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15th Jun
Posted By Scott Vold

The Shift (Part 3) – How Payors Are Influencing Value-Based Payments

By Miranda Crowell

 

After some basic explanation about fee-for-value payment models in The Shift Part 1, followed by a pro/con discussion of fee-for-value payment models in The Shift Part 2, the final piece in this series focuses on various non-provider perspectives surrounding shifting payment models. This post touches upon how insurance companies are embracing The Shift to drive unprecedented change in our healthcare system.

As Optum puts it, the main drivers of market transformation are the need for 1.) consumer-centric healthcare delivery, 2.) value-driven care, and 3.) healthcare infrastructure modernization.  Admittedly, a consumer-centric healthcare system could mean shifting the delivery of care from a long-standing employer-epicenter to a more individualistic approach. Additionally, the way that people view healthcare may change over time. Value-based contracting will push physicians to achieve both quality and efficiency targets before sharing in any cost-savings acquired by fee-for-value contracting. As Payal Shah puts it, this new system will result in a better patient experience, lower healthcare costs, and overall higher quality care. With society’s ever-increasing interest in social media, brand perception could play a role in the patient’s decision to chose a particular provider over another. After all, sharing an opinion about a physician is only 140 characters away.

But it isn’t just patients that are going to see changes. From an employer perspective, UnitedHealthcare told employers in 2012 that they “expect the aggregated return-on-investment of our value-based contracting programs to exceed 2:1 in terms of savings vs. incentives paid because only a portion of the savings will be shared with providers.” The concept is that employers will see a hard-working, healthier workforce with a value-based delivery system, thereby incentivizing employers to be open-minded to changes.

Insurance companies have been anticipating the slow switch from service to value-based contracting. As Shah noted, “insurance companies are working in collaboration with health care providers … regarding payment for incentives, and payors are making sure that savings are realized.” UnitedHealthcare Group is on board with value-based contracting and anticipates a 20% increase in value-based payments in 2015, raising payments from UnitedHealthcare to somewhere “north of $43 billion,” according to Forbes. Blue Cross and Blue Shield (BCBS) companies reported a portfolio of 350 locally-developed, value-based programs in July 2014 and have since increased that number to 570 companies by March of 2015. From 2013 to 2014, BCBS had a 9% increase in claims affiliated with value-based programs and reports $71 billion (yes folks, that another “b”) in programs that provide incentives for quality-based care based on a 2014 annual survey.

Lastly, healthcare infrastructure modernization products and services will be a player on the field that should not be ignored. One quick tour around Matter in Chicago, Illinois, will demonstrate that healthcare tech innovation is already influencing healthcare delivery. For example, Fibroblast Inc., a patient referral management platform, recently landed a deal with Presence Health, Illinois’s second largest health system with over 1 million patients.This takes us full circle back to the concept of patient-centered healthcare; with an increased access to choices in providers, patients will inevitably increase use of information such as branding perceptions, word-of-mouth, and social media when choosing a provider similar to choosing a meal via GrubHub. In summary, the effects of market transformation are far-reaching. Needless to say, the next few years should prove to be one wild ride for all involved with the healthcare market.

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