Overview For Employers: Getting Started with Value-Based Care

As healthcare costs continue to increase, employers continue to look for ways to reduce costs while at the same time ensuring their employees receive quality care. More and more employers are adopting value-based care models that are designed to reduce costs and improve patient outcomes.

Healthcare has traditionally been paid for under a fee-for-service model, in which providers are paid for each service performed. In fee-for-service, many of the ways to manage and measure success are well-established. Key metrics like monthly/annual trend, cost per claim, denial rates, and claim settlement cycle time are all commonplace. Value-based care key metrics are completely different due to their embedded emphasis on quality of care rather than cost. For example, readmission rates are tracked for both, but they are approached differently when considering value-based care versus fee-for-service. In value-based care, readmissions are viewed as potentially avoidable and therefore shouldn’t be reimbursable. In fee-for-service, the reality is that readmissions lead to additional revenue for hospitals. Hospital incident rates are also approached differently. Value-based care uses hospital incident rates to assess the quality and will either exclude providers from participating in programs when they are too high or will reduce reimbursements within contracts when they occur. In fee-for-service, hospital incidents are tracked, but when they occur, they can lead to more or longer interventions and thus higher dollars. This shift in cost and quality considerations can leave employers wondering where to begin to move from fee-for-service to value-based care.

Identifying Value-Based Care Opportunities

To get started in value-based care, employers must first understand their current state as it pertains to their employees’ healthcare and wellness. This exercise can be done internally, or employers can outsource. It will take a bit of work, but it is key to understanding what opportunities exist within value-based care for their employees.

First, employers should assess their wellness programs. Do they offer money towards fitness watches, provide discounts at local gyms, have a gym in-house, or provide any other fitness incentives? Perhaps they work with local farmers to deliver fresh produce to the office during the summer? Are stretching or meditation breaks offered during the workday to reduce stress? These types of programs are all consistent with the philosophy of value-based care. They are designed to improve employees’ quality of life and, in turn, their health – which can lower the employer’s healthcare costs. Whether employers are encouraging exercise, eating healthy, or reducing stress, there are long-term benefits that can come from these types of programs. Additionally, employee participation can be a good indicator of which areas of interest employers might want to consider including in their health plan benefits.

Evaluating Current Health Plans

Second, employers need to understand what opportunities exist within their current health plan. If employers are self-administered, they may only be accessing the fee-for-service reimbursement models that the plan offers, or they may already be in value-based care arrangements and not be aware. Employers should have a discussion with their broker to better understand what is already happening on behalf of their employees. Make sure to ask for specifics: what are the programs, how many of their employees are in them, and what reporting does the plan offer to keep employers apprised of the program’s health? What are the quality improvements and savings? Is the employee notified that they are in a program? What incentives are in place to encourage both the providers and employees to participate?

Employers should ask for the payer’s strategic roadmap. Value-based care is growing and hopefully, their health plan is expanding its programs to meet the demands of employers, members, and the government. Find out what programs they intend to implement. Will self-administered plans be included? Do these programs save their employees money or streamline the care process – are they easy to navigate? What happens if the employee is in more than one plan? How is the employer paying for this, are there any special aspects other than the fee-for-service standard? If the payer has any education around these programs, ask them to share them.

Evaluating Health Care Options

After that discussion, the next step is to understand the population that employers are insuring. What are the demographics? Understanding their workforce, including their dependents, can help highlight what health care options might be needed. If employers are in a rural area, access to care might be harder, and discussing telehealth options might be a good area in which to look. If the employer’s field is labor-intensive, focusing on muscular-skeletal-related programs might be useful, or if the employer has a high number of employees at childbearing age, maternity episodes would be a good option. If their employees are primarily all in one distinct area, it might be useful to look at a narrow network approach. Understanding their insured population can help highlight where opportunities may be available, and even needed.

Once employers have assembled the information, they can review and determine their next steps. This might include further discussions with their existing health plan. It might also include having a discussion with their human resources department, which manages the purchase of healthcare and could set up an RFI for health plans to see what they have to offer. If your current payer isn’t interested in moving into value-based care, a next step may be to look at direct-to-employer options. All of this analysis can be done internally or using an outside consultant to assist; however, employers will want to ask potential consulting firms to detail their knowledge around the variability in value-based care, and their approach to getting answers. If they start making recommendations before any of the research is done, that suggests they have a cookie-cutter approach which may or may not work. Ensuring that they are dedicated to finding the right personalized approach is critical.

Value-based care is the future of healthcare. CMS is mandating it; employers are demanding it; patients are expecting it, and it is growing in popularity not just in the United States, but around the world. There are many complex considerations in value-based care, but it is vital to get initiatives onto strategic roadmaps as the whole industry shifts away from fee-for-service. These recommendations can help set up employers for success as they start to engage in value-based programs. And, as always, Enlace is here to help.