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By Monica E. Oss

I’m still putting together my thoughts about the transition to value-based reimbursement for the specialty provider organizations serving complex consumers. I went to last week’s event, The 2018 OPEN MINDS Performance Management Institute, not quite sure where we are in the transition process. Our own new survey results—released at the start of the institute, see Value-Based Reimbursement—The Numbers Are In—show a small year-over-year change. But, at the end of the week, I had a much clearer picture. A few of my takeaways:

  1. The window to the tipping point for value-based system transformation appears to be three to four years
  2. Over time, the goal of health plans (and the path to system transformation) is more financial risk sharing with provider organization
  3. At the community level, the key is “integration” (yet to be defined) via consumer-centric care coordination between primary care, wellness maintenance, behavioral health, home care, and community supports
  4. For “deep end” specialty providers, the demand will be for “acute stabilization” that facilitates return to the community
  5. The “competitive advantage” is going to go to the health plans—and their partner provider organizations—with the best performance

Why the three- to four-year window for reaching the value-based system transformation tipping point? The reasons are many. Overall, the health and human service system is under great cost pressure—with an aging population in need of more supports (see The Big Medicaid Spend On The 65+ Population and Some Hands-On Advice For The 65+ Market) and a recent national budget proposal with likely spending cuts. Employers are putting pressure on health plans to think outside of traditional service delivery to improve value (see Does Paying For Value ‘Work’?). Medicaid health plans are increasingly required to move provider reimbursement to alternate payment models (see Medicaid MCO In Your State? There May Be An APM In Your Future). And, while the question of whether our largest payer, Medicare, would continue the value-based payment wave was answered last month when the Trump Administration signaled its support for continuing both Medicare Advantage programs and the Medicare bundled rate program (see CMS Announces New Payment Model To Improve Quality, Coordination, And Cost-Effectiveness For Both Inpatient And Outpatient Care). An added impetus was the very promising recent performance by Medicare ACOs (see The 2018 OPEN MINDS Medicare ACO Update: A Four-Year Trends Report).

These drivers were discussed in great detail by our guest faculty—and if you didn’t have the chance to sit in on their presentations in Florida last week, I would suggest taking a look:

  1. Gus Giraldo, President of Commercial Markets, Magellan Healthcare, ‘A Commercial Health Plan’s Perspective’: Magellan’s Philosophy & Approach To Value Based Payment Arrangements
  2. Carole Matyas, Vice President of Behavioral Health Operations for Wellcare Health Plans, Overcoming The Impediments To Value-Based Reimbursement
  3. Misty Tu, M.D., Psychiatrist, Addiction Medicine Services, Allina Health Systems, Building Successful Value-Based Partnerships: How To Align Financial & Clinical Performance Goals With Featured Speaker Misty Tu, M.D.
  4. Liz McKune, Vice President, Health Integration, Passport Health Plan, How To Develop A Value Based Reimbursement Agreement: The Centerstone/Passport Health Case Study
  5. Deborah Adler, SVP, Network Services, OptumHealth, Developing A Value-Based Partnership: The Optum Case Study
  6. Mark I. Foulke, COO, Market Manager, Tennessee, Cigna-HealthSpring, Building A Sustainable Organization In A Value-Based Market – A Guide To Moving Your Organization From FFS To Capitation

In this market, what these health plans executives said they are looking for are “high-performing” provider partner organizations. But the definition of performance is being redefined by the market. In my closing keynote session at the institute, The Transition To Value: Addressing The Challenges Of Performance Measurement, Talent & Capital, I outlined the four key elements to enterprise-wide performance excellence for provider organizations:

  1. Contract-specific performance measures—Excelling at the performance measures that are most important to the primary payer
  2. “Easy and cheap” services—Creating easy-to-access affordable service packages for consumers
  3. Customer experience—Delivering great customer interactions (for consumers, for referral sources, and for health plan managers) that create “passionate advocates” of your brand
  4. Clinically consistent and cutting-edge services—Providing both consistency in consumer service delivery, and timely awareness and evaluation of emerging treatment models and technologies

These are the domains of performance that executive teams need to manage to keep competitive advantage. The big shift ahead is making metrics-based management a reality—from measuring the performance that matters to customers, to developing a culture that makes decisions based on that performance. (My presentation also included a review of the metrics that should be included in every provider organization’s performance dashboard – you’ll see more of that in a future article.)

This system shift is going to challenge organizations of every size. The smallest organizations will be eliminated from independent participation in the emerging systems due to lack of capital for both infrastructure and risk assumption—and need to find integration, collaboration, and/or affiliation models that meet those needs. The largest organizations will be challenged in their ability to actually change to a data-driven culture—where the data that matters is set by their customers and not by tradition. And mid-sized organizations (the size of which is still being defined) will need to answer the question of size and scale. Across the health and human service system, the executive’s role in every organization will be to balance strategy, performance management, competitive advantage, and sustainability—in real time.

For more information on “managing to the market,” check out these resources from the OPEN MINDS Industry Library:

  1. Winning The Business – Business Development In A Shifting Health & Human Service Market
  2. “Following The Money” In Specialty Care Management
  3. Better Yield From Business Development Dollars? Go Where The Money Is
  4. The Market Metrics That Shape Your Business Development Tactics: Mapping Your Market & The Payers
  5. Collaborations Demand ‘Proving Your Business Case’

For more on the changing relationships between payers, health plans, and service provider organizations, join Charles Gross, Ph.D., the Vice President, Behavioral Health at Anthem, Inc., on June 6 for his keynote, “Going Beyond Innovation – Developing Partnerships With Health Plans” at The 2018 OPEN MINDS Strategy & Innovation Institute.

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