Despite difficulties, health plans and providers each have seen benefits from such value-based payment arrangements in recent years.
May 1—An inability to successfully integrate clinical and claims data is among the key challenges in creating and sustaining health plan-provider value-based partnerships, said an executive involved in one such effort.
“It’s great when two organizations come together, but the key thing to make that organization give better care and reduce costs is really tying the analytics together and tying the data together,” said Sunil Budhrani, MD, chief medical officer and chief informatics officer for Innovation Health.
Real-time access to electronic health record (EHR) and claims data has enabled Budhrani to optimally manage populations, he said this week during the World Health Care Congress in Washington, D.C.
“But that integration—I can’t say that has been the easiest thing,” Budhrani said. “And it won’t be the easiest thing as you see more and more organizations get into the space of health care and try to figure out this problem.”
His insight stemmed from his executive role in the first payer-provider joint venture launched by Aetna, in which costs of a Medicare Advantage plan were evenly split with a local health system
Another obstacle to broad collaborations is the contrasting business models of health plans and providers, said Kyle Rolfing, president and co-founder of Bright Health, an insurer that selects one health system in a market to provide its network.
Optimally, better alignment would allow health plans and providers each to bring their strengths to most effectively control costs and improve clinical outcomes he said.
But hospitals’ “business models absolutely get in the way of this being accomplished,” Rolfing said. “It’s going to be a really, really tough road.”
That challenge stems from broad employer networks that ultimately force efficient hospitals to subsidize inefficient hospitals, based on patient utilization over time.
“It’s insanity; it would never exist in any other market in the U.S or probably any other country,” Rolfing said. “Blowing that up is going to be really, really tough to do.”
His company’s approach of working with just one provider in some markets aims to circumvent such traditional business models by establishing better health plan-provider alignment.
Another challenge to value-based partnerships is that health systems have widely varying degrees of readiness to move into them, Rolfing said. Recognizing that, Bright Health offers health systems a three- to five-year glide path to move into full capitation.
“That’s key, they are able to see what risk they are serving and make sure they are delivering care management,” Rolfing said. “We de-risk their movement to risk.”
All incentive-based payment programs at Independence Blue Cross were upside-only as recently as two years ago, said Anthony Coletta, MD, executive vice president.
“They really didn’t drive any cost accountability to the provider, so the health plan was at a fork in the road,” Coletta said.
The insurer designed new “total value of care” plans and for the first time entered five-year contracts—up from three years—with health systems. Like Bright Health, Independence Blue Cross recognized many of its provider-partners were not prepared to accept full downside risk and so wanted to allow enough time for them to ramp up their risk as their capabilities increased, he said.
“We had to be sure we weren’t forcing them down a road to failure,” Coletta said.
Despite the obstacles, health plans and providers have found many reasons to join the growing number of risk-based partnerships.
For insurers, such arrangements offer a new way to control the rise of healthcare costs. For instance, Independence Blue Cross designed its risk contracts to lower the usual increases in fee-for-service rates.
“We’re not going to provide 3 to 5 percent rate increases every year for the next five years—those days are over,” Coletta said.
Health systems have found that partnerships can help teach them how to thrive under the growing number of value-based arrangements that are being sponsored by private and public payers.
Coletta has found a wide range of preparedness among health systems in the critical areas of system-wide care management, analytics, ability to operate a clinically driven network, and patient engagement.
“There is a full spectrum—a bell-shaped curve—of providers who are either ready or not,” Coletta said.
Health systems also are being drawn to risk-based partnerships because they need to grow their market share in order to support very large fixed costs, Rolfing said. Such models also can help health systems either prevent patient leakage to other providers or attract new patients to the system.
Another main driver for health systems to join such arrangements is the increasingly stark choice of maximizing fee-for-service for as long as possible or trying to learn how to thrive under a value-based arrangement, Coletta said.
Similarly, Budhrani cited the growing number of “legislative and non-legislative” pressures, including Medicare payment incentives and rising administrative costs, that will put independent physician practices out of business.
“So, banding together is happening in a very unprecedented way,” Budhrani said. “Whether it’s a bank or a health system or any other large entity, there is no way that a fee-for-service climate will work in that kind of model; it will move toward a value-based population health strategy.”
Health plans and providers also described some of the unique components that make their specific collaborations compelling.
Coletta said one health system entered a value-based arrangement with Independence Blue Cross to absorb the full cost of any enrollee’s readmission that took place within 30 days for any reason.
“So [they’ve taken] a very forward-thinking progressive jump into the value-based world and [they] get to learn how to do it, and that has set the bar in the marketplace,” Coletta said
At least one of the collaborative approaches takes advantage of the physician, hospital, and health system consolidation trend. Rolfing said Bright Health is able to contract with just one provider in a growing number of markets because so many markets have become dominated by a single health system.
“When you look at any geography and look at what has happened, there’s been such a consolidation of not only the specialists but expansion of a geographic footprint,” Rolfing said.
Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare