The Progression of Value-Based Payment Models

Success Will Require All-Around Engagement

By Joy Rios, Managing Partner at Practice Transformation
Twitter: @askjoyrios

This week is all about Health IT awareness. One on-going health IT conversation is how to smoothly transition from volume-based to value-based business models in healthcare. Success will require a shift in mindset, tools to support tracking and analyzing clinician behavior, and a solid infrastructure to ensure usability.

Below, two subject matter experts from McKesson to weigh in.

Matt Zubiller, Vice President, Corporate Strategy & Business Development and Dr. Andrei Gonzales, Director, VBR Initiatives took some time to answer my questions about value-based trends.

Which reimbursement model combinations are gaining traction among payers and providers as the healthcare industry shifts from fee-for-service to one that is increasingly based on value? 

Andrei Gonzales (AG): According to a study we commissioned from ORC International, there’s been growth in all value-based models. The study found that both payers and providers predict that pay-for-performance and bundled payments will experience the greatest growth in the next five years, but capitation will continue to be popular. However, the dominant models vary based on location and depend on local dynamics and what providers are willing and able to support.

Matt Zubiller (MZ): I don’t think there is going to be one new model, but likely a hybrid of both fee-for-service and VBR models.

What are the biggest challenges you see providers facing when implementing these models? 

AG: One of the biggest obstacles is provider engagement and buy-in in VBR across organizations and the continuum of care as well as the provider’s ability to administer multiple VBR models from different health plans. This speaks to the lack of technology that integrates IT systems. Similarly, patient engagement in VBR is critical to its success.

MZ: Obstacles include physician’s engagement, adoption and administration.  There’s a lot of interest in the movement to value, but there is very little infrastructure to ensure ease of use. The current FFS systems have been in place for up to 30 years. Reimbursement is complex, and shifting to VBR makes it even more so.  At a time when providers and payers are focused intensely on reducing operating costs, the focus on value will multiply the complexity and bring significant administrative burden, if it’s not addressed with scalable, shareable technology solutions to manage the complexity.

According to the ORC survey, the biggest concern, however, is in providers buying in, agreeing on what value really means, changing behavior, and sharing data actively with those who are paying for the care.

Where do you expect the VBR market to be in three to five years? 

AG: We expect to see a higher penetration of VBR models covering a greater percentage of medical care—as much as 60 to 75 percent. We also believe we’ll see an active effort to consolidate disparate models to local, multiple payer programs.

MZ:  There will likely be hybrid/mix models employed and that will be hard. Right now we’re seeing market testing and experimentation. Some models will fail, others will succeed. We believe the market will move beyond this phase to more active use based on demonstrable results, and there will be an interest in solutions to support them over the next three years.

Do you recommend any specific tools or resources for providers to help them make the transition? Which ones?

AG: Tools like McKesson Risk and Population Manager help providers understand their quality metrics so they can focus on high value improvement opportunities to fix their clinical and resource utilization gaps.  Before a provider organization enters a value based payment model, they need to know their strengths and weaknesses and how they will perform. Focusing on their strengths and strategically fixing problem areas will prepare them to succeed in value based models.

MZ:  Providers need analytics and risk assessment in their populations, tools to manage care in that population effectively, and tools to automate and drive down administrative costs. They will also need tools to manage narrow provider networks, manage utilization, and ensure accurate VBR claim submission and payment, as well as tools for transparency to the provider and the patient regarding the cost and quality of care they are selecting. In a VBR world that leverages CDHPs, that accountability becomes more real.

Is there a way for providers to understand the financial consequences of clinical decisions they make in real time? 

MZ: We have great tools, market leading RHF’s Patient Estimation tools, but we don’t truly know the cost of care across the care continuum generally until the care is rendered, claimed, and adjudicated today. Unfortunately, it’s not so much a technology problem, but a behavior and trust problem.  Providers aren’t trained, don’t have the time or the data, and generally aren’t comfortable discussing cost with their patient.  Payers traditionally have preferred not to expose their payment terms and haven’t collaborated as they needed to with providers. That’s changing. With the shift to value-based care, many tools are coming to market from payers to give patients direct access to this information online. In VBR models, providers too are much more accountable to understand the cost of the care they are recommending since they are at risk in these models. As such payers and providers are collaborating much more closely and transparency to cost is on its way.

What progress, in technology, collaboration, or otherwise have you seen that enables transparent decision making at each point of the care continuum? 

AG:  This is one of the biggest challenges in advancing value-based models and gets to the challenge of provider engagement across the continuum of care. There are payer-specific tools for care coordination and some level of interoperability among EMRs either directly or through HIEs, but none of these tools are sufficient to facilitate care coordination. Payer-based tools need to be embedded in the provider workflow (EMR) and go across all payers so providers don’t have to use different tools for patients with different health plans. EMRs need to be integrated to the level of seeing and updating a longitudinal plan of care within each encounter, which is not present or at least not mature in most systems. For these systems to evolve, payment incentives need to compel providers to push their vendors to deliver them. This will take time and the progression of value based models is a key driver for this transformation.