Value Based Payment

Not Just Smarter Payment, Better Health Care

November 26, 2018 8:42 pm

In traditional healthcare models, providers and payers often sit on opposite sides of a table and negotiate unit costs, rates, and fee schedules. These sometimes-adversarial relationships and volume-based business models have contributed to the high total cost of care while failing to achieve better access, quality, and member-patient experience.

The earliest shifts from volume-based to value-based care typically have involved relatively simple pay-for-value programs where payers, including the Centers for Medicare & Medicaid Services, offer providers higher payment rates for hitting certain metrics. Some programs then evolved into a “shared success” space, with providers receiving a portion of total cost-of-care savings generated through avoiding unnecessary procedures and high-cost sites of care, additional support for helping patients manage chronic conditions, and other measures.

Highmark Health’s integrated care delivery and financing system—one of the nation’s largest Blue Cross Blue Shield insurers combined with a world-class regional health system—has given us a perfect laboratory to make additional advances on the value-based care journey. Seeing all the health plan financial data right next to all the health system clinical data provides a powerful lens to pull value into focus for everyone involved.

The Highmark Health value-based payment programs that I’ve worked on—True Performance and Quality Blue—extend lessons and practices from our integrated system to non-owned provider partners throughout our health plan service areas. The strategic principles that make these programs successful are equally important in driving value-based transformation that goes beyond payment to inform every aspect of care delivery, financing, management, and innovation. 

Smarter Payment, Better Collaboration

Having a father who is a physician, I know that many providers are altruistic. Having studied economics, however, I also know altruism can go only so far in a large, complex industry like health care. In fee-based models where provider payment literally depends on people being sick and utilizing more services, it’s unreasonable to expect time and resources to be shifted toward reducing unnecessary utilization and expanding preventive care. The payment infrastructure must support that shift by measuring and paying for the right activities and outcomes.

But smarter economic incentives aren’t enough; to bend the cost curve, ensure quality, and improve the customer experience, payers, providers and other stakeholders must all collaborate better and align around how we define and measure value no matter where we are in the system.

So, how can we create a more collaborative relationship where, in the past, clinicians and health system executives sometimes saw payer programs as unwelcome intrusions on how to practice or run their organizations?

At Highmark Health, we start by turning to reputable sources of quality metrics. We go to the largest national presence, which in many cases is a provider’s own specialty organization. The work of America’s Health Insurance Plans (AHIP) and CMS has also helped establish consensus.

Even more importantly, our programs prioritize direct collaboration: We meet with local medical societies, establish provider and hospital advisory councils, and place clinical transformation consultants in the field to work with providers and get their feedback.

That collaboration also includes support for providers. We don’t just set up a payment framework and then walk away; we are committed to giving providers the analytics, technology infrastructure, clinical support, and other resources that increase their likelihood of success. We also try to understand and address their challenges; for example, knowing that cash flow is a big issue, we’ve worked to make billing cycles shorter and more predictable.

Although the payer-provider relationship is central, I also want to emphasize that collaboration should include all stakeholders. When choosing quality metrics, for example, it is vital to also consider how patients and employers define quality, so that what you measure is indicative of value generation for all stakeholders.

On the Road to Population Health Management

Collaboration is a prerequisite to the next stage in the value-based journey: shared accountability and population health management. With shared accountability, we talk to providers about assuming responsibility for costs associated with performance risk—factors they can control, such as directing patients to high-value specialists and facilities and following evidence-based care pathways.

With shared accountability, you now have a financial model that truly incentivizes investment in quality, preventive health and health education, efforts to address the social determinants of health, and other aspects of population health management. Here again, we are highly collaborative, including by providing population health data. We think efforts are most effective and sustainable when providers act with clinical autonomy, not when we tell them what to do with that data.

From our perspective, value-based payment is a stepping stone to the real goal: value-based care that results in better long-term population health. It’s not just about treating patients effectively in high-value, low-cost settings, it’s about doing everything possible for them month after month so that over three years, or 10 years, we’re creating a healthier population. That’s the path to decreasing total cost of care, because people won’t be using the emergency department as often and won’t need as many of the medications and procedures that are required when health deteriorates. 

Delivering on the Promise of Value-Based Care

Highmark’s True Performance program currently impacts the care of 1.8 million patients, and that number is growing. In 2017, the program’s first year, it delivered $260 million in avoided costs and more than $70 million in net savings.

Those numbers are great, but this is only the beginning. Within our enterprise, with our partners, and as an industry, I believe we will see more improvements as we refine what we mean by value and as longer-term investments in population health begin to register in the analytics.

Highmark’s own earliest pay-for-value models have evolved to where value-based thinking is ubiquitous throughout the entire coverage and care experience. We use our quality metrics to build high-value provider networks and design products and benefits around value. In partnerships that include shared accountability for population health and controllable costs, high-value providers are finding new ways to control quality, cost, and experience.

It’s an exciting time, and the more people that get involved and align around value, the more exciting it’s going to become.

Jeb Dunkelberger is vice president, producer administration and service, Highmark Health, Pittsburgh. Until September 2018, he was director of value-based reimbursement strategy and innovation at Highmark, Inc.


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