By Abhay Singhal and Sheetal Sawardekar
Value-based care: A big wave that changed the U.S. healthcare landscape
Traditional fee-for-service models have long challenged the industry due to conflicting priorities. Providers work to maximize reimbursement for the services they provide, while payers continue to reduce payments. Unfortunately, patient outcomes were not the center of the compensation structure. The evolution to value-based care (VBC) is the paradigm shift that realigns the payer-provider relationship to a more proactive and collaborative one, focused on the patient’s overall well-being.
Over the last decade numerous efforts have been made to encourage VBC models, including interoperability so patient data exchange becomes seamless. However, there is still significant work to do to achieve the ultimate goal of improving patient care. While there is never a good time to undertake more challenges, there are practical things payers and providers can do in the short term that will drive interoperability across the healthcare ecosystem, making it better for consumers, patients, members and the ever-changing payer-provider relationship.
In an independent study conducted by AAFP, adoption of VBC models has been increasing, however implementing VBC has its own challenges. Prior to COVID-19, the industry was making significant headway and evolving payer-provider relationships, however the pandemic caused another shift in priorities. While there is still work to do to transform the industry, there are definitive steps and milestones that organizations can take to ease their journey.
Payer-provider collaboration is key
By definition, VBC rewards providers for the quality of patient outcomes rather than the quantity. The reimbursement ties payments for care delivery to the quality of care provided, shares the risk between payers and providers and rewards providers for both efficiency and effectiveness. The transition to VBC has increasingly emphasized the need for collaboration between payers and providers and underscored the need for interoperability to facilitate digital transfer of patient data at the point of care. In addition, it encourages collaboration to develop treatment plans, identify care gaps and offer high-quality collaborative care, which has the potential to decrease overall care costs and improve the health of member populations.
Collaboration is not only just between payers and providers, but all allied services like labs, radiology and dialysis centers that constitute the entire healthcare ecosystem required to care for the patient. The greater the communication between payers, providers and patients, the higher the patient outcomes and the less administrative cost and risk of bearing financial loss.
Hurdles in the collaboration journey
Data accuracy and integrity remains a challenge for both providers and payers. The need for an enterprise data strategy is critical in order to collate data and provide it as a single source of truth for all downstream analytics, which continues to be the heart of the ecosystem. As a key driver to effective VBC, data is the primary need to make sure providers understand the full picture of a patient’s health and for potential health interventions.
VBC models leverage data to drive risk adjustment, which impacts reimbursement and regulatory scoring such as HEDIS or Star Ratings - which again impact reimbursement since many models are closely linked to these quality metrics. However, these identified quality metrics must suit the provider’s patient demographics and their social determinants of health while also being attainable by providers.
Prior to COVID, providers were already challenged by the lack of tools and infrastructure necessary to fulfill contractual agreements. Now, with a combination of increased financial pressure and changing regulations, providers may not be able to or know which metrics they must fulfill this year to meet contractual requirements. To be successful, both payers and providers need to understand each other’s challenges and capabilities, not to mention the administrative burden of reporting and work together to create a plan to move forward.
Payers, likewise, have needed to overhaul operations to address VBC models and incorporate actionable analytics. Data driven actionable insights can help mitigate the operational and financial challenges faced by providers and payers to continue maintaining quality-of-care provided in a post pandemic world. Payers and providers need to have actionable insights in order to assess the status of their partnership. “What-if” analysis can serve as a valuable tool and better predictive analytic algorithms could reduce risk. Apart from these, patient outreach and engagement tools, physician scheduling tools, price transparency solutions and tools for patients to have secure access to data will only improve the collaboration.
For the last few years, payers have worked to create clean data sets, but now must assess if data is accurate and then design appropriate payment algorithms and the reports sent to providers. Over-reporting or providing too little data impacts a provider’s ability to make informed decisions. With VBC still in play, payers are equally required to understand the treatment recommendations in order to identify what is necessary and what is not.
Improve transparency and enhance communication
Contracts are signed between payers and providers to define rules in an attempt to increase transparency and create policies to avoid any surprises post-claim, which includes reimbursement costs, denial reasons and partial payment procedures. Adopting analytics tools for identifying high risk patients, preventing avoidable admissions, avoiding unnecessary medical services and improving population health outcomes is a growing trend.
One such important analytic tool to have in your organization’s repertoire is a PHM analytics solution. Around 5-10% of the population are high cost utilizers. Although such patients represent a small proportion of the entire patient population, they account for a substantial proportion of healthcare costs. Managing high risk, high cost utilizing populations and pushing for preventive care is the key to containing costs. Additionally, every patient cohort has separate needs. PHM is proven to be important for operational and overall financial success for providers, however payers are also seen to be leveraging PHM for preventive and proactive engagement. The roadmap defined by NCQA demonstrates how PHM can be a model of care for managing populations in VBC contracts.
However, a “one-size-fits-all” approach does not work with all contracts between payers and providers. Customization is required based on patient demographics and social determinants of health and it’s important to leverage tools and technologies like predictive analytics and population health management preventive services to ensure this is properly executed. All contracts should also be supported by actionable insights to regularly assess the effectiveness of the rules agreed on by both parties. While regular reevaluation of the contractual terms and rules defined is necessary, an oversight of how patient outcomes and financial risk sharing is impacted is also important in order to maintain a successful payer-provider relationship.
Give patients access to their secure data
Payers and providers are exploring additional VBC models like Accountable Care Organizations (ACOs), Patient-Centered Medical Homes (PCMH) or bundled payment models for better savings and effective reimbursements. VBC aims to reduce the overall cost of healthcare, which directly correlates to lower utilization rates for direct healthcare services. While the structure of the models differs, such initiatives are based on fundamental layers of interoperability and data standards. Sharing patient data across the care continuum has become a mandate for successful integration. Patient education, their knowledge of their health problems and how to care for themselves are key determinants to reduce healthcare service utilization while maintaining the quality of care. In essence, making patient data available is a must as it could improve patient engagement. Boosting patient outcomes is an aim for both payers and providers to reduce overall costs, which is impossible without collaboration.
Restructure contractual agreements
Post-COVID, there is a need to restructure agreements in order to ensure the financial burden is reduced, while trying to meet the proper performance benchmarks. Risk sharing models must be restructured and a balance needs to be struck between FFS and VBC models to ensure both payers and providers are able to overcome the financial burdens they’re separately facing. It’s recommended both parties evaluate other shared savings models and ensure agreements are divergent and restructured to include telehealth services, home health and other remote care services.
Both payers and providers are undergoing fundamental restructuring to meet the needs of VBC models in a post-pandemic world. Collaboration has been seen in the industry across the continuum of care and it’s important payers and providers continue to be more vertically integrated to form even tighter partnerships.
To help the healthcare ecosystem succeed in evolving VBC models, productive payer-provider partnerships and proactive collaboration is a must. A successful collaboration is possible when payers and providers create a customized roadmap for themselves that leverages best practices with a robust technology platform to support their growing needs. In addition, a plan that includes cost transparency, structured well defined contracts, identifies high risk patients, implements PHM initiatives and reduces cost utilizers are key stepping stones in reducing overall healthcare costs. Overall, when payers and providers implement a successful VBC model, the patient’s overall wellbeing will be the prime motto.
About the authors: Abhay Singhal, is SVP of Provider and Healthcare Services at CitiusTech. Sheetal Sawardekar is Sr. Healthcare Consultant at CitiusTech.