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News | Healthcare Reform

Verma to insurers: The public is ‘frustrated with you’

News | Healthcare Reform

Verma to insurers: The public is ‘frustrated with you’

  • Public and provider frustration could soon result in elimination of private health plans, says CMS Administrator Seema Verma.
  • Private health plans need to increase their level of innovation and shift to value.
  • Keys to value partnerships include giving providers data, insights and timely feedback.

The leader of Medicare and Medicaid warned private health plans to follow the federal government’s lead on innovation and in shifting to value-based payment, or politicians will “eliminate your industry.”

Seema Verma, administrator of the Centers for Medicare & Medicaid Services (CMS), addressed a Washington, D.C., gathering of members of America’s Health Insurance Plans on Sept. 24 and warned that the public has soured on the costly, complex fee-for-service healthcare system.

“They’re frustrated with you,” Verma said as health plan executives attending the address glanced at each other.

Verma said “a change will take place” and the current system will be replaced either with a single-payer system or a private system driven by innovation.

Warning signs for the existing system recently have included public polls and the votes of 47% of American Medical Association (AMA) delegates to urge adoption of “Medicare for All,” Verma said.

 “Consider that [AMA] vote the canary in the coal mine that health insurance is in danger,” Verma said.

Health plans need to be serious about shifting to value-based payment (VBP), which Verma described as “the future of healthcare.”

CMS is driving VBP but needs helps

As the nation’s largest insurer, CMS plans to continue pushing providers to move into VBP, Verma said. Such efforts include upcoming models with more of a multi-payer focus to encourage more providers to change their behavior.

But CMS needs health plans to “step in the ring, innovate and create value.”

Verma’s warning and plea followed increasing provider complaints that health plans are reluctant to offer risk-based contracts and the release of data showing that hospitals continue to derive little of their income from risk-based sources.

A troubling sign for VBP is an increasing tendency of physician practices to pull out of risk arrangements with health plans, Denise Kress, a vice president of Tufts Health Plan, said at the AHIP meeting. She said that trend stems in part from the proliferation of “too many” models and also from the desire of practices to focus their efforts on certain models.

“It’s been very distracting for people to figure out where they fit and what’s the long game” on risk-based payment, Kress said.

Krishna Ramachandran, a vice president of the insurer Health Care Service Corporation (HCSC), credited Medicare with pushing providers toward risk-based contracts. To expand in VBP, his company has had to “bake in protections” for physician practices, such as by offering reinsurance to those operating under risk-based payment.

HCSC has shifted 36% of enrollees into VBP, including 60% of its Medicare Advantage enrollees.

How the shift to VBP may accelerate

Based on HSCS’s experience, Ramachandran said, keys to health plan-provider VBP collaborations include both ”tangibles” and “intangibles. Among them:

  • Giving providers data, insights and timely feedback
  • Developing a “shared language” between providers and health plans
  • Building trust to move from an adversarial relationship
  • Keeping an open mind

Those keys were echoed by Brian Clem, president of Oak Street Health, a large group of practices that operate under full capitation contracts.

“Two-way data exchange is one of the most important and difficult elements of success,” Clem said.

Such data is key to fully understanding patient populations and helps providers ensure “all the gaps are closed,” Clem said.

As identified by Tufts Health Plan, Kress said, keys to succeeding in risk-based plans include:

  • Establishing strong and stable leadership
  • Incentivizing individual clinicians to take steps toward VBP
  • Developing the ability to engage with patients

About the Author

Rich Daly, HFMA senior writer/editor,

is based in the Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare

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