Value-Based Care Models Gain Steam, Cut 20% of MA Spending

November 21, 2019 - Evidence is mounting to confirm that value-based care models are more cost-effective than fee-for-service, according to Humana’s fifth Value-Based Care Report, which said bundled payments and value-based payer-provider partnerships are key to this process.

The major payer’s Medicare Advantage plan yielded 20.1 percent lower medical costs, or $3.5 billion in healthcare spending, compared to traditional Medicare. Even in commercial non-value-based care settings, Humana sidestepped $249 million in unnecessary expenditures through value-based care.

The cost of covered medical care was 1.4 percent lower in value-based care contracts. However, quality has not suffered as a result of the drop in healthcare spending, with utilization, readmissions, and emergency department visits all sloping downward and medication adherence and overall health improving. Preventive care played a significant role in decreasing utilization costs which, although it increased upfront spending, ultimately led to savings.

As the value-based care model gains a greater foothold, the savings extend to every stakeholder. Last year, 60 percent of providers who engaged in value-based contracting with Humana received shared savings.

In Humana’s value-based care arrangements, the providers not only saved, they gained. Compared to their peers in non-value-based arrangements, Humana Medicare Advantage providers earned nearly $0.16 for every dollar that went to primary care, while those in fee-for-service or other models pocketed about $0.06 for every primary care dollar spent. In either case, however, Medicare reimbursement levels were inferior to both commercial payment options.

Providers and payers also benefited and saved by engaging in bundled payments, said the payer, which expanded its bundled payment models this year. Three out of every four providers involved in Humana’s total joint replacement bundled model were compensated for positive patient outcomes, which included post-treatment care.

Humana’s bundled payment models saw twice the success for providers in 2018 as in 2017, with double the number of providers receiving outcomes-based additional payments.

In orthopedic groups participating in total joint replacement model alone, the number of providers earning gain-share went from 45 percent in 2017 to 75 percent in 2018. These providers performed well on four quality measures, which checked readmission rates, whether patients endured an infection, any dislocations or fractures, and certain vein contractions.

Bundled payments, according to Humana’s model, could prove that value-based care can serve the interests of all stakeholders. While providers were receiving higher gain-share and payers were looking at lower costs, patients were seven percent less likely to be readmitted to inpatient care in the first month following the procedure, and complications such as infections, dislocations and fractures, and vein contractions decreased by 15, 19, and 16 percent, respectively.

Humana also allows providers to engage with zero risk for their first year in the program, meaning there is no financial disincentive associated with the agreement.

Neither payers nor providers can take on value-based care alone. As a consequence, one of the questions circulating in the industry is: how do stakeholders interested in value-based care convince colleagues, present partners, and potential partners to buy into the idea?

At Xtelligent Healthcare Media’s Fourth Annual Value-Based Care Summit, Worthe Holt Jr., MD, vice president of the office of the chief medical officer for Humana, stressed that communication and attitude are critical to making these partnerships function in a value-based care environment.

“It’s like anything else: communication is extremely important, and very labor-intensive as well, but that's what it takes to be successful,” Holt said. “It's mostly just making surethat you've got the attitude that this is where you want to go, you're committed to making this move and working with somebody, like a Humana, to be successful.”

In addition to communication and attitude, however, Summit participants also said that proponents of value-based care have to be able to prove that it works in order to create stakeholder buy-in. Providers need statistics, such as those in Humana’s report, to prove that the risk will be worthwhile.

“We’ve advanced  our approach to a value-based model so that together  with our payer partners we can focus on improving  health and reducing cost while improving patient  and provider satisfaction,” summarized Jeff Conklin, senior vice president  and chief payer strategy officer for OHSU Health, in Humana’s report. “What we experience now is greater collaboration with payers because both of us can and do succeed when patients are healthy.”