Value-Based Payment Engine Component #4 - Episode-Centric Reconciliation

Aver’s value-based payment engine works to take the pain out of bundled payment operation for payers, providing an outsourced solution for the management of episodes of care. It is comprised of  four major components:

  1. Episode determination - identify members that are in episodes based on flexible eligibility criteria and establish a budget based on a tiered or variable risk model.
  2. Concurrent episode monitoring - associate adjudicated claims to episodes and concurrently share episode statuses versus their established budgets with contracted providers.
  3. Quality data collection - collect quality data based contract rules and incorporate it into episode performance and reconciliation calculations.
  4. Episode-centric reconciliation - issue settlement payments upon completion of each episode, rather than reconciling completed episodes 6-12 months at a time.

This post focuses on episode-centric reconciliation. Aver’s value-based payment engine is an end-to-end solution for the administration and operationalization of episodes of care. In order to appreciate the ways in which Aver simplifies the bundled payment experience for both payers and providers, it is important to consider the processes by which payers manage and reconcile bundled payment programs today.

As my colleague, Elaine Daniels, so eloquently put it, payers that manage their bundled payment programs in-house report “a technological, administrative, and financial nightmare.” In short, these payers are trapped in the morass of a manual reconciliation process in which a human reviews all claims received during the episode period, compares those claims to the episode definition and rules, and determines how the episode initiating provider performed relative to the episode budget. As Elaine rightly notes, “This manual process is tedious, costly, and leaves too much room for human error.”


"By balancing across these [quality] dimensions the measures In short, these payers are trapped in the morass of a manual reconciliation process in which a human reviews all claims received during the episode period, compares those claims to the episode definition and rules, and determines how the episode initiating provider performed relative to the episode budget."


Aver already relieves this headache for payers by automating the assignment of claims to an episode and determining the impact of that claim on the episode budget for reconciliation purposes. As I’ve previously mentioned, this takes the headache out of bundled payment administration for payers through an episode reconciliation process that sits outside of, and leaves untouched, a payer’s existing claims adjudication system. While valuable, these insights are several weeks old, offering monthly insight into provider performance on bundled payment contracts. This is not timely enough notification for providers to take action to help a patient who has detoured from the bundled payment care pathway.

Aver’s new approach to processing value-based payments substantially reduces lag time at several points in the operationalization of a bundled payment program, ultimately allowing reconciliation to occur at multiple times throughout a contract year. First, all claims for a member determined to be in an episode of care are sent to Aver by the payer as they are processed. Rather than processing claims in a monthly batch, Aver will apply claims to the episode and deduct payment amounts from the total episode budget on a more frequent basis (eventually approaching real-time). This gives payers and providers concurrent insight into every episode of care. It also means that a mini-reconciliation occurs every time a claim is processed or quality data is shared with Aver -- all parties immediately know how that claim or quality data point affects the episode budget.

Aver Episode Reconciliation.png

In addition, because Aver conducts reconciliation through technology and not a manual process, an episode can “close” many different times. For example, 7 days after the end of the claims runout period, Aver can close the episode and send the payer instructions for issuing a reconciliation payment. If another expected post-acute or unexpected leakage claim comes through, Aver can reopen the episode and send the payer instructions for issuing another adjustment. This reopening when new claims are processed may continue for up to a year, if the payer desires.

Automating the reconciliation process to allow for multiple episode closures also help to solve edge case problems that many payers face. For example, members can submit claims on their own behalf, often for up to a year after receiving care. These claims might be for therapy services, an emergency room visit, or anything else the member pays for out-of-pocket that is related to an episode of care. While members may not often submit claims, many plans find it is critical to apply them to an episode, even if it has already been closed, to ensure accuracy of return on investment calculations for the bundle program. With Aver’s value-based payment engine, Aver and payers can reevaluate the reconciliation continuously, if desired, to determine if claims should be attributed to episodes of care.

The last several posts have laid out the four main components of Aver’s value-based payment engine: episode determination, concurrent episode monitoring, quality data collection, and this post on episode-centric reconciliation. Using this payment engine, Aver is solving the problems payers face when they try to operationalize value-based contracts using legacy claims adjudication systems designed for fee-for-service payment. Plans today face unsustainable administrative costs of manually implementing value-based reimbursement as the primary strategy to contain medical costs and improve quality.

Aver’s value-based payment engine provides an automated, fully-outsourced solution for managing episodes of care, with responsive pricing and concurrent insight that helps providers change their behavior and care pathways faster. This ensures providers succeed under a bundled payment contract and stay in the program, taking a payer’s value-based program to scale.

Finally, our approach to value-based payments is ideally suited to transitioning specialists along the reimbursement continuum from fee-for-service to CMS-style retrospective bundles to innovative member-centric prospective payments.  Although starting a bundle program with prospective payments can be appealing due to the improved member experience these arrangements offer, they can be a real headache for providers to execute upon (as has been well-documented in pieces like this in Health Affairs). By concurrently sharing retrospective insights with providers, payers can give specialists the tools they need to identify the most efficient referral patterns and structure downstream provider arrangements that are necessary for success with future prospective contracts.

Whether you are starting your first bundled payment program or looking to take an existing program to scale, let Aver take the headache out of your bundled payment program and advance your organization’s commitment to value-based care.

Vice President, Product
Aver, Inc

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