From vision to reality: Critical elements to getting value-based care right

The healthcare ecosystem has faced profound disruption due to the COVID-19 pandemic. Surveys have shown a ~50%-90% drop in revenue for hospitals and health systems, and providers have struggled to manage various quality improvement programs during the pandemic. For value-based care (VBC), these results are a double-edged sword. On one hand, the pandemic has elucidated the pitfalls of our traditional fee-for-service (FFS) and care delivery models. On the other hand, we see payers and providers aren’t yet well-equipped to move away from FFS and toward VBC arrangements. 

Making this shift from FFS to VBC is imperative, and the market is moving quickly in that direction. Just recently, the Centers for Medicare & Medicaid Services (CMS) announced its intention to have 100% of original Medicare patients enrolled in accountable care relationships by 2030. Further, the industry expects a massive shift in risk from the government onto provider organizations and other players in the private market over the next five years. Payers looking to be at the forefront of this change by developing strong VBC portfolios, should build out or strengthen their capabilities across the four stages of the VBC life cycle:

1. Strategy and contract design
2. Provider enablement
3. Performance monitoring
4. VBC enablement and administration

There are multiple levers health plans can pull to improve cost, quality and access to healthcare for their members. VBC is one of the main levers for plans to achieve their aims, but it’s important they strategically think about how to build out a VBC portfolio in line with broader organizational goals. Plans can ensure their VBC strategy is cohesive and future-focused by asking the following questions:

• Strategy and vision planning - What role does VBC play in our strategy? How much do we want to invest in VBC, and are we ready to invest to that level? How should we respond to regulatory changes?
• Provider intelligence - What kinds of providers should we contract with? How should we partner with these providers?
• Product and contract design - Should we standardize our contracts or allow for more flexible contracting arrangements? What kinds of contracts or products are going to be most attractive to our providers or members?

Providers face various barriers to participating in and being successful under VBC arrangements, whether the challenge is properly aligning physician incentives to reduce cost, improving quality and collaboration with specialists on patient care or evaluating utilization and outcomes for improved performance.

Without successful provider partners, health plans won’t be able to realize gains from VBC arrangements. As such, health plans play a critical role in ensuring providers not only have the right capabilities but can execute on them effectively. To help enable providers, plans should carefully consider the following questions:

• Provider engagement - What kinds of capabilities do our providers need to work under VBC arrangements effectively? How should we source (e.g., build, buy, partner) and provide these capabilities (e.g., field staff, tech solutions)?
• Member engagement - How should we engage with our members? What kinds of programs would make the biggest impact in managing our members’ health?
• Analytics - What are the data and analytics needs of our providers, and how does this align with our IT strategy?
• Governance - What kinds of governance, accountability and reporting processes do we need to support provider partners effectively?

Payers struggle across a variety of dimensions in monitoring the performance of their contracts and cross-portfolio performance. Limited visibility into provider data, lack of standardized measures across contracts, lack of timely data and poor connection between data and workflows are just a few of the challenges payers face in evaluating their performance. As payers think about strengthening their performance monitoring capabilities, which are integral to execute VBC contracts effectively, they should consider their performance measurement and reporting and insights capabilities, such as those outlined below:

• Performance measurement - How should we measure the performance of our contracts on an ongoing basis? What measures can and should be standardized across our contracts?
• Reporting and insights - How do we report insights from our data back to providers? What kinds of data would our providers see as making the most impact?

A health plan must navigate various levels of VBC stakeholders and contracts, facing diverse challenges at each level. 

Plans need to understand the following to ensure they can successfully administer their contracts:

• Where their challenges lie—for example, whether their data exchange capabilities or program enablement and deployment capabilities are the bigger obstacle
• How sophisticated their processes are today
• How sophisticated their processes need to be to meet the challenges of tomorrow

Now, more than ever, health plans need a detailed, future-oriented approach to building VBC capabilities and creating strong payer-provider relationships to harness the transformative power of risk-based arrangements. By asking themselves the strategic questions outlined above, plans can ensure they’re in the best position to push VBC adoption to the next level both for themselves and their providers. In our next piece in this series, we’ll take a closer look into how health plans can assess their current VBC maturity against their short-term and long-term vision to build a roadmap for VBC transformation.