We all know Americans spend too much on health care. Per capita estimates for 2017 indicate the US government spend per person is $10,209. That’s in addition to what consumers paid out of pocket in 2017, which experts estimate ranges between $4,500 and $8,300. A March 2018 review published by the Journal of the American Medical Association (JAMA) reports that the US spends roughly twice the amount as other first world countries. Yet, our outcomes aren’t better than other countries, and our life expectancy is significantly lower than countries that spend less. It’s no wonder consumers and payers alike are demanding better quality, value and transparency from healthcare providers.
All this pressure has insurers, health systems and independent practice associations (IPA) working tirelessly to identify new and innovative ways to reduce costs, improve value and improve patient outcomes. It’s the trifecta of value-based care and the end goal of payment reform for which healthcare industry executives everywhere are working toward.
What does all this mean for the payer-provider relationship? With both parties working toward a common goal, a new world of partnerships, analytical thinking and innovation is opening up. While the provider-payer relationship has previously been more transactional in nature, it’s now becoming more collaborative – which is driving the innovation that’s leading to better performance.
Here are just a few of the ways independent physicians, private payers and health systems are collaborating to achieve success in value-based care.
- Bundled Payment Models – A practice that was initially more common among government payers is now moving more into the world of private insurers. A bundled payment model is when a provider or health system is paid a single, set payment for all services delivered for a clinically defined episode of care. For example, a routine delivery, hip or knee replacement, etc. Bundled payments can be structured in various ways to include either upside or downside risk, or a combination of the two. With a defined payment set for an individual service, providers are encouraged to streamline care and processes in an effort to reduce costs. Well-known Mayo Clinic has been a longtime leader in using bundled payment models.
- Patient-Centered Medical Home Providers, payers and patients alike appreciate the concept of a Primary Care Medical Home (PCMH), which is a unique model of care that encompasses care that is comprehensive, patient-centered, well-coordinated, accessible and is focused on quality and patient safety. Based on the Agency for Healthcare Research and Quality’s (AHRQ) definition, it encourages greater efficiency by streamlining care through each patient’s primary care provider which can help prevent unnecessary duplication of services and ensure each patient is getting the care (including preventive screenings and medications) they need based on evidence-based guidelines. Health systems all over the country including Cleveland Clinic, UNC Health and many others, have adopted the Primary Care Medical Home model in effort to deliver care that is well-coordinated and high quality.
- Accountable Care Organizations – Accountable Care Organizations (ACOs) are collaborations between insurers, health systems and in many cases, groups of independent physicians all working together to improve the quality and value of care to a specific group of patients covered under a medical plan (covered lives). All participants mutually agree upon quality and cost targets that, if met, may result in the distribution of shared savings at the end of each year or contract period. This model incentivizes providers and health systems to streamline care, follow evidence-based guidelines and look for innovative ways to drive waste out of complex processes to deliver better value to patients and payers. Just this week, Aetna and the Cleveland Clinic announced plans to establish an ACO with the goal of reducing healthcare spending by 10%.
- Narrow Networks – Because healthcare costs tend to be higher for payers that offer a large network of providers to choose from, narrow networks have become increasingly popular as a means to reduce costs and improve value. Similar in concept to an ACO but without the shared savings aspect, narrow networks limit the number of providers and facilities available to patients in an effort to reduce costs. Health systems all over the country are partnering with new payers to establish narrow networks in an attempt to deliver greater value, including academic medical centers like Duke University Health System in Durham, NC.
These creative models are just a few of the most common ways insurers and providers are collaborating as the healthcare world moves from a fee-for-service (FFS) model to the world of value-based care. Each of these models involves comprehensive and ongoing evaluation of data and analytics to track and monitor progress against quality and cost targets. Data is used to help set goals and priorities and identify areas of opportunity – all in an effort to deliver greater quality and value.
GeBBS Healthcare Solutions offers a broad range of solutions to support payers and healthcare organizations in the shift to value-based care. To learn more visit www.gebbs.com