Will value-based reimbursement really happen? And, if it does, will it be sustainable for our organization? This was the “big theme” in my many discussions with executives at this year’s 2016 OPEN MINDS Performance Management Institute.
The question of whether value-based reimbursement “will really happen” is in the context of provider organization executives who say they are “prepared” but can’t get health plans to pull the trigger on their new and innovative program ideas. That is in contrast to my many conversations with health plan executives who are planning to move ahead with value-based reimbursement – but express doubts that they can find provider organizations with the management competencies and infrastructure they need to proceed. For more, see The Management Transition To Value-Based Reimbursement Is All About The Performance Metrics, The Health Plan Perspective On Improving Performance & The Future Of Value-Based Contracting, and What Do You Need To Demonstrate & Manage Your Value?.
For the specialty provider organizations serving complex consumers, the use of value-based reimbursement is just in the early stages – our recent OPEN MINDS survey found that 15% of behavioral health and social service organizations are in some type of value-based payment arrangement (see Where Are Behavioral Health & Social Service Organizations With Value-Based Reimbursement? The Numbers Are In). For most organizations in the survey, this represents less than 20% of their overall organizational revenue. This is a contrast to primary care and acute care where the use of pay-for-performance is higher.
The question of sustainability of value-based reimbursement for service provider organizations is a separate issue. There is the issue of readiness for managing “risk” contracts – If Capitated Contracts Are In Your Future, Then What?, Three Competencies For Risk-Based Contracting: Advice From An Executive Who Is There, and The Payer Perspective On Provider Collaboration: Performance Measurement, P4P, Gain-Sharing, & Risk-Based Contracting. And, the issue of capitalizing the development of this infrastructure – The Business Model Transition To Value-Based Care and Are You Really Ready For Value-Based Payment?. But even with the capital and the competencies, managing for “value” requires a change in organizational culture – Is Your Culture Performance-Driven? Ask Yourself These Six Questions, and Performance Management Needs Performance-Driven Leaders.
I asked my colleague Jamie Stewart, Chief Administrative Officer of Grafton Integrated Health Network and chair of the OPEN MINDS Performance Management Institute, about the readiness and sustainability of organizations in the field – he noted that the field is not as ready for value-based reimbursement as its executives would like to believe.
I think the most surprising thing to me from this year’s institute was not as much from the provider side, as from the payer side. I thought – and many others I have spoken with also thought – that the payers were further along in readiness (and willingness) to accept value-based and risk-based contracting and had a clearer understanding of what risk they would be sharing or asking us, as providers, to take on.
A lot of comments I’ve heard showed providers’ disdain for the payers. Behavioral health providers think they are terminally unique, that they are unequivocally better at doing what they do than their competitors, and that they are further along than them. But I see that whole set of perceptions as a major weakness for our industry. Many executives think their organization is more prepared than they really are. When it comes down to actually operating in a value-based system, you have to ask: Have these organizations truly developed a system that allows them to capture data that can prove the desired result of the contract? Is the culture of their organizations truly understanding of a “do-less, make-more” model that focuses on quality outcomes vs. quantity of services? In many circumstances, the answer to those questions is no.
I think a lot of provider organizations in behavioral health “drink their own Kool-Aid,” and therefore perceive they are at a different place than they really are. And that is a problem because if they do try and fail, especially large systems, I can see the payers going a different direction. At the Healthcare Financial Management Association (HFMA) conference, I was struck by how the major health system executives have a professional relationship with payers that goes beyond just payer/provider. They have negotiated contracts and in that process, the payer knows the provider beyond just “someone who submits claims.” I do not think we have that in behavioral health, due to our lack of “material” size in the eyes of payers.
Jamie Stewart’s observation shows the need for a shift in strategic positioning for specialty provider organizations from “vendor” to “partner” of health plans (see The Business Model Transition To Value-Based Care). But to have a significant relationship with health plans, management teams of specialty organizations need to look beyond a narrow set of services and think broadly in terms of the consumer populations they serve. This means being willing to “own” all the services and supports needed for a specific group of consumers – to create a “value-added” service experience for consumers that is the basis for a “value-added” relationship with health plans.
We’ll continue to track the adoption of value-based reimbursement among the organizations serving consumers with complex needs. In fact, we’re planning an issue of the OPEN MINDS Management Newsletter this summer that will focus on “best practice” pay-for-value arrangements that have a track record of success. If you know of a program you think we should feature, please let us know (send comments to email@example.com).
And for more, be sure to mark your calendar for next year’s, The 2017 OPEN MINDS Performance Management Institute on February 16-17, 2017 in sunny Clearwater Beach, Florida – and the session, “From Bundled Day Rates To Capitation: Understanding The Current Pay-For-Value Contracting Models.”