Preparing for Value-based Reimbursement: Steps Anesthesiologists Can Take

Fee-for-service in 2015 continued to account for the vast majority of reimbursements paid to anesthesia clients of Change Healthcare. But, as momentum for payment reform continues to build, it is anticipated that value-based reimbursement will become increasingly prevalent, if not dominant, in the years ahead.

To prepare for this shift, anesthesiologists should concentrate on developing and documenting evidence-based quality outcomes, finding ways to further reduce costs and bringing new value to the system. Achieving and sustaining these goals will help practices adapt more quickly in the emerging value-based paradigm and reduce the risk of being replaced.

Transitioning to new value-based reimbursement models

The most visible value-based reimbursement mechanisms affecting anesthesiology for now continue to involve public payers, most notably Medicare. Last year, Health and Human Services announced a goal of tying 50% of Medicare reimbursements to quality models such as accountable care organizations, bundled payment arrangements and medical homes by 2018¹.

The Physician Quality Reporting System (PQRS), a long-standing pay-for-reporting initiative, requires that anesthesiologists report quality measures to avoid financial penalties. PQRS’ first such negative payment adjustment is occurring this year and will be based on 2014 provider filings². PQRS ultimately will be absorbed into the Merit-based Incentive Payment System (MIPS), which is being developed as part of the Medicare Access and CHIP Reauthorization Act (MACRA) of 2015³. A final rule on MIPS is expected in the early fall of 2016⁴.

In the MIPS environment, provider performance will be rewarded or penalized based on assessments across four categories: Quality, Cost, Advancing Care Information and Clinical Practice Improvement Activities5.

On the commercial side, approximately 38% of payers recently reported that they were contracting through value-based purchasing arrangements, according to a survey by the Health Care Transformation Task Force, an industry consortium working to accelerate payment reform6. Based on our experience at Change Healthcare, one of the most popular models for value-based contracting in the commercial sector continues to be payment bundling for the patient’s entire episode of care. The bundled payment methodology, which is frequently used by Accountable Care Organizations (ACOs) as well as new CMS pilot programs, apportions appropriate payment to all providers involved in the care event.

Achieving the financial incentives available with payment bundling by keeping costs below a pre-designated amount requires significant coordination between providers. All parties must work together with a high level of transparency to reduce costs while sustaining quality.

What can anesthesiologists do?

Adjusting to the value-based environment will require that practices become more pro-active across the care continuum. Here are three steps your group can take to play a more a prominent role in clinical operations and to ensure that you’re compensated fairly:

1. Managing the OR

   Anesthesiology groups can strengthen their positions by expanding their clinical and administrative roles in the hospital setting. This can involve managing care coordination and overseeing the surgical event, from early pre-assessment to post-operative care and follow-up. By focusing on streamlining the process, groups can minimize OR downtime, generate more consistent throughput and strengthen quality and efficiency. Anesthesia groups are likewise well-suited to help reduce costs through selection and utilization of medical equipment, supplies and medications.

2. Improving Patient and Provider Satisfaction

   Anesthesiologists can contribute to quality assurance by tracking surgical outcomes and can be an important resource for improving patient satisfaction by helping patients recover faster with less post-operative pain. Measuring and documenting patient and surgeon satisfaction, OR turnaround time, patient outcomes, best practices and other factors represents yet another opportunity. Assuming these responsibilities will not only to help achieve quality reporting requirements, but also demonstrate the group’s value and track record to the hospital and to fellow clinicians.

3. Understanding Revenue Requirements

   When it comes to negotiating value-based reimbursement contracts, it is important that anesthesia groups fully understand their historical reimbursement in order to get a fair piece of the bundled payment. A key benchmark is fee-for-service equivalent-per-case. Essentially, a practice needs to know its historical case reimbursement, both weighted for the entire practice, and by payer, for each case type. The objective is to negotiate equivalent reimbursement from a bundled payment agreement. Agreements should include provisions that ensure that any reimbursement adjustments, either up or down, are equally shared by all participating clinicians.

A seat at the table

As healthcare reform and value-based reimbursement have gained prominence in recent years, anesthesia groups too often have found themselves on the outside looking in. Typically, the focus has been on primary care physicians, outpatient care and surgical specialists.

It is increasingly clear that anesthesiologists have a unique role to play in the value-based system. They’re optimally positioned to manage perioperative care and can also be highly effective in controlling costs, ensuring quality and overseeing reporting. For these reasons, it is incumbent upon all anesthesiology groups to get in the game. Look for opportunities to create and demonstrate value: Not just for your group, but for patients, peers and your provider organization as a whole.

¹“Better, Smarter, Healthier: In historic announcement, HHS sets clear goals and timeline for shifting Medicare reimbursements from volume to value,” press release, Department of Health and Human Services, Jan. 26, 2015,
²“Payment Adjustment Information,” fact sheet, Centers for Medicare & Medicaid Services
³“Quality Payment Program: Delivery System Reform, Medicare Payment Reform, & MACRA,” fact sheet, CMS
⁴“The Medicare Access & CHIP Reauthorization Act of 2015 – Path to Value,” power point, p. 21, CMS
⁵“Quality Payment Program: Delivery System Reform, Medicare Payment Reform, & MACRA,” fact sheet, CMS
⁶“Health Care Transformation Task Force Reports Increase in Value-Based Payments,” press release, Health Care Transformation Task Force, April 12, 2016