Providers are central to the change of how healthcare is paid for, moving away from fee-for-service to value-based care which focuses on paying for the quality of care rather than quantity of care. It is clear that the transformation will disrupt current business models. However, moving to a healthcare delivery model where payment is made based on improvements in patients’ health will advance the triple aim of providing better care for individuals, improving population health, and reducing costs.
To get started in value-based care, providers have to understand their patient population’s service utilization and quality outcomes. This analysis can be performed by an internal or external resource. Without having this information readily available, providers can inadvertently enter into losing contracts. Furthermore, this information is the key to understanding what opportunities exist within value-based care for their business.
Identifying Value-Based Care Opportunities
Providers should start with their existing data, some of which they may already be reporting to CMS or their state. Are they tracking quality outcomes and patient care coordination, and is there an opportunity to utilize their EHR more effectively to assist with this? Do providers already have care coordinators in their group? Do they have educational materials or programs around their main disease states easily available for patients? What are their care path patterns? Is the whole group consistent or is there variation? Getting a good sense of their team’s current strengths and weaknesses can help highlight the programs in which it may be beneficial to start and understand their opportunities.
Providers also need to understand what is currently being offered in their market. Besides CMS and Medicaid, which payers in their area have value-based contracts? Start with the top 3-5 commercial payers. Do they have active programs? If payers aren’t publicizing programs on their websites or making providers aware of them, reach out to the representatives who handle the payers’ contracting and/or credentialing – even if they can’t help, they can direct providers to the right resource. Asking about these programs does not mean providers are committing to participating, but it does signal a willingness to discuss, which can be beneficial.
In addition, providers should evaluate their relationships with those who are upstream or downstream from them in the patient care continuum. Are there potential partners with whom the providers have a strong relationship? This can help inform how and where providers should be involved in value-based care. Different kinds of providers will participate differently: a hospital, surgical group, post-acute care provider, or managing an ACO all have guidelines that dictate where and with whom they can participate.
Lastly, providers must evaluate their finances. What are their costs versus their reimbursements? Are there areas of treatment that have a higher profit margin? Are there specific payer relationships that yield a higher profit margin? Are any of these areas at risk due to pass-through billing? Are there areas where a site-of-service shift could impact revenue? Are there payers with higher administration costs? Understanding the financials can help providers better understand their areas of opportunity, what areas are at risk with the changing market, and which areas could be used in negotiations with payers around value-based contracts.
After this multifaceted assessment is complete, providers can start to develop an approach for their team. This aspect is highly variable depending on the type of provider business and wherein the patient care stream they are placed. Given the variability, trying to address all the approaches in one overview doesn’t make sense, so we will call out key points that are universal.
Developing a Value-Based Care Plan
First, the proposed provider plan needs to be realistic. If their team hasn’t yet evaluated and worked to improve standardization of care and quality outcomes, this paradigm shift will require focus and time. It would be wise to start putting structures in place before a contract is signed so that there is time for the team to get used to new protocols. However, delaying entering into a program until the structure is in place may prevent you from potentially achieving success in a shared savings program. Don’t let perfect be the enemy of good.
Second, be sure the processes you are implementing will address higher quality patient outcomes. Checklists are useful and often can be built into EHRs when needed. Value-based care focuses on improving patient outcomes, and if the process being followed or checked doesn’t equate to better outcomes, it doesn’t need to be tracked or measured to that level of detail. Every choice has a cost and requesting that clinicians monitor too many things will get in the way of their ability to deliver improved outcomes. In other words, be thoughtful about any new processes, and push back if they don’t make clinical sense.
Third, be strategically smart. There may be a desire to “do it all at once,” especially when providers are starting their value-based care journey. Don’t. Start slow to build speed. If providers are going to take on more than one value-based contract, ensure that they are similar enough to one another that the tools implemented for one will work for the other. Providers could be managing new data feeds to or from payers, while also monitoring systems and new care path protocols, and having too much to manage at once could impede the success of the program overall. Once providers get acclimated to the new and unique considerations of value-based care, accelerating into new contracts and programs will get easier.
Lastly, don’t be afraid of risk. Risk can be a good thing, as long as the approach is calculated, strategic, and the contract is structured for success for all parties. If the provider is open to taking on risk, payers will most likely be more willing to negotiate with providers on items such as administrative burden and reimbursement. If providers know their team has well-controlled care pathways and measurement tools, and have strong relationships with their patient care partners, risk can be quite beneficial for providers. Engaging in a risk arrangement is more likely to produce a steady income for patient care (whether due to per-member per-month payments, payer steerage, or other mechanisms), which can have long-term financial benefits, especially in difficult times. Don’t enter into risk arrangements lightly, but don’t be afraid of them, either. Work together to establish a winning contract.
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 providers up for success as they start to sign value-based contracts. And as always, Enlace is here to help.