Reporting Framework for Value Based Care
Learn how a provider's relative performance, or 'value', can be evaluated through three key components in an equation: quality, efficiency, and cost.
One area of data management within the healthcare industry that is getting new emphasis and interest from regulators is a focus on encounter data. Today, the majority of Americans receiving healthcare services funded through the Medicaid program are enrolled in some form of managed care. Under this scheme, states contract with MCOs that take on responsibility for providing Medicaid services in exchange for a fixed capitation payment. This approach is in contrast to the traditional fee-for-service (FFS) program where providers submit claims directly to the state for payment.
It is widely recognized that the FFS approach to provider payment creates perverse incentives for delivery of unnecessary services and uncoordinated care. Medicaid managed care gets away from this by providing a fixed capitation amount to the Medicaid MCOs, giving them incentives to more effectively manage care. The MCOs often pass along those same incentives by paying certain providers using capitation as well.
Notwithstanding the undesirable incentives that FFS creates, one area where FFS excels is the collection of timely and complete data about the services rendered to each patient and information about the price of those services. Because FFS claims are essentially invoices, this approach offers strong incentives for providers to submit claims in a timely manner (for timely payment) and to ensure those claims are a complete reflection of services rendered (for complete payment).
Under capitation, the payment mechanism is decoupled from the data collection process. In lieu of claims, MCOs must collect encounter data from their providers and then submit that data to the states. Unfortunately, this takes away the direct financial incentives providers have for timely and complete data submission. As a result, many states have struggled to collect credible information about the services delivered under Medicaid managed care. Such data is essential for important activities such as rate setting and program management.
Viewing submission of encounter data as an MCO function, many states have implemented strict contractual requirements coupled with tough performance guarantees and financial penalties to motivate MCOs to improve the quality and timeliness of the encounter data they submit. Failure to perform can have significant consequences for MCOs including financial penalties, corrective action plans, bad press, and even contract termination. Based on our experience working with states and MCOs to help improve encounter data quality, we have identified a few things that can help improve the results:
As states have made the transition from FFS to managed Medicaid, the quality of utilization and cost data they receive has eroded. With the majority of Medicaid beneficiaries today receiving healthcare services through managed care plans, this makes it more difficult for states to perform effective oversight of these programs. Multiple encounter data improvement initiatives have emerged as this has become an area of focus for both states and the Federal government. MCOs should expect this scrutiny to continue, but should also recognize that through a systematic approach to managing and reconciling data, and a collaborative posture with their state partners, many of these challenges can be overcome.