In our May 2, 2018 blog we discussed the limited trust and interaction between payers and providers and discussed how this ‘trust gap’ has negative implications for the healthcare system and its patients. We also proposed strategies around standardized metrics, communication, and health information exchange were offered to help payers succeed in the transition to value-based care – concluding that creating a ‘payvider’ model to deliver care and accept risk requires a shift in thinking by both the payer and provider.
A recent brief in HealthcareDive signals a narrowing of this ‘trust gap’ and a shift to the payvider model. Regional and national payers are increasingly looking to vertically integrate with their provider partners as a strategy to succeed in the move from free-for-service to value-based payments. In the first quarter of 2018, twenty-two payer-provider partnerships were established, signaling a “red hot” trend. Perhaps more important than the number of such relationships is the fact that some 73% were joint venture or full co-branded, indicating a stronger level of commitment.
Payers and providers alike appear to be recognizing the value of collaborating and creating ‘exclusive partnerships’ to improve care quality and reduce costs. And, in many states, the alliance approach is being adopted to secure and grow share in highly competitive healthcare markets.
Exclusivity: High-risk, high-reward
The exclusivity of these partnerships – one health insurance product built around a single provider system – offers a high risk-high reward scenario that is paying off for some in terms of cost savings, significant member growth, and lower premiums passed on to consumers.
Each ‘payvider’ will have unique goals and constructs. Since there is not a one-size fits all solution, alignment on the clinical and financial model is key to long-term success in these partnerships. Payers and providers must find consensus on what performance indicators will define optimal outcomes – each party must share data and insights and establish effective lines of communication. Partners should establish quality measures and performance improvement goals, risk arrangements, the target patient populations, and more.
This single-system dynamic is creating a race to the finish line for establishing partnerships. For example, some health systems, if the deal is good enough, are only accepting one Medicare Advantage plan in a given market, requiring members to switch to that one plan if they want access to the health system’s network. In other cases, some health systems are forcing employers to offer a certain health plan to access the care network most desired by employees.
Believing that partnership deals are no longer avoidable in some markets, many players are trying to secure the best deal to avoid the risk of significant member disruption and less than optimal integration. Providers need to analyze their current performance in the delivery of preventive and chronic care conditions to determine where gaps exist and how they can beat the competition to collaborate with payers in their marketplace.
Take control where you can
The message is that providers and payers waiting on the sidelines may be left out of the opportunities in their market. While you don’t want to rush into a bad deal, plan now for payer partnership strategies that will give you the most control over your future.
Also consider taking greater control over how you’re measured by payers in your area. Being creative in the approach to creating value through the payer-provider alliance is more important than ever. At our most recent customer summit in May, 2018, we heard that some health systems are able to propose a list of quality measures to one or more payers in their area when the payer didn’t already have a list. That can help to put providers more firmly in the driver’s seat, giving them the opportunity to establish quality metrics that are more meaningful – and that potentially give them an edge in their marketplace.
Regardless, aligning payer financial incentives with quality, outcomes and patient satisfaction measures for optimal reimbursement can create a win-win for the ‘payvider’ partnership. When done well, where the partners leverage analytics to understand their populations and develop a healthy level of trust and communication, both sides – as well as their patients – can benefit from a mutually healthy relationship.
Is there a business case for value-based care?
Is your organization reaping Return on Investment from participating in VBC payment models or are you still watching from the sidelines? Read this paper to learn how.
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