What health plans need to know about Medicare Advantage financial reconciliation
What health plans need to know about Medicare Advantage financial reconciliation.
Health systems in many countries in the Middle East are currently undergoing a radical transformation as they strive to balance quality, cost and access to healthcare. Healthcare spending continues to increase, driven by the region’s growing healthcare consumerism, ageing populations and increasing prevalence of chronic conditions and lifestyle diseases such as diabetes and hypertension. According to one industry overview, the current healthcare expenditure of Gulf Cooperation Council (GCC) nations, which include Oman, Kuwait, Saudi Arabia, the United Arab Emirates, Bahrain and Qatar, is expected to reach US$104.6 billion in 2022, up from an estimated US$76.1 billion in 2017. 1
As providers, payers and patients alike recognise that the current healthcare financing framework–a predominantly fee-for-service environment--is not sustainable, a key focus for reform in the region is developing high value provider reimbursement models that tie healthcare spending to the achievement of the best possible health outcomes. A value-based healthcare system encourages the efficiency of hospitals and clinics in a way that optimises the services they provide. By tying payment to the value of services provided instead of just the quantity of services, value-based payment incentivises providers to give the best possible care to patients in order to maximise health outcomes, patient safety, patient experience and efficiency.
Countries like the United Arab Emirates and the Kingdom of Saudi Arabia have recognised this need and are leading the region’s initiatives to adopt value-based healthcare. As an example, the Saudi Arabia Ministry of Health explicitly articulates its importance in its Health Sector Transformation Strategy, part of the country’s Vision 2030 plan.2 However, the successful adoption of value-based care in the Middle East faces important challenges. We outline six of these challenges below.
Establishing an effective regulatory structure—in other words, determining who sets the rules in the healthcare industry and what those rules are—is a necessary first step to adopting a value-based system. A regulatory structure underpins the implementation of value-based healthcare, from early efforts to develop data and coding standardisation all the way to the ultimate goal of linking the provider reimbursement structure to healthcare value. The regulation of health providers and payers has a critical facilitative and governance role in the implementation of value-based healthcare in any market.
In contrast to nations like the United Kingdom (which relies mainly on a public delivery and financing system) or the United States (which is primarily a private care delivery system with a combination of public and private financing), many countries in the Middle East currently have a dual public and private system. A high proportion of expatriates are covered by private health insurance, mostly paid for by their employers as part of their residence visa requirements, while citizens are mainly covered by the government through the public healthcare system. This often leads to different regulations and standards for public and private healthcare payers and providers.
A key role of regulation in the movement toward value-based healthcare is fostering a collaborative, unified approach among all stakeholders. Generally, regulators in the Middle East region have a strong influence on the market because they can introduce new requirements fairly quickly, without lengthy industry engagement periods. In this region, the regulators, payers and providers often express a strong interest in replicating the best value-oriented healthcare practices from around the world, and this represents an opportunity as well as a challenge.
On one hand, healthcare regulators in countries like the United Arab Emirates and Saudi Arabia can adopt best practices from around the globe. However, it is important that the potential of any new initiative be evaluated in the local context, which may differ substantially from other regions where the approach was successful. A framework to engage stakeholders requires an effective regulatory leadership for an active transformation process that runs from initiation through planning to implementation. This journey must incorporate critical factors such as mandates for strategic planning, monitoring and evaluation, change incentives for payers and providers, and safeguards for patient interests in the change process.
In addition to regulation, a value-based healthcare system relies on the standardisation of data and clinical coding for diagnoses, services and care that are collected during the usual course of business. When using data collected through administrative claims to guide the transformation, standardisation creates a common taxonomy about what healthcare services are being provided to which patients.
