Recent strategy statements from the Centers for Medicare & Medicaid Services (CMS) make it clear that Medicare will hold providers financially accountable for patients’ care costs.

Until now, CMS value-based payment models have been soft on cost control. For shared savings accountable care organizations, the CMS capped total risk and allowed providers to take time in accepting downside risk. No more. We can expect to see capitation and episodic payments in every value-based care payment model.

ACOs fought hard to maintain options for no downside risk for providers, from concern over revenue impact. The fact is that to keep financially viable under risk-based reimbursement, ACOs and specialty organizations must enlist providers in efforts to control costs of care by managing patient health, stalling disease progression and involving patients in improvement. A big lift for ACOs and organizations, this requires leadership, physician engagement and, most important, trusted clinical and cost data. It also requires collaboration with payers, which have essential cost data.

Providers need payers to solve their cost blindness
 

There is a historic standoff between payers and providers on distributing complete digital cost data—patient claims—to providers at risk for services. Apart from the CMS, which provides full claims detail to providers in payment models, there is no such arrangement with commercial insurers. Instead, there is resistance by insurers who fear that providers will use the data to identify competitors’ rates and then insist on higher payments.

Lack of claims data limits providers’ view of all services outside their walls. Their blindness to outside services and diagnoses endangers patients and disables providers from tackling costs and providing coordinated care. They miss cost drivers, utilization, complications and comorbidities.

Both clinical and cost data are needed to create specialized analytics that view cost and outcomes together. The clinical data come from aggregated EHR data. Providers have advanced in the aggregation of disparate EHR data sources, making it possible to better measure patient population health status, assign risk and determine interventions. The broad adoption of EHRs and mandatory quality reporting has increased adoption of digital health records throughout the health systems and fortified providers with high-quality clinical data. This empowers providers to use analytics and data-driven solutions. Even small ACOs are ramping up their data aggregation.

But what they don’t know about their patients’ healthcare disables them from tackling cost along with quality. Cost and services data come from payer claims and complete the picture of a patient by including services from all providers, facilities and ancillary providers. Together, clinical and claims sources enable creation of value-based care episodes by condition, treatment or procedure. 

Organizations using these analytics can illuminate why one patient’s procedure cost is higher than another and explore the data revealing causes. For example, comparison of knee replacement costs through value-based care episodes could reveal higher infections or repeat procedures, pushing total cost higher and exposing quality issues to investigate. Use of this data with specialists can help such groups adopt better procedures for control infection rates, have better information prior to surgery and construct improved clinical pathways. Actionable data are the essential tools for reducing cost of care without compromising quality and for collaboration within organizations or between ACOs and specialists.

Economics and practicality require an all-patient approach to value-based care
 

For ACOs or other physician organizations negotiating with commercial health plans, lack of claims data means that 40% to 60% of specialty provider services are unknown for covered patients. The ACO cannot develop an optimal referral network based on performance to help patients find the best cost-effective treatment. For specialists, there are no claims data revealing post-procedure complications nor comorbidities prior to operations. Specialists can’t prevent bad events for those patients because they don’t have all the data, either; they may have performed surgery on a patient with unknown preexisting conditions or risk factors. Under risk arrangements, however, they will still be responsible for any costs over the expected benchmark.

The economics of participating in value-based care and risk-based reimbursement require a big investment from providers. That investment can’t be justified for a single payer, even if that payer is Medicare. At least 50% of primary care practices represent Medicare beneficiaries. But 50%-plus enrollment in Medicare Advantage effectively reduces patient volume under a CMS payment model to 25%. It is unrealistic to expect a practice to make major changes in patient care for a small slide of the practice.

Are there solutions to enable provider-payer collaboration?
 

After years of resisting downside risk, providers can’t avoid future risk payment models. They can, however, collectively ask payers to work out mechanisms to share essential data. Payers who often use dedicated portals to show data need to abandon that approach in the interest of providing digitized, patient-identified claims data to integrate with clinical data and guide cost initiatives.

There are many ways of achieving this outcome. Payers could negotiate the use of bundling certain facility or various provider costs together or work with an outside party to construct methods of masking negotiated rates. There are multiple possibilities for providing essential data while obscuring proprietary or sensitive information. It requires only willingness and creativity to have that conversation and move forward to realize true value-based care. 

Theresa Hush is a healthcare strategist and the CEO and co-founder of Roji Health Intelligence.