VBR Marches On – A Trend Driving 2022 Strategy

By Monica E. Oss, Chief Executive Officer

We started the year with the release of new reports on the continued movement away from fee-for-service reimbursement to alternate, value-based reimbursement (VBR) models. Over half of health systems are planning to move to “payvider” market positioning in 2022 (see Nearly 60% Of Health Systems Aim To Become ‘Payviders’ In 2022). These ‘payvider plans’ include many arrangements – provider-sponsored health plans; direct contracting with health plans; joint ventures with health plans; and risk-based contracting. In addition, a new survey found 56% of health plans and pharmacy benefit managers (PBMs) report using outcome-based, non-fee-for-service provider reimbursement. However, when it comes to mental health reimbursement, only 22% reported having outcomes-based contract (OBC) (see 56% Of Payers Had Outcomes-Based Provider Reimbursement In Place As Of September 2021).

This disparity between the use of VBR for reimbursement for behavioral health services and other areas of health care is not new. Our survey, The 2021 OPEN MINDS Performance Management Executive Survey: Where Are We On The Road To Value, reported 53% of specialty provider organizations serving consumers with chronic and complex conditions are participating in VBR, compared to 74% of primary care organizations. And, 12% of specialty provider organizations reported 20% or more of their revenue was tied to VBR, compared to 32% of primary care organizations.

There are several reasons for this disparity. Many specialty provider organization executives report difficulties securing VBR contracts. Health plan executives express concerns about balancing choice and access with value-based contracts for behavioral health. In addition, when it comes to behavioral health reimbursement, health plans have issues with linking behavioral health provider compensation to total cost of care in systems with capitation of primary care services; with data sharing and systems interoperability; and with making necessary system changes.

Executive teams of specialty provider organizations need to get ahead of this curve and develop a strategy to “fit” in established value-based relationships. That will involve understanding the dominant health plans in their market areas – and how they prefer to contract for delivering services to consumers living with behavioral health and cognitive conditions. With that market information, executive teams can decide if new partnerships, a merger, or an investment in a different service delivery and management capacity is the best strategy.

Many executive teams are skeptical of participating in the new alternative payment methodologies because the options are limited. Fee-for-service rates for undifferentiated services have been flat for a number of years (on the decline, on an inflation-adjusted basis). To maintain margins, executive teams need to build a plan for creating “value-added services” that get above-market reimbursement. Or, the other options for margins is VBR.

In 2021, there were some great perspectives on future health plan strategy from our keynote speakers at our institutes and summits. To watch any of those presentations, check out:

For the VBR year in review, check out these 2021 resources in the OPEN MINDS Industry Library:

And for even more, join OPEN MINDS on February 10 for The 2022 OPEN MINDS Performance Management Institute, where OPEN MINDS Chief Marketing Officer, Timothy Snyder and OPEN MINDS Senior Associate, Casey Zanetti, will present the executive seminar Maximizing Revenue, Aligning Internal Growth Strategy & Succeeding In Value-Based Care.