Skip to main content
By Monica E. Oss

Until The 2018 OPEN MINDS Performance Management Institute, I didn’t realize that managers in health and human services need to take surfing lessons. In the keynote address, A Commercial Health Plan’s Perspective”: Magellan’s Philosophy & Approach To Value Based Payment Arrangements, Gus Giraldo, the President of Commercial Markets at Magellan Healthcare and avid surfer, provided the executive audience with a short course on oceanography and surfing. He talked about how waves start hundreds of miles from shore and, over time, create the swells that surfers ride on the beach. In addition to physical fitness and a good board, Mr. Giraldo said that success with surfing is all about positioning—staying ahead of the crest and being in the right place at the right time.

Gus Giraldo

The parallels of surfing to success in a health and human market driven by value-based reimbursement are striking. His point—the push for linking value to payment in health care probably started with the 2006 Michael Porter paper, Redefining Health Care: Creating Value-Based Competition On Results, which had an influence on CMS policymakers. Since then, the use of value in selecting health plans, provider organizations, and clinical professionals has slowly created the “wave” that we’re seeing in the field today. The result is overall transformation of the health and human service delivery system. That transformation has two paths—a short-term and probably short-lived path limited by our current specialty-centric delivery system, and an emerging and more consumer-centric integrated care path. For now, we are largely adopting Value Base Payments (VBP) in limited form to optimize segments along the first path, but ultimately VBP will become central to optimizing along the entire care continuum in the integrated care framework.

Magellan Healthcare is in the midst of its own transformation in this changing environment. Mr. Giraldo discussed the emerging multiple business lines—traditional specialty management services (behavioral health, imaging, pharmacy) and vertical/specialty health plans in Medicaid and Medicare are core offerings. But, Magellan is also offering health plan solutions for provider organizations entering into value-based arrangements, as well as digital therapeutics solutions and other means to augment the constrained delivery system (see Magellan Health Collaborating With Click Therapeutics To Develop Therapeutic Mobile Apps).

In their managed care program networks, Mr. Giraldo said Magellan’s goal is to have 30% of their spend in alternate payment arrangements by 2020—as well as developing “service bundles” over the next couple years. Currently, Magellan has about 5% of payments in alternative payment models in eleven state—California, New Mexico, Nebraska, Minnesota, Florida, Virginia, Maryland, Pennsylvania, New Jersey, New York, and Massachusetts. His view is that the current range of value-based arrangements will not last forever and that the likely future model is primary care provider, or other “entry points of care”, accepting a global capitation payment and managing the full care needs of individual consumers, through either owned or affiliated specialties across all areas of care.

Like many health care organizations, Magellan is looking to the tech sector for competitive advantage. For Magellan, this means focusing on member risk-stratification, complex population health management, tele-behavioral network augmentation, and digital therapeutics. One example is Magellan’s recent collaboration with PEAR Therapeutics to launch a pilot of their prescription-only addiction treatment app (see Magellan Health To Pilot PEAR Therapeutics reSET Application For Addiction Treatment). He sees great untapped potential in restructuring health care using technology. He envisions a future with tech-enabled talk-based therapy: “You’ll wake up and say ‘Alexa I don’t feel good. Recommend a prescription.’”

In his closing, Mr. Giraldo provided some strategic advice for executives of specialty provider organizations. He urged them to develop a value-based reimbursement strategy that goes beyond contracting and focuses on their entire business model focusing on how they contribute value from a consumer and delivery system perspective as the sources of value are reshuffled among health system participants as a result of the shift to value. The entire health and human service system is in a state of flux, and the “wave” may look very different five years from now. In value-based reimbursements, like in surfing, positioning and timing are everything.

For more on Magellan, check out some of our recent coverage:

  1. Arizona Medicaid Awards AHCCCS Complete Care Contracts To Seven MCOs
  2. Magellan Health Expands LTSS Presence With $400 Million Purchase Of Senior Whole Health
  3. What Are Payers Looking For In Value-Based Partnerships? A Town Hall Discussion On What Payers Need From Provider Organization Partners
  4. “A Commercial Health Plan’s Perspective”: Magellan’s Philosophy & Approach To Value Based Payment Arrangements
  5. Magellan Health Launches First FDA-Approved Prescription Digital Therapeutic
  6. Technology Innovations & Payer Expectations
  7. Virginia Medicaid Selects Six MCOs For Medallion 4.0 Integrated Physical & Behavioral Health Contracts
  8. Cost Per Claim For Medicaid FFS Specialty Drugs Rose 20% In 2016
  9. Virginia Medicaid Launches Mandatory MLTSS Enrollment; Specialty Behavioral Health Services Included
  10. Magellan Health To Acquire Veridicus Holding, LLC For $74.5 Million

To learn about how one organization has navigated the complex market and moved towards a sustainable future, join us on June 5 in New Orleans for The 2018 OPEN MINDS Strategy & Innovation Institute and the keynote address, “Sustainability In A Competitive Market: The Daughters Of Charity Services Story”, featuring Michael G. Griffin, Chief Executive Officer, Daughters of Charity.


Login to access The OPEN MINDS Circle Library. Not a member? Create your free account now!


Support Request

Need help now?

Call our toll-free phone number 877-350-6463