Five Ways to Contain Costs Without Spending a Fortune
It’s clear that providers continue to express frustration about federal regulations, especially MACRA. According to a recent MGMA survey, about 82 percent of leaders from 750 group practices viewed MACRA’s Quality Payment Program as “very” or “extremely” burdensome.1 Many providers go so far as to say they would rather sell their practice than deal with the administrative burden of MACRA, according to research by Black Book.2 Yet for providers who stick to a plan of action, positive payment adjustments are not only achievable, but may be less burdensome than they realize.
The only measure that requires no special data submission is the Cost Category, which is based on claims data. Yet, many providers ignore it, believing it has little or no impact based on a cursory review. Consider that of the four percent at risk today, 20 percent is based on cost and seven percent is the maximum penalty for poor scores. Therefore, even with low MIPS scores, only 0.8 percent of a provider’s revenue is at risk. In addition, there are no specific measures for how to improve cost, so providers are unsure what action to take. Hence, without a plan and with very little downside risk, most providers are not focusing on cost. However, by making cost a priority, providers have an opportunity to grab low-hanging fruit, resulting in performance payments. What’s more, they will position themselves for shared savings contracts and be well prepared as the weight for cost performance increases over time for a broader set of resource use measures.
Five key cost containment areas give providers the means to achieve results in the short term and continue to build upon them over time. Most providers will get all the results they need by focusing on only one or two of these areas.
1. Utilization. The fundamental question for utilization is: Am I using the best, most cost-effective resources for each patient? Although patients typically believe that more activity – tests, scans, procedures – directly correlates to care quality, the opposite is often true. Providers know the difference and can have a big impact on how costly resources are used. For example, what is the cost of a scan at a hospital versus a free-standing imaging center? For patients with the same condition, can we reduce care variation by standardizing care along the optimal path and looking at all aspects, including supplies, labs, drugs, radiology, etc.? Small changes in utilization can have a significant impact on cost while increasing care quality.
2. Preventable Emergency Department (ED) Visits and Admissions. Providers know that saving half a day off a hospital stay delivers cost savings, but preventing that stay altogether is where the real money is. For example, provider care teams that work closely with key patient populations, such as asthmatics and diabetics, to actively manage their care can prevent ED visits and hospital stays. Taking a holistic approach to key populations includes managing both physical and psychosocial needs from proactive care monitoring to diet and exercise to depression management, which can dramatically reduce the number of costly emergent events.
3. Referrals. Referral management and place of service go hand in hand. First, providers will reduce costs immediately by simply referring within their network where the most favorable cost and quality metrics have already been negotiated. For example, a healthcare system may have a contract with a skilled nursing facility that consistently meets contracted quality metrics, such as preventing all-too-common UTIs, at a discounted price, making it the best choice from both a cost and quality perspective. With small changes to workflows, providers can assure they refer in network and reduce costs.
4. Place of Service (POS). Closely related to referral management is selecting the most cost-effective place of service. Because a hospital is always the most expensive, routing patients to imaging centers for MRIs and performing minor procedures in ambulatory surgery centers will reduce costs and is often more convenient for patients. As with referrals, changes in workflows to identify the best place of service can have a big impact on cost and patient satisfaction.
5. Frequent ED Visits. Reducing the number of people who use emergency departments in place of primary care was one of the key targets of the Affordable Care Act. When people are insured, they are more likely to be connected with a primary care provider and more likely to seek routine and preventive care in the appropriate setting. From a cost perspective, providers can have an impact by asking, “How can we guide our patients better?” By assessing patient populations, providers can identify patients and match them with care services, such as proactive disease management, hospice care, or social services to reduce the number of ED visits, prevent overtreatment and improve care outcomes.
Recommendation for Providers
As MACRA continues to roll out in 2018, providers are encouraged to take a long-term view and work backwards by focusing on a key area, such as cost containment, each year. Especially as shared savings contracts become more prevalent, cost savings compounds quickly and has a big impact on the bottom line. With focused effort, providers can minimize the administrative burden while achieving results in the short term that continue to pay dividends year after year.
1 MGMA Releases 2017 Regulatory Burden Survey: Medicare's New MIPS Program Tops List, Medical Group Management Association, August 9, 2017.
2 10 Top MACRA Trends Challenging Providers, Health Data Management, May 9, 2017.