Payers, Providers Use Population Health Management to Cut Costs

January 22, 2016 - Health payers and providers of today are working more closely together to develop effective care management strategies meant to reduce medical costs, improve quality of care, and ensure better patient health outcomes. For example, more private payers and providers are now partnering to create accountable care organizations and strengthen population health management.

A recent report from Markets and Markets shows that the population health management arena is expected to reach $31.36 billion in the next four years and grow at an annual growth rate of 23.2 percent between 2015 and 2020. This shows just how important population health management is to payers and providers as well as the patient community looking to improve health outcomes.

Health reforms and the Patient Protection and Affordable Care Act are some of the measures that are bringing greater interest in the population health management market. Additionally, meaningful use requirements under the Medicare and Medicaid EHR Incentive Programs have stimulated the implementation of health IT systems across the medical spectrum.

This has also brought providers to pursue population health software tools and revenue cycle management platforms in an effort to partner more effectively with health payers. The aging baby boomer population has also brought more elderly patients in need of geriatric services while a rise in chronic medical conditions has put greater focus on population health management.

As more payers and providers focus on value-based care payment reform, creating more effective care management strategies will be key. One of the few entities that may be limiting market growth of population health management is health data security or the need to protect patient information.

The report from Markets and Markets further positions the Affordable Care Act and its mandates as a main driver of population health management software. Healthcare providers looking to improve their claims management including benefit reconciliation, denial processing, and automation have turned to the revenue cycle management market.

Another report predicts that the revenue cycle management market around the world will reach $7.09 billion over the next four years. The report expects the market to grow at 11.8 percent annually between 2015 and 2020. One again, the greater focus on health IT systems has led this particular area of the medical industry to flourish.

Out of all IT systems implemented by healthcare providers, the global revenue cycle management market took a large share of 35.5 percent in 2014. A faster, more streamlined revenue cycle management platform in real-time can help providers maintain a constant cash flow and keep their revenue in stable condition, the report describes.

From bundled payment models to accountable care organizations, payers and providers are working harder than ever before to reign in excessive and wasteful healthcare spending. When it comes to managing the revenue cycle and implementing new value-based care reimbursement strategies like bundled payments, there are certain key ingredients that must be integrated.

These ingredients include ensuring health insurance for a particular disease or condition, a focus on risk-adjusted patient health outcomes, reimbursement linked to quality healthcare services, and greater payment limits on medical care unrelated to patients’ needs. Bundled payments are meant to cover the services provided to a patient during a specific cycle of care.

“What’s happened here is we have built over many years a decent infrastructure that is really focused on servicing this one-size-fits-all version of healthcare particularly these fee-for-service models,” Ray Desrochers, Chief Marketing Officer of HealthEdge, told HealthPayerIntelligence.com.

“As we start to move into things that are much more individualized, personalized, and customized – that’s both on the benefits and payments side leveraging value-based care benefits and payments as well as the new ACO models and individual market models – we are suddenly in a world where the one-size-fits-all approach doesn’t work anymore.”

“People are seeing that there’s a fundamental disconnect in terms of the technology that’s in the organizations today, which was great in the old days but was never built or designed to handle any of the things we’ve just talked about.”

“They’re also seeing a fundamental disconnect with their people and processes. What many of these organizations are doing is they’re undertaking a fundamental transformation of the business. Most of the executives now believe that this transformation of their businesses is the only way they’re going to compete in this new healthcare economy.”

Along with new models of reimbursement, payers and providers are also introducing innovative care management strategies to stabilize skyrocketing healthcare costs. The Affordable Care Act has also led some providers and organizations to re-design their approach to care management especially with its focus on developing accountable care organizations.

Disease prevention and population health management continue to be vital areas for strengthening current care management strategies. For example, patients are continually being encouraged to adhere to their medications, obtain health screenings, and remain physically fit. Patient engagement and risk stratification are becoming more popular throughout the health payer industry.

“With the focus being on the at-risk population and those with chronic conditions, what folks are trying to do now is combine what had been traditional care and disease management, which we know is effective,” Desrochers continued.

“If you’re a diabetic, for example, and we have a nurse that’s doing outreach with you and making sure that you’re taking care of yourself, we know that’s effective. People have been doing that for quite a while now.”

“If we can combine that concept with the incentives that are part of the value-based care models – incentivizing the right member behavior, particularly for this at-risk population – and combining that with the incentives for the providers to help make sure patients are doing the right things – seeing the doctor on a regular basis, taking health-risk assessments, and taking their medicines – then, all of a sudden, we have the holy grail,” he concluded.

Essentially, population health management strategies remain a vital part of the payer-provider relationship as the healthcare delivery system continues to strive toward quality care, better health outcomes, and lower costs.