Most healthcare providers not ready to handle value-based payments, KPMG survey shows

The vast majority of U.S. healthcare providers are unprepared for conversion to new payment models, according to a recent survey by KPMG’s Healthcare & Life Sciences Practice.

Only 15 percent of the 164 healthcare professionals surveyed said their finance departments have the “very sophisticated” capabilities required to support capitation, bundled payments, and quality-based payments. As the healthcare industry transitions away from the traditional fee-for-service reimbursement model, providers are increasingly reliant on these emerging payment methods.

Another 61 percent reported that their finance departments are “gathering tools and conducting analysis about getting their finance function ready for this move,” KPMG said in a press release announcing the survey results.

Meanwhile, 13 percent of respondents to the KPMG survey said the capacity of their finance departments for managing risk and accounting procedures for emerging payment options is “undeveloped.”

The Centers for Medicare & Medicaid Services has established a target for healthcare providers to link 90 percent of Medicare payments to value- or quality-based reimbursement methods by 2018. Given the results of the May survey – taken during a KPMG webcast on alternative payment arrangements – many providers could lose revenue by being unprepared for the transition.

“It has never been more crucial for providers to prepare their finance departments to address the demands that new care delivery models, such as Accountable Care Organizations and alternative payment arrangements, will present as the industry moves away from fee-for-service reimbursement mechanisms,” said Joe Kuehn, an advisory partner at KPMG’s Healthcare & Life Sciences Practice. “Medicare, Medicaid, and commercial health plans are all pushing toward paying hospitals and physicians for value, effectively pushing financial risk upon the providers.”

To effectively manage these transitional challenges, Kuehn said, healthcare finance departments will need “better systems to measure performance against established targets, including the cost and quality of care.”

One glimmer of hope: Only 4 percent of survey respondents “view their senior management as uninvolved in addressing alternate payment arrangements,” KPMG said.

To prepare for value-based reimbursement models, providers are pursuing several courses of action. Twenty percent of respondents said their organizations are “measuring risk and accounting for it in their fees,” while 23 percent “are using data and analytics to measure and improve efficiency and quality,” KPMG reported.  Other preparation activities include revamping finance and accounting functions and updating contracts.

Many respondents also indicated that their finance departments need predictive modeling (30 percent) and analytical tools (27 percent) to successfully make the transition. 

“Data and analytic tools are an important component for improving the finance function’s effectiveness, especially since there are so many variables that need to be addressed in the delivery of care,” KPMP Managing Director Mark Jamilkowski said. “The tools available now can take that unstructured information from patient records, billing, and sources outside the provider organization that can help provide meaningful context around measuring healthcare quality and overall costs.”

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