By Kevin Hutchinson, CEO, Apervita
October 2020 – Value-based care remains widely misunderstood by many across the healthcare industry. Much of this confusion stems from our collective inclination to misinterpret activity as progress, and that misinterpretation has created plenty of frustration among payers, providers and regulators. The truth is, we’re failing to see the bigger picture.
We tend to drop a pin on 2008’s Medicare Improvements for Patients and Providers Act (MIPPA) and say it marks the beginning of the shift from volume to value. In reality, this has been a decades-long initiative that predates MIPPA. If we’re mapping out a timeline of value-based care, it’s more accurate to begin with the Nixon administration’s Health Maintenance Organization Act as the cost-containing effort that gave rise to managed care.
Today, the healthcare industry understands value-based care as a buffet of fee-for-service alternatives that includes every pay-for-performance model under the sun, from quality-linked FFS to ACOs and shared savings to bundled payments. However, when we view value-based care from a wider historical lens, we can see the progress in the number of models has not accelerated the models’ success, and instead the outcomes continue to trudge along at the same lethargic pace. Advancements in value-based care as we understand it today—that is, alternative payment models based on provider performance—have been weighed down by the same problem we’ve largely skirted around solving for decades: strained payer-provider relationships. Value-based care will not progress as rapidly as we expect it to until we reduce the friction that has long existed between payers and providers.
In value-based care today, this problem is manifesting itself in quality scoring and value-based contracting, two elements of the value-based care tapestry that hold the most transformative potential. These are two areas where we have the ability to improve much more rapidly, and both are rife with a level of disorganization and human error that only further dampen partnerships between payers and providers.
Quality metrics have become needlessly redundant and burdensome for providers, with hundreds of different measurement systems, scoring algorithms, and certifications from a bevy of nonprofit registries, each with their own set of similar-yet-incompatible quality standards. Without a standard reporting model, providers must report different metrics to each insurer they work with. That means piles of expensive administrative work just to report multitudes of measures that ultimately assess the same thing.
Value-based contracting is not nearly as innovative as it’s been hyped up to be. Most value-based contracts between payers and providers are built and executed using rudimentary tools and processes. Right now, there are healthcare administrators across the country generating reports from their local databases, manually plugging that information into a spreadsheet, and sending that file to one of several commercial payers they contract with for just one of their specialties. That’s happening right now, and it will happen again tomorrow when those same administrators need to execute an entirely different arrangement with a different commercial payer for the same specialty.
You can see how this can very quickly become a headache.
These are just the processes that are in place for upside risk contracts, which dominate value-based care today. Only three percent of the value-based contracts that exist right now are set up with downside risk for providers, where the provider has to pay out of pocket if certain performance metrics have not been met. When such a small percentage of your revenue as a provider is coming from risk-oriented contracts, you have no real incentive to make dynamic changes to the way you deliver care. You’re still optimized for fee-for-service; value-based care is just a financial tool you tinker with.
This is where the true transformational shift within value-based care needs to happen. If we want to jumpstart that shift, we can start immediately by returning to the foundation of these relationships and build trust between the folks delivering value-based care and those who pay for it.
Payers and providers have mutually become increasingly vocal about their desire to accelerate the transition to value-based care. This willingness by both payers and providers has grown as the COVID-19 pandemic continues crushing provider volume, exposing some of the fundamental flaws of a fee-for-service system. With mutual interest growing on both sides, what’s holding back progress?
For one, the partnership dynamic between payers and providers is historically tense, and the relationship is made even more fragile by the unnecessarily nightmarish processes that are currently in place to execute value-based contracts. There is simply too much variety in quality measures and contract components, and too much complexity in the algorithms used to design value-based contracts, to continue to rely on manual tools — and it’s creating hesitation on behalf of providers to engage in riskier value-based contracts.
We have the technology today to simplify and streamline these processes, reduce redundancy in quality scoring and contract components. Implementing this technology today will get us closer to the expectations we hold for value-based care and the progress we believe is possible.
We’ve seen this with telemedicine. With patients hesitant to seek out care in traditional clinical settings for fear of contracting COVID, telemedicine has proven to be one of the most cost-effective means of caring for large patient populations during the pandemic. Payers, providers and regulators came together to accelerate the adoption of telemedicine. The pace at which all three have rallied around the technology, reimbursement processes and policies needed to provide the service at scale has been mind-boggling. For decades, the industry buzzed about potential cost-savings of telemedicine. It took a pandemic to rally healthcare around widespread adoption. Let’s use the technology and motivation for cost-effective care to also drive the urgency, adoption, collaboration, and success of value-based contracting.
About the Author
Kevin Hutchinson has more than 30 years of experience in growing companies that deliver innovative services by using disruptive technology. Formerly the founding CEO and president of Surescripts, Kevin now serves as CEO of Apervita.