Practice Makes Perfect: Turn risk into opportunity under new reimbursement models

In June 2014, the Medical Group Management Association released the results of a questionnaire that ranked members' most pressing practice-management challenges. In this edition of “Practice Makes Perfect,” we'll tackle No. 3 on that list: Preparing for reimbursement models that place a greater share of financial risks on the practice.

Alternative payment models come in different forms, such as bundled payments or accountable care organizations. Practices and other organizations preparing for reimbursement models that take on a greater share of financial risk should consider their patient population and their ability to take on risk, and experiment with their current payer mix.

If a practice or organization has not yet engaged in a risk-based contract, it's helpful to determine what constitutes “risk.” Risk-based contracts imply that there may be losses for payers or providers depending on how the contract is written. Medical practices and organizations that have the capacity to collect data and identify risk within their patient populations have an edge. Does your organization serve a large diabetic population? What percentage of the patient base does Medicare cover? Knowing and tracking payer-mix changes will help predict how risk-based contracts might affect certain segments of patients.

In my experience working with physician practices and other healthcare organizations, risk-based contracts sometimes get a bad reputation. Assess the risk that the organization incurs on a regular basis that may not always be acknowledged. Taking risk allows the organization to step up and take credit and, if constructed properly, get paid for managing a patient population's health. Organizations in the federal government's Pioneer ACO model had to find ways to communicate differently, staff differently and track their patients' progress differently. While this isn't necessarily a bad thing, taking on risk when the organization isn't ready could lead to problems that would be difficult to solve after the contract is signed. Therefore, make sure when you take on risk-based contracting that key personnel are included and are communicating regularly.

It is important to have frequent discussions with practice leaders about future scenarios. Why? The responsibility for care falls on everyone in the organization. Physicians, administrators, managers, clinical staff and billing departments all have a stake in taking care of the patient at some point along the continuum of care. Engage in some modeling of how the practice and some of its processes would change today if half of its reimbursement changed to risk- or value-based reimbursement. What data or information would the practice need to collect that isn't already being gathered?

Although this might seem like a futile exercise, I believe that the most prepared organizations are those that are having these scenario-based conversations.

Preparing for reimbursement models that place a greater share of financial risk on the practice requires a comprehensive understanding of the patient population and the organizational threshold in managing risk. With the rate at which the healthcare reimbursement environment is changing, it makes good sense to routinely take the steps involved in understanding how risk might affect the organization.

Dea Robinson is director of consulting at MGMA.