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Payers See Cost, Quality Gains with Value-Based Payment Models

Value-based payment models are delivering on their promises to reduce costs for payers and improve the quality of care.

Value-based payment is helping payers reduce costs and improve outcomes.

Source: Thinkstock

By Thomas Beaton

- Payers and providers participating in value-based payment models are seeing reduced costs and improvements in care quality.  

Value-based payment, which is expected to account for 59 percent of all healthcare payments by 2020, helps payers and providers address significant cost challenges.

Commercial payers have leveraged value-based payment models including accountable care organizations (ACOs), bundled payment models, and patient-centered medical homes (PCMHs) to create savings opportunities and contain spending.

BlueCross BlueShield Association ACOs, PCMHs reduce care costs by 32 percent

The BlueCross BlueShield Association’s network of ACOs and PCMHs, called the Total Care Network, reduced care costs by 32 percent during the first half of 2018.

BCBS payers leveraged data-driven decision making, provider collaboration, and national guidance from the BCBSA to achieve meaningful results. BCBSA has plans to scale the network over time by developing additional cost-saving quality measures.

In addition, Total Care Network organizations helped BCBS payers reduce beneficiary hospitalizations by 15 percent and ED admissions by 10 percent in their first year.

“We are encouraged by our results here to continue to promote and grow these types of programs across the country,” Kari Hedges, Senior Vice President, Commercial Markets & Enterprise Data Solutions at BCBSA Hedges said.

“BCBSA is working towards the advancement of these programs, maturing these programs, and having more patients get access to value-based care that is focused on outcomes and improving patient care.”

BCBS payers also reported significant cost-saving opportunities at the regional level. In particular, BCBS of Kansas reduced per member month (PMPM) costs by $17.35 for commercial members, and by $6.50 for members with chronic conditions.

Bundled payment programs help payers cut costs by 7 percent

Value-based payment models can reduce a payer’s care costs by 5.6 percent, according to Change Healthcare. Bundled payment programs were found to reduce care costs at even higher rates.

However, a third of payers said they need roughly one year in order to launch a new bundled payment program. Between 43 and 58 percent of payers said that it is difficult to engage providers in a bundled payment program.

The potential savings opportunity from bundled payments have sparked payer efforts to overcome provider onboarding challenges.

To address provider concerns, payers are investing in administrative staff to help grow and manage new bundled programs. Currently, 66 percent of payers have made investments in hiring new staff to onboard providers into bundled payment programs.

Highmark performance-based payments help save $260 million in 2017

Highmark Health Plan saved $260 million in 2017 by customizing performance-based payments for participating providers.

The True Performance Program uses pay-for-performance measures to reimburse providers based on their ability to deliver timely and appropriate care.

The program lead to 11 percent fewer ED visits and 16 percent fewer inpatient admissions. Highmark estimated that reducing inpatient admissions alone cut care costs by $224 million. True Performance Program providers use data insights shared from Highmark to improve clinical decision making, reduce cost, and improve quality of care.

“True Performance helps physicians focus on prevention and wellness — they are evaluated on meeting nationally-recognized quality measures such as ensuring members receive appropriate screenings and vaccinations,” said Dr. Charles DeShazer, Senior Vice President and Chief Medical Officer of Highmark Health Plan.

“Those prevention and wellness efforts are helping to keep our members out of the ER, and we estimate that potentially avoided costs were over $38 million in just the first year of the True Performance program.”

Humana’s value-based care programs cost 15 percent less than fee-for-service

The total care costs of Humana’s value-based care programs were 15 percent less than the costs of its fee-for-service payment model.

The payer reported higher rates of preventive care utilization and 26 percent higher provider HEDIS scores with value-based programs over fee-for-service payment. Humana’s portfolio of value-based payment models include shared savings programs, global capitation payments, and bundled payments.

Humana beneficiaries served by providers in value-based payment programs also experienced improvements in chronic disease treatments and healthy behaviors. The payer’s value-based care programs increased blood pressure control by 7 percent, adult BMI assessments by 4 percent, and diabetes-related renal disease control by 2 percent.

The payer suggested that value-based payment programs can successfully reduce costs and improve outcomes by supplementing payment models with additional support systems such as coordinated care and wellness programming.

“Payers may also offer acute, post-acute and supportive care, as well as embedded care coordinators, home health and pharmacy solutions, and chronic condition programs that supplement a physician’s treatment plan,” Humana said.

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