Payment Models

Newer Health Plan Products Align With Value-Based Care

January 25, 2018 10:21 am

With the clout to steer the healthcare industry away from a volume-based approach, health plans are implementing innovative payment models.

As healthcare stakeholders seek opportunities to improve patient care and lower costs, health plans have created products and designs that align with value-based care. 

“This transformation began with a Centers for Medicare & Medicaid Services [CMS] imperative to implement a value-based provider reimbursement framework, putting some degree of financial compensation for providers at risk by financially incentivizing providers to demonstrate high-quality clinical outcomes metrics in patient care,” says Yele Aluko, MD, chief medical officer at EY’s Americas Advisory Health. “Commercial payers have followed suit in the design of their own plans.”

This activity is increasing, according to a 2016 Health Care Transformation Task Force Report, which noted that the share of its provider and health plan members’ business that used value-based payment arrangements increased from 30 percent in 2014 to 41 percent at the end of 2015. In a McKesson white paper, payers reported that 58 percent of their business has already shifted to some form of value-based reimbursement, a 10 percent increase from two years earlier.

From provider incentives to enrollee cost-sharing to joint ventures, health plans aim to create more-efficient business models that reduce clinical variation and enhance the quality of care.

“The expected outcome is to instill a culture of financial discipline and to hold providers accountable for objective delivery of quality clinical outcomes, by embracing the principles of value-driven care,” Aluko says. 

Newer Provider-Incentive Arrangements

BlueCross BlueShield of Western New York has completed the first year of its BestPractice model, a plan that combines fee-for-service and monthly capitation payments, with participating physicians measured on quality (see the exhibit below). The insurer took into consideration pay-for-performance programs such as the Medicare Access and CHIP Reauthorization Act (MACRA) and New York State’s Advanced Primary Care model when designing BestPractice.

A Look at the BestPractice Model

“As a reimbursement model for primary care, it was essentially designed to create alignment between the health plan and physicians delivering on quality, efficient care,” says Thomas Schenk, MD, senior vice president, chief medical officer, BlueCross BlueShield of Western New York. Over 95 percent of primary care providers that are in the market and participate with the insurer receive payment through BestPractice.

In 2017, the insurer determined physician payment based on Healthcare Effectiveness Data and Information Set (HEDIS) compliance, with 27 measurements ranging from adolescent immunizations to colorectal cancer screening to osteoporosis management. 

While BlueCross BlueShield of Western New York is awaiting results from the first year, Schenk has noted a positive outcome in the engagement of participating physicians. “We definitely have had a lot of interest from the physicians in trying to be as active as they can be in getting to all of the gap closures they can get,” Schenk (pictured at right) says. 

In 2018, the health plan is measuring physician performance based on HEDIS quality measures (80 percent) and cost of care (20 percent). Examples of cost-of-care measures include inpatient utilization, emergency department utilization, laboratory services, and specialist services.

Schenk hopes to see this type of model expand within the western New York market and into other markets. “The more physicians’ patient panels we can get in this kind of model, the more they can fundamentally change their practice patterns and workflows,” he says.

BlueCross BlueShield has created products that focus on improved quality in other parts of the country as well, such as the Arkansas HealthCare Payment Improvement Initiative (AHCPII), a collaboration with Arkansas Medicaid and QualChoice. With an episode-based payment model, AHCPII seeks to move away from a system focused on volume and toward one that promotes better coordination of care. 

A designated Principal Accountable Provider (PAP) oversees an episode of care and is responsible for its performance. Each year, the health plan determines a PAP’s performance and payment based on quality of care and resource use. Other participating providers receive reimbursement at standard fee-for-service rates and have access to reports to learn about opportunities for improvement. 

“If there are providers [PAPs] in our state that can demonstrate higher quality of care while controlling costs, the episodic payment program creates incentives for other providers to achieve that level of value,” Max Greenwood, director of government and media relations for Arkansas BlueCross BlueShield, says via email. 

On the government side, CMS’s Comprehensive Primary Care Plus (CPC+) model incorporates public and private payers to improve patient care and reduce clinical variation. Comprising two tracks, CPC+ supplies educational resources and data to support participants in care delivery, with practices paid based on performance.

In Round 1 of the model, 2,816 primary care practices work with 54 aligned payers throughout 14 regions, while in Round 2, up to 1,000 practices work with seven payers in four regions. Round 1 is expected to run through the end of 2021 and Round 2 through 2022.

Both payment tracks include a risk-adjusted care management fee, and practices also receive payment based on performance measures that are focused on efficient clinical care, patient safety, communication and care coordination, community/population health, and cost reduction.

CMS also reimburses Track 1 practices with regular Medicare fee-for-service payments for covered evaluation and management services. Track 2 practices receive a combination of fee-for-service payments and a “comprehensive primary care payment” to account for in- and out-of-office visits.