In some parts of the Middle East, the absence of such data and coding standardisation currently limits the substantive analysis that is necessary to measure and then reward value, such as assessing quality or comparing the achievement of standards across providers. Without regulation mandating standardisation, many hospitals rely on their own in-house systems and service descriptions when reporting information on claims, resulting in a lack of a common, unified language in the market. As a result, insurers must deal with unstructured and unstandardised information, which disrupts their ability to profile providers, compare prices or develop meaningful benchmarks to assess the quality of care.
Markets can consider a variety of well-established coding systems when evaluating the best option to meet their needs. It is important that the selection of any coding system allows for an adequate description of services provided to support the intended reimbursement mechanism.
Furthermore, local human resources and systems capacities must be available (or developed) to support widespread implementation of the selected system across providers so that everyone can progress together toward a value-based system.
In addition to standardisation of data, accurate, consistent and complete data is essential to a value-based healthcare system. Markets moving toward such a system must develop specifications for a minimum data set, which ensures that the required demographic, administrative claims and clinical information is captured over a sufficient time period in order to measure and compare the quality of care and severity of health conditions across relevant entities, such as clinics, hospitals and geographic regions.
In some parts of the Middle East, such accuracy, consistency and completeness of data is often an elusive goal. Many small providers lack electronic medical records (EMRs), and are not incentivised or mandated to provide claims information for basic services such as consultations, blood tests or other services in a standardised format. While the reporting of ICD-10 diagnosis codes to provide diagnosis information for health services provided is now mostly required throughout the region, the coding of surgical services on claims remains largely non-standardised.
In addition, fragmented information technology infrastructure can often limit the automation of data, making it less easily accessible. Providers in the region often expend substantial time and effort on manually transcribing and recording data to submit to insurers for payment. With a more automated and standardised system of collating data, that time could be spent analysing and assessing the quality of care provided to patients, which could translate into better health outcomes without an increase in cost.
Complete, standardised and accurate data is required for a sufficient time period in order to capture the current experience accurately and identify data-driven priorities for change. This data can support meaningful analysis of a baseline period prior to the implementation of value-based payment incentives intended to drive movement toward high value care. Quality data helps set an important baseline and reference point for comparison, monitoring and evaluation of changes in quality in response to transformation initiatives.
In a successful value-based healthcare system, payments to providers are not only aligned with the quality of patient health outcomes, but also with the provider’s necessary resource costs for providing services that are high value. This means establishing a provider classification system that takes into account factors such as geographic location (rural versus urban), infrastructure (e.g., specialty resources), and the severity of health conditions in the population served by the provider, all of which may have an impact on a provider’s baseline resource costs. For example, while the cost of labour is generally higher in urban markets, a small hospital in a rural area that provides important access to people in the local community without other available providers may have a higher unit cost than a larger hospital located in a city where many other providers are located.
Ideally, a provider classification system should allow provider payment to be linked to:
In the Middle East today, the absence of such a provider classification system limits the payers’ ability to negotiate prices with healthcare providers based on their necessary resource costs or quality performance (such as clinical outcomes). Instead, tariffs are often driven by the brand name or popularity of that provider in the market. Many providers in the region aspire to international accreditation, whether from Canada, Australia, the United States or elsewhere. However, while such accreditation might take into account a provider’s infrastructure and processes, it does not necessarily reflect the quality of care as reflected in clinical outcomes or the provider’s efficiency. Accreditation alone falls short as a measure of the overall value of a provider’s care to patients.
To sustain a value-based healthcare system, a robust framework must be established to evaluate and classify providers’ performance in four key quality domains:
Creating a successful quality outcomes framework requires setting priorities among these quality domains and determining what measures will be used to evaluate performance across providers. Relevant quality measures may already exist from work in other countries or measures of local importance may need to be developed. Quality measures must be risk adjusted for the severity of patients’ health conditions in order to provide a fair comparison of providers against the quality that can be achieved for the patients they care for. Administrative claims data and survey instruments can be useful tools, but they must also be standardised across all providers in order to yield information that can be used for effective quality measurement. In addition, requiring the submission of additional data beyond claims poses an administrative burden on providers that must be considered and may require the development and implementation of other data systems.
