First Steps for Payers Developing Value-Based Care Initiatives

May 24, 2018 - Successful value-based care initiatives require payers to learn which populations experience a high prevalence of chronic disease, where their organizations overspend, and how value-based contracting can solve these problems.

Carefully assessing value-based care opportunities, implementing analytics strategies that can accurately identify opportunities, and monitoring success with meaningful quality measures can help payers achieve higher quality while reducing unnecessary spending.

Determining where to focus population health management efforts

Value-based care needs to create positive healthcare outcomes for a payer’s most vulnerable beneficiary populations. Assessing vulnerable and at-risk beneficiary groups is key for most value-based care programs.

The first step for payers to determine vulnerable beneficiary groups is to review data about their beneficiary groups to see which chronic diseases are the most prevalent across populations.

A population health analytics strategy can help payers identify the prevalence of healthcare risks, chronic conditions, and other healthcare conditions within beneficiary groups. Payers should analyze datasets such as healthcare claims, and medication adherence data to assess beneficiary healthcare challenges.

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Once payers can identify healthcare patterns across beneficiary groups, they then need to implement solutions for population health management.

Population health management strategies such as lowering cost sharing for chronic disease medications is just one example of how payers could improve overall health for chronically ill beneficiaries.

Cynthia Rice, Senior Vice President of Advocacy and Policy at the Juvenile Diabetes Research Foundation (JDRF), suggests that reducing financial costs for diabetes medications improves beneficiary health and lowers costs for payers as well.

“For people with Type 1 diabetes, their overall medical costs are about three times the costs of people who don't have diabetes,” Rice said. “And payers want to reduce that number. If we can provide the right tools and resources upfront we think we can prevent costly emergency room visits from either high blood sugar or low blood sugar.”

Payers that start to leverage population health management need a way to review the performance of their strategies. Measuring the success of interventions requires payers to assess process and outcome measures related to beneficiary outcomes.

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Process and outcome measures help payers determine if population health activities are leading to better beneficiary health outcomes. Implementing process measures can help payers learn if members are receiving preventive care services at recommended rates. Outcome measures determine if provider activities are leading to significant healthcare improvements for beneficiaries.

Addressing population health may also require payers to determine a beneficiary’s social determinants of health (SDOH).

SDOH can help payers determine healthcare risks and possible outcomes for their beneficiary populations based on factors outside the clinical care system.

Designing wellness programming and taking actions to address SDOH need their own specific goals as well.

For example, the Aetna Foundation performs historical analyses of beneficiary zip code data to address SDOH-related healthcare challenges.

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Payers can address SDOH related to food insecurity when equipped with zip code information that identifies food deserts and other socioeconomic barriers to nutritional meals. A handful of payers have also managed housing-related SDOH by transitioning homeless beneficiaries into subsidized apartments.  

Evaluating payment model capabilities  

Payers also need to evaluate their organization’s largest spending drivers before developing value-based payment models.

Physician costs, prescription drug spending, and residential care lead the top most expensive US spending categories.  Cardiovascular conditions, alcohol and tobacco related health issues, and diabetes lead the list of the nation’s most expensive chronic diseases.

Payers can also rely on the data available in claims to determine which healthcare services and conditions are becoming more expensive to cover. For example, an all-payer claims database aggregates claims information on a state’s healthcare spending, allowing payers and related stakeholders to identify overutilization and high spending.

After payers determine where overutilization or high spending occurs, an organization should then design payment models to address care costs.

Payers should create payment models that are simple for providers to adopt. Healthcare providers must understand which data and coding procedures are needed to report performance related to value-based reimbursement.

A health plan data governance strategy can help onboard providers into value-based agreements. Health plan governance can help providers understand the datasets and coding processes needed to earn value-based reimbursement.

Payments models that are ready for successful implementation have clearly defined conditions for provider reimbursement and lead to financial savings.

For example, a bundled payment model requires payers to pre-calculate the cost of care so that providers are fairly reimbursed for an episode of care.

BlueCross BlueShield of Michigan is one payer that has launched a bundled payment by relying on clinical insights to evaluate an optimal payment model. BCBS of Michigan found that a bundled hip and joint replacement model could reduce their overall spending by allocating payments between $22,000 to $55,000.

Putting it all together to create value-based care portfolios

Payers that have a value-based care program with a targeted population, and the appropriate payment model, need to determine which providers can join a value-based network.

Assessing providers for value-based care contracts requires payers to update credentialing processes, partner with providers, and help onboard providers by educating them about contracting details.

A strong data sharing program is key to facilitating value-based reimbursement. Nearly 70 percent of providers say that effective value-based care requires efficient data sharing systems between payers and providers.

Payers with strong provider partnerships, and thoughtfully designed value-based care programs, can then scale their successful VBC portfolios.

Enhancing provider engagement outreach, data sharing, and quality measurement allowed the BCBSA to scale their value-based care operations into a network that covers 19 million beneficiaries. In addition, BCBSA’s experienced a 35 percent decrease in costs and improved provider performance above national standards of care quality.

Considerable time, resources, and planning are needed for payers to launch effective value-based care programs. Payers that take the time to thoughtfully develop value-based care initiatives can experience improvements over fee-for-service reimbursement.