Quality Data, Cost of Care Crucial to VBID Payer Negotiations

Having a detailed lens into quality metrics and service costs is a key for hospices that are searching for sustainable value-based payment pathways.

Quality and cost data are important pieces to bring to negotiating tables with payers in value-based reimbursement, according to Joe Calcutt, CFO of Liberty Healthcare Management.

Hospices that can demonstrate the ability to financially and operationally weather changes in an evolving reimbursement climate have a leg up on competitors in the value-based landscape, Calcutt said at the National Association of Home Care & Hospice’s (NAHC) Financial Management Conference in New Orleans.

“You’ve got to have both finance and you’ve got to have your operations at the table, because you’ve got to figure it out together,” Calcutt said during the conference. “It takes everybody to make this work nowadays. If you really want to build relationships with managed care players, they need to understand you and you need to understand what they’re doing. You’re trying to get into something where it works for both of you. If you get in a relationship and you understand them, then you’ve got a chance to craft something they’re interested in and you aren’t just a commodity on the other side.

Agencies that “do the best job” in the value-based landscape are those that include clinical capacity around patient care and related operational expenses in their cost delivery structures, Calcutt indicated. Two types of data are particularly crucial, the total cost of care and patient outcomes, he added.

These data can help hospices develop lasting payer partnerships in an evolving value-based reimbursement climate.

Hospices have been inching closer to value-based care, beginning with the value-based insurance design (VBID) model demonstration.

Originally slated to complete next year, the U.S. Centers for Medicare & Medicaid Services (CMS) recently expanded the hospice component through 2030. CMS recently announced that patients of participating providers will be able to receive curative treatments alongside hospice care, and that the agency would permit health plans to further restrict the utilization of out-of-network providers.

These changes may have hospice providers taking different approaches when entering value-based payment contracts, including how they present cost data analysis to payers as well as the extent to which they can demonstrate their ability to take on risk while providing quality care, according to Calcutt

When negotiating with payers, providers should have a plan in place to demonstrate how they cover those expenses, according to Nick Seabrook, managing principal and founder SimiTree.

“It’s important to really understand level-setting and know what your contract [terms] are,” Seabrook said. “Level-setting what those provisions are for renewals and also when you can negotiate those rates. [It’s] looking at those different care levels from a margin standpoint and identifying what that target is, and then looking at your cost-per-visit either around high, medium or low levels to figure out the threshold.”

When evaluating those contracts, providers should pay attention to the target reimbursement rate and consider ways to reduce costs, he said.

Hospices that have a firm grip on quality metrics and cost fluctuations will have a leg up in the value-based payment arena, Seabrook stated.

“If we look at some of the performance benchmarks, this really illustrates why it’s so important to make sure that you’re getting the best rates you possibly can get from Medicare Advantage and why it’s so important to make sure you have adequate process and controls in place for this to be prepared in contracting,” he said at the conference.