The early half of 2020 is going to have long-term effects on the cost of healthcare. Beyond treating COVID-19 patients, volume volatility, loss of clinics and practices due to permanent closures, and lack of chronic condition management are each going to contribute to the aftermath. What’s becoming evident is the stabilizing impact of capitated payments and a robust risk adjustment program to help payer and provider organizations stay afloat and offer the resources they need to expand quality of care and access moving forward.
It’s well known that the first half of 2020 was hit with reductions in cost and revenue (particularly under fee-for-service) due to patient volume shifts. Much of this is the result of the necessary protections of shelter-in-place orders and guidance to avoid healthcare settings to mitigate infection risk. This has left departments and organizations directly addressing patients infected with the novel coronavirus operating at a high capacity, while others are facing furloughs or closure due to lack of patients.
The expansion of risk adjustment to telemedicine by CMS has gone a long way to enabling remote care. For the patients that can be identified and reached remotely, many chronic conditions can be treated, documented and reconfirmed (or updated), impacting risk score and therefore reimbursement. In some cases, conditions can be diagnosed through telemedicine as well. Despite this progress, telemedicine is not a replacement for traditional care. And as encounter volumes rebound, providers are facing new issues:
- First, patients who are generally healthy but have avoided seeking treatment will not just rebound, but temporarily spike care demand.
- Second, patients with chronic conditions that require ongoing management that have not had easy access to their clinicians have often worsened.
- Finally, the total number of clinicians and clinics to treat those patients has reduced, whether from ongoing furloughs or from permanent closure.
Setting aside that COVID-19 is still ongoing, the best way forward to mitigating what may well be a catastrophic spike in volume as restrictions lift is proactive outreach. As the goal of shelter-in-place was to “flatten the curve” of COVID-19 infections to avoid over-taxing hospital resources, the same approach can be applied to returning patient volumes. Health Fidelity can provide a free claims-based report to our clients that identifies patients treatable through telehealth, as well as provide instructions on how to build your own. This same approach can be applied to any other modalities of care that can reach these patients before they seek treatment.
This is not just a concern for providers, either. At the moment, payers are experiencing a windfall of sorts; costs are down across the board due to depressed patient volumes. However, the rebound in costs will outweigh any short-term savings. At the same time, organizations already heavily engaged in treating covered populations through value-based care with strong risk adjustment strategies are in a more stable scenario, the payment model insulates them from the volatility that has marked fee-for-service in early 2020.
This is why effective, thorough risk adjustment is critical. When patients can safely return, or if they come in under emergent conditions, any new complexities to conditions introduced due to lapse in care are captured and adjusted at a new, appropriately higher level to account for increase in cost. This impacts the resources available to continue to provide care, but also, under the right risk adjustment program, ensures the patient record is accurate and keeps clinicians informed of the patient’s full health status at future visits. Risk adjustment is often regarded as purely a revenue and reimbursement lever, and while that’s a significant element, ultimately it is also about how sick a patient is, and what is being done to provide care. The capture of risk means the recognition of, and effort to help, patients with chronic conditions.
Ultimately, the lesson is clear: as care patterns continue to shift, and we see new utilization patterns, the stability of capitation and the revenue insulation provided by thorough, effective risk adjustment are key to thriving. And if the ultimate goal is to fund and deliver care, the disruptions of 2020 are proof positive of their ability to do precisely that.