In the Middle East, just as there is little standardisation of data and coding, there is no standard unified measurement of quality in these domains. Accreditation bodies may require the ongoing reporting of certain quality issues, particularly those related to patient safety, but those reports are not shared externally. Hospitals and other providers currently have their own in-house systems for evaluating their processes and quality and addressing concerns. However, their assessment of quality remains within the organisation itself and is not shared externally or compared with the performance of other providers.
The ultimate goal for a reimbursement structure within a value-based healthcare system is to align payments to the quality of services provided, both to incentivise and reward those providers that provide high quality, efficient services and to penalise providers for low quality services, including poor clinical outcomes and inefficiency. Transitioning from primarily fee-for-service to comprehensive value-based payment requires developing and adopting new payment frameworks that continuously evolve over time as data collection, quality performance measurement and payment incentives are refined during implementation.
One approach that may serve as a springboard to broad, effective value-based payment is a provider reimbursement system that makes a single payment for a bundle of services related to care for a patient’s condition, for a specified time period. This payment methodology incentivises efficiency in the delivery of that care and facilitates measurement of the outcomes of the care. Payment for an inpatient hospitalisation event through a single bundled payment for a diagnosis related group (DRG), similar to Medicare’s payment methodology for hospital services in the United States, 3 is one example of a provider reimbursement system aligned with value. In a DRG system, providers are paid a single, fixed amount for the hospitalisation based on a patient’s diagnosis or major surgery performed, rather than based on the number of days in the hospital or on the individual hospital and physician services the patient receives during the stay. Financial incentives to reward good clinical outcomes, such as reduced readmissions following hospital discharge, can be incorporated into the payment methodology to capture additional quality domains beyond efficiency.
Another example of a value-based payment approach is capitation, which pays providers a fixed amount per enrolled patient per unit of time to provide all care for the patient, whether or not that patient receives care and irrespective of the care that is actually provided during the capitation time period. The capitation payment may be varied based on the provider’s achievement of high quality care in the domains of clinical outcomes, patient safety and patient satisfaction. In both of these examples, which incentivise reducing the cost of care by eliminating waste from unnecessary services, safeguards to ensure that high quality care is provided are important in order to guard against skimping on necessary care or any other adverse impact on quality under a DRG or capitation-based payment approach.
Abu Dhabi implemented a DRG system a number of years ago, while Dubai started one recently. There is some use of capitation in the region, although the regulatory environment is generally lagging behind the industry’s initiatives. However, without an effective regulatory system, standardised data and coding, and the other prerequisites for a value-based healthcare system, any payer reimbursement mechanism cannot accurately and fairly reflect the underlying provider costs and quality performance.
When it comes to healthcare, it is not just about how much money is spent—it is also about the health of the population. Currently there is a clear need and desire in the Middle East to pay providers for the healthcare value they deliver through provider reimbursement reform that incentivises meaningful reductions in wasteful spending and improvement in healthcare quality. As the region rides this wave of transformation, the Middle East is uniquely positioned to implement global healthcare approaches that have proven successful. As a result, there is great potential for the Middle East to adopt an effective and efficient value based healthcare system, should it be able to successfully address some the challenges alluded to in this article.
12018 GCC Healthcare Industry Report by Alpen Capital. ArabHealthOnline. Retrieved on November 6, 2019, from https://www.arabhealthonline.com/content/dam/Informa/arabhealthonline/en/downloads/AH19_INDUSTRY_OVERVIEW_v3.pdf.
2KSA Ministry of Health, Health Sector Transformation Strategy, March 2017. Retrieved on November 8, 2019, from https://www.moh.gov.sa/en/Ministry/vro/Documents/Healthcare-Transformation-Strategy.pdf.
3MS-DRG Classifications and Software, Centers for Medicare and Medicaid Services website. Retrieved on November 8, 2019, from https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software.html.