now, discuss where you want to go and implement and support a plan to get you there with as little interruption as possible.

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