Read the full article by Jeff Buchanan at Xconomy Wisconsin here. 

Fresenius Medical Care North America, an organization that provides healthcare for patients with kidney failure and other chronic conditions, recently signed a multiyear agreement to license software developed by Madison, WI-based Forward Health Group.

Michael Barbouche, founder and CEO of Forward Health Group, says his company will begin installing its population health management software in clinics owned and operated by Fresenius later this year.

Forward Health Group’s digital tools are designed to allow users to pool patient data from different sources, such as claims sent to insurers, clinical documentation, and labs. With all of this information in place, users of Forward Health Group’s software can group patients into specific populations based on their symptoms, diagnoses, and other attributes. Doing so could allow the company’s customers—which include networks of hospitals and clinics, as well as research groups like the American Heart Association—to identify patients most at risk of congestive heart failure, for instance, and attempt to stop them on their progression to chronic disease.

Fresenius Medical Care North America, headquartered in Waltham, MA, is part of Germany-based Fresenius Medical Care (NYSE: FMS). The company operates more than 2,200 dialysis clinics in the U.S. Its other facilities include outpatient cardiac and vascular labs, and urgent care centers.

Barbouche says Forward Health Group will seek to install its software at as many Fresenius clinics as possible. While the contract between the two companies supports covering Fresenius’s entire network in North America, they’ll move forward at a pace that’s comfortable for both sides, Barbouche says. Forward Health Group, launched in 2009, has been adding employees recently but is still a fraction of the size of Fresenius.

Under the terms of the agreement, Fresenius will pay Forward Health Group to license the company’s software on a per-physician basis. Barbouche says that while doctors are not the primary day-to-day users of Forward Health Group’s software, the company’s contract with Fresenius is based in part on the number of physicians who see patients at a particular location because that’s how the Centers for Medicare and Medicaid Services (CMS) reimburse for care under some of its programs.

One such program, which the CMS created under a 2015 law that aims to more closely link Medicare payments to quality of care, is the Quality Payment Program (QPP). It’s a quality-based reimbursement program requiring clinicians and healthcare organizations to report select patient data to the agency, via one of two paths. With the help of Forward Health Group’s software, Fresenius-affiliated clinicians expect to report patient data to CMS using the Merit-Based Incentive Payment System path, says Jason Niosi, director of marketing operations at Forward Health Group. Once the agency has the data, it assigns a score to the reporting party, which could result in it receiving a Medicare payment bonus, or a penalty, in 2019.

The introduction of the QPP, which first went into effect on Jan. 1, highlights the ongoing shift to quality-based reimbursement models in healthcare. The legacy fee-for-service structure, where healthcare providers are reimbursed for individual units of care such as lab tests, is giving way to what is known as value-based care, where providers are incentivized to keep costs as low as possible by keeping patients healthy.

The American Medical Association and KPMG recently conducted a survey that examined physicians’ knowledge of—and readiness for—the QPP and related programs. According to the survey, 70 percent of respondents have started preparing to meet the requirements of the QPP this year. However, only 23 percent of those who have begun preparing feel well prepared to meet the program’s requirements in 2017.

Barbouche says that despite the work Forward Health Group is doing to help its customers adapt to changes in how the government reimburses organizations that care for Medicare patients, he believes medical practices as a whole are currently not ready to navigate the shifting landscape.

Still, he believes that the CMS’s move toward value-based care could send an important signal to other leading health insurers.

“We think that what QPP represents is the start of a transformation,” Barbouche says. Medicare is “aggressively courting the Aetnas (NYSE: AET), Cignas (NYSE: CI), and others to match the same type of incentive programs. All of these programs are going to carry this idea of performance-based reimbursement. They’re not going to be focused on legacy fee-for-service.”