Adoption of value-based reimbursement (VBR) models is glacial—slow to occur but changing the delivery system in its wake. It’s an issue we’ve written about before—4 Lessons From ACOs For Managing Downside Financial Risk, VBR @ Scale—Changes Required, and Preparing For The Very Glacial VBR Rollout In Some Markets and will continue to help health and human service organizations find their footing. In the field, what I find interesting is that two different conversations are happening: Health plan executives talk about the lack of readiness of provider organizations while managers of provider organizations talk about the difficulty in moving VBR proposals forward with health plan customers. How do we make these partnerships evolve more smoothly? I think observations and advice from Alyna T. Chien, M.D., MS, Harvard Medical School, and Professor Meredith B. Rosenthal, Harvard T.H. Chan School of Public Health in the report, A 3D Model For Value-Based Care: The Next Frontier In Financial incentives And Relationship Support) provide a great foundation for that discussion.
The authors present a three-part framework for considering the health plan shift to VBR – financial incentives for reduced spending, financial incentives for improving quality, and infrastructure support for their partner provider organizations. Their infrastructure support includes performance management information (both access to raw data and analyzed data), limitations on financial exposure from risk contracts, care coordination tools, technical assistance, and infrastructure payments.
What is interesting is that these were the very issues brought up by provider organization executives during my session at our 2019 OPEN MINDS Executive Leadership Retreat. Access to data and limitation on financial downside were high on the list.
To make this three-dimensional model for VBR a reality, there are some specific actions that managers in health plans, accountable care organizations, and state and county government can take. Two key issues stood out for me as potentially having the greatest impact: Increasing the amount of revenue tied to VBR and aligning performance measures across payer contracts.
One of the common concerns I hear from provider organization executives is that the upside in the value-based contracts is not enough to justify infrastructure expenses. This is a fiscal reality at two levels in any individual payer contract. Is the incremental increased revenue of quality-based performance bonuses or shared financial savings enough to justify new operating infrastructure? Second is the volume of consumers served great enough to warrant dedicated service capacity (it’s addressing that ‘one foot in two canoes’ issue that provider organization managers face).
In our recent survey of specialty provider organizations, we found that 16% had 20% or more of their revenue coming from VBR contracts (see Where Are We On The Road To Value?: The 2019 OPEN MINDS Performance Management Executive Survey). While these numbers represent growth, they still illustrate the challenge of scale.
OPEN MINDS Senior Associate Drew Digiovanni urges industry members to walk before they run with VBR contracts that include financial risk:
Establish a pathway for providers who are entering into VBR agreements for the first time. Assess their abilities and offer limited performance measures in the first year to help them ramp up for success, before entering into more robust risk contracts.
The other issue is one that comes up every year during the OPEN MINDS Performance Management Institute – can’t health plans get together and agree on the same performance measures? From the provider organization perspective, almost every VBR-based contract is a ‘one off’ with different measures that have different definitions.
Admittedly, the adoption of NCQA HEDIS and CMS STARS are starting to create some “standardization” of measures, but provider organization managers need very flexible (and very expensive to maintain) performance reporting tools that can be customized for each contract. Almost any initiative to standardize measures would be welcome on the service delivery side of this equation.
Moving forward, how do health plan executives make their provider partnerships a success, sooner rather than later? OPEN MINDS Senior Associate Paul M. Duck suggests that transparency and investments in technology need to be front and center in VBR discussions:
Provider and payer organizations benefit from technology implementation. If a tool like a telepsychiatry platform is implemented, the payer benefits by increasing access to care, which lowers costs and prevents emergency room admissions. Provider organizations benefit by delivering a new service, which opens the door for additional revenue. It expands access for a larger population and delivers services in places where a group might not have a physical presence, such as rural communities. In other words, it’s a win-win.
Tomorrow, we’ll look more specifically at the provider organization side of the VBR equation. But for now, for more on the path to VBR, check out:
- The OPEN MINDS Value-Based Reimbursement Readiness Assessment
- How To Build Value-Based Payer Partnerships
- Implementing Value-Based Care Through The Certified Community Behavioral Health Model
- Does Your Strategy Prepare You For Success In A Value-Based Market?
- Current Insights Into Population Health Management Value-Based Models In Managing High-Risk, High-Cost Patients
- Using Data To Follow The Money & Stay True To The Mission
- Structuring (& Budgeting For) Analytics
- Technology & Reporting Requirements For Population Health Management: Preparing For Value-Based Reimbursement
- Planning & Budgeting For Technology: How Much Is Enough?
- From Pain Point To Revenue
And for a deep dive, join us February 12 for the “How To Build Value-Based Payer Partnerships: An OPEN MINDS Executive Seminar On Best Practices In Marketing, Negotiating & Contracting With Health Plans” during the 2020 OPEN MINDS Performance Management Institute.