“CPC+ is grounded in value-based compensation models providing improved payments to practices that objectively demonstrate capabilities to deliver high-quality, cost-efficient primary care,” Aluko (pictured at right) says. “One year into its existence, the model has large potential, but value realization from this novel program is still pending.”

Enrollee Cost-Sharing

To incentivize consumers to proactively manage their health, approaches such as the Medicare Advantage (MA) Value-Based Insurance Design (VBID) Model have created cost-sharing elements for health plan enrollees. Beginning in 2017, VBID allows MA plans to offer additional benefits or decrease cost-sharing for enrollees with certain chronic conditions. CMS tested the model in seven states in 2017 and is rolling it out to additional states over the next couple of years; the model will run for five years.

Eligible MA plans that receive CMS approval in designated states can customize benefit designs for enrollees with diabetes, congestive heart failure, chronic obstructive pulmonary disease, past stroke, hypertension, coronary artery disease, mood disorders, or combinations of these conditions.

The model examines whether patient cost-sharing and other health plan features motivate enrollees to use high-value services that can positively impact their health while lowering costs. Enrollees in the model have the opportunity to lower their cost-sharing and receive more benefits—and are not at risk of paying higher costs or receiving fewer benefits than other participants.

This type of payment model—which other payers such as Mayo Clinic, BlueCross BlueShield of North Carolina, and state employee programs have explored—has the potential to better involve consumers in their own health outcomes. Some models may incorporate higher cost-sharing for certain elective health choices. “It is a good thing to encourage patient responsibility by way of self-empowerment through education, and by providing additional insight that financial consequences might exist for patients who continue controllable adverse lifestyle choices and behaviors,” Aluko says.

Joint Ventures

Efforts to reduce clinical variation and enhance patient care have also manifested in joint ventures between health plans and providers. By sharing financial accountability and merging resources, these partnerships have the potential to better manage patient populations while lowering costs through value-based payment.

For example, Allina Health and Aetna have created a jointly owned health plan company, Allina Health and Aetna Insurance Company, for employers and consumers in the greater Minneapolis-St. Paul area, with plans to launch insurance products in 2018. The company aims to utilize insurer and provider data, integrated care, benefit design, and administrative support to improve the consumer experience.

“The joint venture’s goal is to accelerate the move away from fee-for-service health care to outcomes-based health care,” Brigitte Nettesheim, Aetna’s president of transformative markets, says via email. “In part, this helps ensure the more efficient use of healthcare dollars, including the elimination of waste.”

Aetna and Allina Health will share information about their members beyond demographics and insurance coverage, such as most recent details about their health and any therapies. Aetna anticipates that engagement of members in their own care will be higher in this market, as has been the case in the four other joint ventures that the insurer has established throughout the country.

Aetna has been collaborating with physicians and healthcare organizations to build these products for more than seven years. As of early 2016, providers in value-based arrangements had delivered care for nearly 6.2 million Aetna members, representing an estimated 40 percent of the company’s payments for medical care.

“This 50/50 partnership aligns both Allina Health and Aetna’s incentives to deliver the best care in the most efficient way possible,” Nettesheim (pictured at right) says. “Joint ownership of this new company, with shared-profit-and-loss potential, will accelerate the change that’s necessary to improve quality and experience while addressing affordability.”

What Lies Ahead

The impact of such efforts on the industry is uncertain. Many payment models have launched only recently, and approaches vary across payers. “It’s still a fragmented response to an industry that requires a more integrated response,” Aluko says. “From a macroeconomic perspective, is it impacting cost reduction across the industry? We haven’t seen that yet.” 

The acceleration of these types of products is expected to continue, and if nothing else, the alignment of such products with value-based payment shows the potential to reduce clinical variation and improve care quality. 

Health Care Transformation Task Force members, including Aetna, established a goal of having 75 percent of business in value-based arrangements by 2020. With value-based care models being established in multiple markets, the focus on improved quality and reduced costs will continue as a key factor in health plan business strategies. 

While the industry-wide impact has yet to be determined, Aluko notes that this approach “has created a culture transformation within systems and physician enterprises that understand they could be at financial risk if they are unable to transparently demonstrate delivery of best practice in clinical outcomes.” 

Elizabeth Barker is a digital communications professional and freelance writer in Chicago.

Quoted in this article: Yele Aluko, MD, chief medical officer, Americas Advisory Health, EY; Max Greenwood, director, government and media relations, Arkansas BlueCross BlueShield; Brigitte Nettesheim, president, transformative markets, Aetna; Thomas Schenk, MD, senior vice president, chief medical officer, BlueCross BlueShield of Western New York.


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