How Value-Based Payments Support Physicians During a Crisis

More practices are going to want to get their revenue through value-based payments following the COVID-19 pandemic, according to heart failure cardiologist Sanjay Doddamani, MD.

The pandemic has shown the best of American healthcare (collaboration and selflessness on the part of providers, to name some highlights) but also many of the system’s challenges. From a practical perspective, the primary challenge was compensation, explained the chief physician executive and COO at Southwestern Health Resources and former senior physician advisor at CMS’ Innovation Center.

“Many of the practices, especially in primary care, have been extremely cash strapped and have been struggling for many years,” Doddamani recently said in a RevCycleIntelligence interview. “This has been a big moment for us to act in accelerating our performance-based incentive payments to our primary care doctors. We moved up our schedule of payments so that they could at least have some continued flow of funds.”

But the push to pay out value-based payments begs a broader question about provider compensation, Doddamani stressed. Should physicians be paid based on individual transactions or should it be based more broadly on a panel of patients?

Physicians were – and still are – the nation’s key players in the fight against COVID-19. But financial challenges have sidelined many physicians during the pandemic.

About one in five physicians were furloughed or had their pay cut as a result of the COVID-19 crisis, according to a survey conducted by Merritt Hawkins and the Physicians Foundation. Furthermore, data from the Primary Care Collaborative and the Larry A. Green Center showed that nearly a fifth of primary care practices had temporarily closed in May despite ongoing outbreaks of COVID-19 in their communities.

Meanwhile, practices that were able to stay open had to quickly pivot operations to ensure the safety of their patients and providers. Chief among those changes was telehealth.

Regulatory flexibilities and payment parity contributed to what Doddamani refers to as a “sentinel moment for the expansion of telemedicine.”

Physician use of telehealth at Southwestern Health Resources jumped from well under 10 percent prior to the pandemic to almost 98 percent in a matter of months, and many of the network’s practices had never used telehealth before, Doddamani reported.

The clinically integrated network also had almost 900 employees working from home through remote technology, including nurses who were once embedded in clinics using telehealth tools to help arrange visits when necessary and keep patients engaged at a time when they were hesitant to come into the office even for essential care.

Telehealth and other virtual services have helped practices like those at Southwestern Health Resources bring in revenue during the pandemic. But the technology has also proved to be a valuable resource for physicians and other providers even as communities start resuming normal activities, including in-person healthcare visits.

“Everyone recognizes that telemedicine needs to continue and will probably be something that will be made permanent,” at least as a complement to in-person care, Doddamani said. However, practices will need sustainable funding for virtual services which is not currently available under the fee-for-service system.

Currently, providers are getting higher rates for telehealth visits, sometimes on par with payment rates for in-person care. But the fee-for-service system does not offer payment parity for telehealth services outside of the pandemic. Instead, the system incents providers to conduct in-person services to drive revenue.

Whether payers decide to make payment parity permanent or not, value-based payments can help fund telehealth and other enhanced capabilities developed during the pandemic while ensuring a more predictable source of income for practices moving forward.

“Greater predictability is very aligned with value-based care, and moving away from encounter-based or transactional care will actually give greater accountability to physicians managing panels and populations,” Doddamani stated.

Per member per month payments, for example, could help primary care practices focus on “who needs care the most and prioritization, something quite natural to what we saw during the COVID pandemic,” Doddamani added.

Fostering this type of value-based care is key to quickly and effectively responding to COVID-19 and other potential outbreaks. For instance, Southwestern Health Resources was able to leverage its existing data analytics platforms, which it has used to support population health management strategies, to find those most at risk of infection and target messaging to those patients.

“We have data insights into those at risk, such as those who are immunocompromised, those who are socially challenged and have social determinants or live in high prevalence zip codes, where we can double down and amplify messaging,” Doddamani said.

Other providers in value-based contracts have similarly leveraged the capabilities they developed to succeed in alternative payment models to respond to COVID-19 and do so effectively. According to a recent survey from Premier, 82 percent of alternative payment model participants reported using care management support to manage COVID-19 and other patients, opposed to just 51 percent of those relying on fee-for-service revenue.

Providers in alternative payment models were also more likely to have triage call centers (55 percent versus 31 percent), remote patient monitoring (49 percent versus 30 percent), population health data to manage and predict COVID-19 cases (43 percent versus 20 percent), and claims data to understand care delivered outside of the acute care setting (29 percent versus 13 percent).

Value-based payments have supported these types of activities, giving providers more flexible reimbursement to implement care coordination, data analytics, and other value-adding capabilities.

COVID-19 could be a catalyst for faster adoption of these types of payments. But fee-for-service may still have a place in the healthcare financing system, Doddamani asserted.

“We recognize that some components of care may be restricted to an episode-based payment. I would like to see that it's not just a transaction for a visit or a procedure, but for an episode of care, whether it's a hospitalization, whether it's a bundle, or whether it's for a condition. It will bring out greater accountability and greater predictability in terms of the flow of funds, which I think will help practices, physicians, and health systems.”

By tying the right payment structure to the right type of care needed, providers can deliver high quality, low-cost services to patients while having peace of mind that what they are doing will bring in revenue and ensure their offices stay open even during a pandemic.