Greetings from Florida and the opening day of The 2020 OPEN MINDS Performance Management Institute. It’s a power-packed agenda full of sessions focused on optimizing performance and sustainability in the complex consumer market. I opened the institute with results from our 4th annual survey on the state of value-based reimbursement (VBR) in the market (see Where Are We On The Road To Value? The 2020 OPEN MINDS Performance Management Survey). The findings reminded me of the 1980s advertisement for Wendy’s with the woman, the insistent Clara Peller, asking, “Where’s The Beef?” (see Where’s The Beef) – and saying “I don’t think there is anybody back there…”
This is the fourth year that we’ve tracked developments around performance management and performance-based contracting in both specialty provider organizations and primary care organizations, and I got the sense there is some critical mass around a few issues. There were three market developments that caught my attention – the changing models of value-based contracting, the differences between primary care and specialty provider organizations, and the growing revenues in VBR arrangements.
Bundled Rates Inch Up As A Reimbursement Model
In terms of the types of VBR contracting, the past year found use of capitated models decreased slightly (for both care coordination and services) and an increase in case rates and bundled rates. For primary care organizations, the bundled rate/case rate contracting was up 5%, and for specialty provider organizations up 6%. This is not surprising considering some of the reimbursement developments in the past year focused on bundled rates. These are a few of the related stories that we covered:
- Medicare Bundled Payments For Opioid Addiction Treatment To Start January 2020
- CMS Announces ‘Primary Cares Initiative’ With Five New Value-Based Models
- Walmart Employee Health Plan Expands ‘Centers Of Excellence’ Program To Cover Kidney Transplants In 2020
- Humana Expands Value-Based Bundled Payment Programs
- UnitedHealthcare To Launch Bundled Payment Program For Medicare Advantage
- UnitedHealthcare Launches Bundled Payments For Maternity Care
VBR Is More Developed In The Primary Care Sector Than In Specialty Care
In most metrics, primary care organizations have more, and more well-developed, VBR contracting. Contracting with health plans – 86% of primary care organizations and 70% of specialty provider organizations. Participation in value-based contracting, 77% versus 58%. Case rates/bundled rates, 24% versus 16% (but specialty provider organizations were in more pay-for-performance fee-for-service arrangements).
Revenue From VBR Has Become Significant
Provider organization revenue from value-based arrangements has become more significant – but does vary by market. Of the primary care organizations participating in VBR, 26% have 20% or more of their revenue in those arrangements. That percentage is 15% of specialty provider organizations.
The evolution of VBR is far from mature. Adoption varies by state (for a look at a few of our state-by-state analyses, see The OPEN MINDS Medicaid Managed Care Market Share Report, State Medicaid Mental Health & General Pharmacy Carve-Outs: An OPEN MINDS Market Intelligence Report, Enrollment Of The Medicaid I/DD Population In Managed Care For Acute Care Services: An OPEN MINDS Market Intelligence Report, and Medicaid Health Plan Requirements For Provider Alternative Payment Models: The 2019 State-By-State Update). Provider organization executive teams are struggling with the infrastructure required for the new model (see Are You Ready For Value-Based Reimbursement? An Executive Guide For Assessing Readiness In A Value-Based Market and Ten Steps To Align Your Financial Management Systems with VBR).
And there are questions about which VBR models deliver savings and how to make those models work. We’ve had extensive coverage of the analysis on cost savings and return-on-investment over the past year:
- Cascadia Behavioral Healthcare’s Integrated Model Cut Potentially Preventable Emergency Department & Inpatient Utilization By 18%
- Is Care Coordination A Bust Without Social Services?
- Cigna Reports Combined Medical, Pharmacy & Behavioral Benefits Reduces Annual Costs By More Than $207 Per Covered Life
- Medicare Shared Savings Program Lowered Medicare Spending By $755 Million Over 5 Years
- Year Four Of The Medicare Independence At Home Demonstration Generated Savings Of $32.9 Million
- Physician-Led ACOs Generated Almost 7 Times More Savings Than Hospital-Led ACOs
- ACOs Saved Medicare $1.7 Billion In 2018
- Illinois Medicaid Pediatric Care Coordination Program Led To Limited Savings
- Making VBR A Success: What Health Plans Can Do
- Success With VBR: What Provider Organization Execs Should Consider
The move to reimbursement based on value is still in flux. There is some “beef” as critical mass increases. But, the best models and the best practices are still unclear – and we’ll be covering them in the year ahead. For a deep dive into our survey results, sponsored this year by Qualifacts, download the complete survey, Where Are We On The Road To Value? The 2020 OPEN MINDS Performance Management Survey, from our online community Value-Based Care for Behavioral Health (available free with registration).
For more on success with VBR contracts, join us June 3 for “Succeeding With Value-Based Reimbursement: An OPEN MINDS Executive Seminar On Organizational Competencies & Management Best Practices For Value-Based Contracting” hosted by Drew Di Giovanni, OPEN MINDS senior associate, and Kenneth Anderson, OPEN MINDS senior associate, during The 2020 OPEN MINDS Strategy & Innovation Institute.