How Payers Can Move Providers Along Value-Based Care Continuum

The value-based care continuum

As payers prepare provider organizations to enter into value-based care contracts, they may find that providers need to ease into the most advanced value-based care models. 

As a result, a spectrum of value-based care agreements exists, from models that are most similar to fee-for-service reimbursement to advanced models that impose two-sided risk. For many payers, the ultimate goal is to move their provider partners into two-sided risk contracts in which providers receive incentives for high-quality care and penalties for low-quality care.

“We see anecdotally and qualitatively that those providers that are furthest along on the spectrum—that are bearing two-sided risk—have the most advanced population health management infrastructure, chronic disease management, etcetera,” said Powers.

In the study, nearly a third of the patient participants were covered under upside-only risk payment models (32.4 percent), and a little over half of the participants were covered under two-sided risk models (51.0 percent). Powers and his team conducted the study from January 2019 through December 2019 using claims data from over 489,000 Medicare Advantage beneficiaries.

For patients whose providers engaged in upside risk models, all-cause hospitalization rates were similar to the all-cause hospitalization rates in fee-for-service: 159.7 beneficiaries out of 1,000 beneficiaries were hospitalized in the upside-only model, versus 159.2 beneficiaries in a fee-for-service model, according to the study. 

Meanwhile, providers engaged in two-sided risk saw lower all-cause hospitalizations, with 152.5 beneficiaries out of 1,000 experiencing all-cause hospitalizations.

The same principle was true for avoidable hospitalization as well as all-cause and avoidable observation stays: fee-for-service reimbursement and upside-only risk model outcomes were similar, while two-sided risk models produced lower rates of undesirable outcomes.

However, while the outcomes were encouraging for those pursuing two-sided risk value-based care models, the study’s design presented some challenges in identifying the cause for these outcomes.

“The providers that do well move into more advanced models that reward them for the outcomes that they're delivering, so it's hard to tease out how much is the payment model and how much is the provider themselves,” Powers acknowledged.

Nevertheless, the critical role of the value-based care continuum is to create an environment that rewards providers for positive performance, the study highlighted.

Powers recommended that payers take certain actions to empower providers as they move along that value-based care continuum.

Offering payment support for value-based care transformation

Transformation payments are vital to transitioning providers into more advanced payment models. When entering into a value-based care model, providers may have to cover care coordination costs, practice transformation costs, and other expenses. 

Per member per month payments from payers alongside bonuses for positive performance can be essential to a provider’s progress in those early stages of the value-based care continuum, Powers said.

“It's really about seeding that transformation with practice transformation payments upfront and then moving into a total cost of care model where the performance is directly rewarded, and the incentives and investments capital is provided through shared savings,” Powers explained.

However, for beginner value-based care providers, Powers stressed the importance of basing payments on growth. 

Payers should not hold providers accountable for patient outcomes in the earliest stages of the transition into value-based care. Instead, they should reward providers for seeing a reasonable amount of change from a new process in the first year of implementation and apply graded incentives.

Initial financial support for the transition into value-based care can focus on one disease state or pathway. Then, as the providers can expand into other areas of care, payment structures can evolve into total cost of care payment models.

Giving technical support for value-based care transformation

In addition to financial support, payers can offer technical aid to providers starting their journeys on the value-based care continuum. In particular, providers in the initial stages of the value-based care continuum rely on payers for data and insights.

Powers shared that Humana offers providers online tools and reports that allow providers to compare their performance to their peers. These tools also help providers identify poor outcomes and low-value or excessive healthcare spending.

Aside from assessing trends, technical and data support can also inform providers about strategies that high-performing practices employ, and, likewise, high-performing providers can share their steps to success.

These tools are particularly useful for very small practices with one or two providers that do not have the same resources as a multi-specialty group practice, Powers noted.

Pursuing primary care transformation

An essential piece of transitioning providers into value-based care is primary care transformation. For a primary care practice that has traditionally relied on fee-for-service reimbursement to meet value-based care performance metrics, changes will have to occur.

“We are seeing evidence in this analysis with those avoidable utilization metrics that the practices that are engaging in value-based payment models, at least in our experience, are changing the way they deliver care in a way that really impacts patient outcomes,” Powers shared.

Primary care transformation is primarily the responsibility of the practice itself. However, payers institute appropriate metrics to help orient that process.

Powers emphasized that—while utilization and healthcare spending are helpful and important metrics, particularly for policymaking—primary care transformation is ultimately about patient-centered utilization outcomes.

“An avoidable hospitalization is sort of an abstract term, but what that means, in reality, is someone who didn't go to the hospital because of a COPD exacerbation or someone whose heart failure didn't get so bad that they know couldn't breathe and had to call an ambulance,” Powers said. 

By keeping patient experience at the center of value-based care utilization measures, payers and providers will better understand how providers redesigned their primary care practices to improve clinical outcomes.

Identifying areas for further value-based care research

While Medicare Advantage plans have played a key role in driving forward value-based care adoption, research on the impacts of value-based care in Medicare Advantage is still nascent compared to research on value-based care in traditional Medicare. Powers anticipated more extensive exploration in this area.

Specifically, Powers noted a lack of insights around incentives quantities and structures and the nature of two-sided risk incentives. 

Additionally, the healthcare industry should more closely track provider movement along the value-based care continuum in Medicare Advantage. Powers indicated that this is a topic that Humana is pursuing.

There is a lot to glean from studying value-based care changes at the practice level, Powers added. In particular, the industry should apply more effort to understanding transformational strategies in high-performing practices.

“If we can learn more about what works best from the performers, then we as a payer—and then the community more broadly—can think of ways to target fee-for-fee programs or target specific models along that continuum that may help less advanced providers in value-based care make investments in the right areas,” Powers shared.

Improving research on how value-based care payment models operate within Medicare Advantage can provide a deeper understanding of value-based care’s impact across the healthcare industry.