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Top 4 Best Practices for Transitioning to Value-Based Care

When transitioning to value-based care payment contracts, there are four best practices that health payers should follow.

By Vera Gruessner

With the healthcare industry continually reforming toward better patient outcomes and reduced medical spending, health insurance companies have been moving away from fee-for-service payment structures and adopting value-based care reimbursement instead. For those still early in their transition, certain challenges crop up.

Alternative Payment Models

What are the best practices health payers should follow when implementing value-based care payments? Below we outline the top four tips payers can incorporate in their transition to alternative payment models.

Introduce risk gradually

According to a report from the Alliance of Community Health Plans, alternative payment models and value-based care reimbursement requires healthcare providers to take on financial risk. This is different from fee-for-service payment structures where health payers often took on more financial risk and providers were incentivized to offer large amounts of medical services.

The report outlines that transferring financial risk onto the provider network will need to be accomplished gradually and incrementally while investing in care management. Otherwise, providers may not be able to manage too much financial risk before getting their bearings when implementing value-based care protocols.

READ MORE: CMS Extends Pediatric Alternative Payment Model Comment Period

The report outlines how Tufts Health Plan uses a spectrum to assess risk and analyzes which provider groups are ready to take on additional financial risk. Currently, 86 percent of medical practices that have contracted with Tufts Health Plan are operating through an alternative payment model including 29 percent that have taken on a full-risk, capitated reimbursement structure.

“A portion of the provider's total potential payment is tied to the provider's performance on cost efficiency and quality performance measures. While providers may still be paid a fee for service for a portion of their payments, they may also be paid a bonus or have payments withheld. For value-based contracts, this bonus is not paid unless the providers meet cost efficiency and/or quality targets,” Jeff Rivkin, Research Director for Healthcare Payer IT Strategies at IDC Health Insights, told

“Clinical integration fees paid to providers are contingent on the providers engaging in practice transformation to adopt technology and processes that alter the manner in which they deliver care. Provider goals include accountability to their patients, creation of advanced care teams to include nurse care managers and pharmacists, and implementation of automated processes to address prevention and wellness,” concluded Rivkin.

Customize quality measures to providers’ improvement goals

Healthcare quality measures are often connected to factors such as reduced hospital readmission rates and better outcomes for patients with cardiovascular disease or chronic conditions like diabetes. The type of quality measures used do vary between payer to payer, the report states.

READ MORE: Humana Expands Medicare Orthopedic Bundled Payment Programs

Some have followed the lead of the Centers for Medicare & Medicaid Services (CMS) when implementing healthcare quality benchmarks.  Security Health Plan in Marshfield, Wisconsin uses the CMS Five-Star Quality Rating System as well as HEDIS quality measures.

Using the same measures as CMS and other key stakeholders allows the payer to align and customize their benchmarks to providers’ interests and ensures the payers don’t place undue administrative burden on medical facilities.

Create and share actionable performance data

When transitioning to value-based care payment models, health payers will need to understand the importance of data for improving the quality of care, patient outcomes, and reducing costs. Such data is “valuable only if actionable,” the report from the Alliance of Community Health Plans states.

Actionable performance data offers providers a path toward reaching their quality improvement goals. Various payers that hold membership in the Alliance of Community Health Plans tend to hold meetings with medical groups to go over the data gathered and find areas to focus on quality improvement.

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For example, HealthPartners in Minneapolis, Minnesota meets regularly with physicians to review data as they transition to value-based care payment models. Engaging providers in better understanding the data they gathered should lead them to align more closely with their quality improvement efforts.

Align reimbursement and quality improvement data to individual providers

The report further outlines that commercial payers will need to reward clinicians at a more individual, personalized level rather than at the practice level. This means that each provider will need to be reimbursed on a value-based care system instead of a larger hospital system being paid through value-based care while individual physicians still operate through a fee-for-service payment structure.

“Security Health Plan is working with physician practices to ensure rewards reach individuals who demonstrate improvement in care delivery,” the report stated. “Starting in 2010, the plan implemented a Medicare Advantage pay-for-performance program designed to control the cost of care while simultaneously creating incentives for quality improvement. However, it did not achieve the hoped-for results. Part of the challenge was that money went to clinics but did not make its way to individual physicians.”

By rewarding physicians who perform at the highest level, this should create an environment in which clinicians strive toward quality improvement and attempt to deliver the best possible care.

Image Credits: Alliance of Community Health Plans


Dig Deeper:

How Payers Should Prepare for Value-Based Reimbursement

What Are the Benefits of Accountable Care Organizations?


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