By Monica E Oss, Chief Executive Officer
The proportion of U.S. health care reimbursement dollars paid in advanced value-based reimbursement (VBR) models—contracts with shared savings, downside financial risk, and/or population-based payments—just passed 40%. The slow adoption of VBR with financial gain sharing and downside risk sharing—along with the unique challenges to specialty provider organizations in participating in these arrangements—may cause executive teams to think there isn’t much movement. But this development is glacial—slow but changing the landscape along the way.
In addition to the national snapshot of reimbursement patterns, the recent survey by the Health Care Payment Learning & Action Network (see APM Measurement Methodology And Results Report and The 2020 LAN APM Measurement Effort), also reported that the reimbursement model that health plan executive think will grow the most in the next year were arrangements with both shared savings and downside financial risk. This includes reimbursement with fee-for-service-based shared-risk and procedure-based bundled/episode payments
This trend is reflected in some current market developments. In a recent earnings report, Wyatt Decker, M.D., CEO of Optum Health, said that the company had exceeded their projections for value-based reimbursement. Optum Health has raised its projects of consumers in VBR arrangements from 500,000 new consumers to 600,000 (see Optum Health Has Raised Its Expectations For Value-Based Care Participation. Here’s Why). The increase was attributed to changes in provider reimbursement for dual special needs consumers with high acuity who need care across the continuum and wrap-around services in the home.
In other news, the federal Department of Health and Human Services (HHS) proposed testing models that use value-based payments in Medicare Part B to link payment with a medication’s clinical value (see HHS Proposes Testing Value-Based Payments For Medicare Part B Drugs). This plan also includes testing total-cost-of-care models to assess whether the models result in changes to drug utilization, reductions in total spending, and improvements in beneficiary health outcomes. And in January the Colorado Department of Health Care Policy & Financing (HCPF) launched its first two value-based contracts for the Colorado Medicaid pharmacy program—two Medicaid value-based contracts with drug manufacturer Novartis (see Colorado Medicaid Implements Two Pharmacy Value-Based Contracts With Novartis). Both contracts hold Novartis financially accountable for meeting the clinical outcomes demonstrated in clinical trials.
And in February, the U.S. Centers for Medicare and Medicaid Services (CMS) announced it will increase performance measurements and the use of value-based reimbursement for nursing homes (see CMS Planning New Staffing Requirements & Value-Based Reimbursement Plans For Nursing Homes). This will include an effort to reduce unnecessary medications, staffing, and the inappropriate use of antipsychotic medications, and strengthen the skilled nursing facility (SNF) value-based purchasing (VBP) program with incentive funding to facilities based on quality performance.
Among specialty provider organizations, 45% are participating in some form of VBR. But only 9% have more than 20% of revenue coming from VBR contracts (see The OPEN MINDS 2022 Survey On Value-Based Reimbursement In Specialty And Primary Care).
From our recent discussions with health plan executives, the challenge for specialty provider organizations in participating in robust VBR arrangements is attribution of consumer care coordination and financial management responsibilities. (For more on this, see my articles on the presentations by Dr. Indira Paharia, Chief Operating Officer, Behavioral Health, Centene Corporation, Eric Bailly, LPC, LADC Business Solutions Director, Behavioral Health Clinical Strategy, Anthem, Inc. at The 2022 OPEN MINDS Performance Management Institute—Collaborative Care At Scale – More Important Than Ever and The Choppy Road To Better Value.) My takeaway is that specialty provider organizations have two possible approaches for moving ‘upstream’ in risk arrangements with health plans—specialty service programs or health home/medical homes with primary care.
The question for executive teams of specialty and primary care provider organizations is how to navigate this change in the market and maintain (and grow) revenue. For an answer to that question, I recently spoke with my colleague and OPEN MINDS Senior Associate, Paul Duck. His observation—executive teams need to think less about volume and more about value. “They need to understand the ‘value’ of their services to consumers and payers—and develop models to get paid for that value.”
“Most provider organization executive teams have not adequately prepared their infrastructure for arrangements with downside financial risk—their data systems, their clinical delivery systems, and their culture,” explained Mr. Duck. “While many professionals service consumers with behavioral and cognitive disorders have traditionally had a mindset that therapies are more of an art form than science, the science has grown over the past decade and payers want to reimburse on this emerging new science and the performance it will bring.”
“Executive teams need to retool for the four major market shifts that are top-of-mind for payers—“integrated” care coordination models, ‘hybrid’ service delivery models, and a push for lower costs and value with financial alignment with risk sharing reimbursement.”
To test how prepared your organization is for reimbursement arrangements with risk sharing, check out the got an error message when trying to link to this on PRC OPEN MINDS Value-Based Reimbursement Readiness Assessment. And for more on the changing health and human service reimbursement landscape, check out these resources in The OPEN MINDS Circle Library:
- 2021 Trends In Behavioral Health: A Reference Guide On The US Behavioral Health Financing & Delivery System, 3rd Edition
- Provider Organizations In Medicare Home Health Value-Based Model Outperforming Non-Participating Providers In 9 States
- Measuring Performance—Data Integration Matters
- CMS Sets New Reimbursement Code For FDA-Approved Prescription Digital Behavioral Therapeutics
- Massachusetts Rebids Medicaid ACOs, With New Expectations For Primary Care Integration
- Psychiatrists Scores On 2020 Medicare Merit-Based Incentive Payment System Lower Than Other Physicians
- The Opportunities & Challenges Of VBR – Making It Work On The Ground
- The Payvider Market Map
- The Choppy Road To Better Value
- Optimizing Whole Person Care: A Successful Integrated Care Model
And for even more, join us on June 16 at The 2022 OPEN MINDS Strategy & Innovation Institute for the session, Metrics Matter – Utilizing Quality Measures & Key Outcomes As Performance Drivers, featuring Isamu Pant, Director of Business Intelligence, Aurora Mental Health Center; Dominick DiSalvo, Corporate Director of Clinical Services, KidsPeace; and Tammy Pearson, Senior Associate Director, Marshall Center of Excellence for Recovery, Marshall University.