WHAT IS THE FUTURE OF VALUE-BASED CARE?

Commercial risk will be a critical catalyst of progress – it’s complicated, but is it possible? We think so.

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Our Take

How Health Plans Can Support Providers in Risk

In early 2021, Advisory Board surveyed a randomized sample of 225 providers and 26 health plan executives from across the country. The survey asked about their readiness for risk and their most effective support resources.

The survey found that plans are still operating on outdated strategies that were formed when value-based payment was in its infancy. On the current trajectory, providers stall in upside risk and remain ill-prepared for downside risk. Plans must adapt their strategies to break through this plateau.

Furthering the urgency for plans, the Covid-19 pandemic has increased providers’ interest in participating in value-based payment models but not necessarily their ability to succeed under those models.

 

Overview

Research question
How should health plans support providers on the path to value?

Problem
Years into the transition to risk-based payment models, health plans are still nowhere near their downside risk goals. Of provider organizations in risk-based contracts, a handful participate in downside risk only, and even fewer are successful. It is difficult for plans to identify how they can be helpful for providers to encourage them to take on additional risk.

On the current trajectory, providers stall in upside risk—and they’re ill-prepared for downside risk. We are still operating on strategies formed when value-based payment (VBP) was in its infancy. Health plan strategies to support providers in risk must change and adapt to the current situation, especially now, given that the Covid-19 pandemic has increased some providers’ interest in value-based payment.

What we did
In early 2021, Advisory Board surveyed a randomized sample of 225 providers and 26 health plan executives from across the country. The survey asked about their readiness for risk and their most effective support resources.

What we found
The state of VBP following Covid-19 is not set in stone. Health plans must take an active role in advancing risk-based payments using the three new strategies:

  1. Prevent providers in downside risk from backsliding
  2. Convert providers in upside risk to downside
  3. Focus providers not in risk on the end goal
The future of value-based care

Medicare and Medicaid risk is progressing (slowly) – but commercial risk will determine whether the industry tips toward a new cost and quality standard.

 

What we found

The state of value-based payment during Covid-19

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The Covid-19 pandemic has once again placed a spotlight on value-based payments. Many news headlines suggest providers are more interested in VBP now because they desire a more stable financial model than they experienced during the pandemic.

In contrast, health plans are less bullish in their predictions. More plan executives think Covid-19 will slow down the pace of risk adoption rather than speed it up. Driving that belief is a recognition that risk adoption is a costly proposition and provider financials are “inconsistent” as a result of the pandemic.

Making the transition from volume to value requires a tremendous investment in capital, time, and other resources. The interruption Covid-19 has caused to the money supply would likely be an impediment to the introduction of value-based care.

Michael D. Robertson MD
CEO, Covenant Health Partners in Texas

Within this landscape, providers are split on how they think Covid-19 will impact risk adoption. As the data below indicates, a quarter of providers say Covid-19 has caused them to take on less risk, but another quarter say Covid-19 has caused them to take on more risk. Similarly, 28% of providers think Covid-19 will slow down risk adoption while a similar percentage, 26%, of providers think Covid-19 will speed up risk adoption.

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The future is not set in stone. Health plans can influence how fast providers adopt risk post-pandemic, but providers will require support. Plans will need to prioritize who they support, and which types of supports they offer.

Covid-19 hasn’t made life easier for providers. In fact, providers say that recovering from Covid-19 will be their biggest challenge in 2021 with plans offering limited support during the pandemic. The most common additional supports given by plans were telehealth reimbursement and quality reporting exemptions. Only 38% of plans offered providers support through advance payments and even fewer (15%) offered loan assistance during the pandemic.

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As providers work toward their Covid-19 recovery goals, they especially value the financial support plans can offer that give time and flexibility to pay shareholders back when patient volumes fully recover.

Although plans are seeing more losses in 2021 than in 2020 (when decreased utilization had lowered plan MLRs across the board), provider financial struggles are arguably more pronounced. The American Medical Association (AMA) announced that medical practices have seen a 32% average drop in revenue because of Covid-19. Providers are still recovering from lost volumes, and interviews show that even the most progressive independent physician groups lack capital to push forward new risk initiatives.

There are two equations providers face when considering risk adoption. When providers do the math on strategy and market forces, it makes sense for them to take on VBP. But when providers consider the resources and time investment necessary to operationalize VBP and succeed under risk, the math starts to fall apart.

This doesn’t mean health plans must fund a provider’s path to risk, but plans should be prepared to help provider partners analyze how they could source funding or justify investments.

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Beyond financial supports, plans told us that very few providers in their network have the utilization management, contract management, network management, and data & analytics skills that are required for success in risk—despite buy-in from executive leadership at health systems.

Data below show that provider executives feel more prepared to take on risk than physicians.

Physicians feel less prepared to take on risk than provider executives
n=169 physicians, 59 executives.

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This discrepancy is worrisome because it indicates executives must be able to change physician thoughts and behavior to succeed under risk. Further, physician burnout was already high pre-Covid-19 and has only worsened during the pandemic. Executives are, therefore, rightfully concerned that pushing a new way of practicing on physicians will further exacerbate physician burnout.

The silver lining in this story is that providers do appreciate plan resources offered as part of risk-based contracts. When we conducted this survey in 2018, few providers thought plan financial or operational supports were effective. However, as the data below shows, since then, the percent of providers who find plan financial supports effective has risen by 7 percentage points and the percent of providers who find plan operational supports effective has risen by 24 percentage points.

How effective are health plans at supporting frontline clinicians to take on downside risk?
Percent of providers selecting “very effective” or “somewhat effective”

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Give yourselves a pat on the back… but don’t rest on your laurels. Providers need both financial and operational support to succeed under VBP—and increasingly they recognize the value of the supports you are offering. The next phase is evolving those supports to prioritize the right help for the right physicians.

Plans and providers initially formulated their strategy on pursuing risk when few providers participated in these models. At the time, these strategies made sense. First, move providers from no risk into some risk. To do this, front-load resources to entice providers to make the jump from fee-for-service to risk. Then make sure to maintain support so that eventually providers move into downside risk when they are comfortable with upside risk.

Encouraging providers to climb up risk mountain circa 2012-2020
2012-2020

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But the world has changed a lot since risk adoption started, and especially as the U.S. starts to emerge from the pandemic. These strategies made sense back in 2012 when CMS launched the ACO model, and even earlier, but not now.

Now, some providers are in upside risk, others participate in downside risk, and others are showing interest in risk for the first time (following the impact of Covid-19). This means strategies to encourage further risk adoption must become multifaceted as well.

First, overinvest in providers already taking on downside risk to prevent backslide. Second, providers in upside risk will naturally pursue more upside opportunities. Your job is to convert them to downside risk. And lastly, save the hardest (providers not in risk) for last. When you approach them, focus them on the end goal.

In the rest of this brief, we will present data that show why it is time to adapt our path-to-value strategies and how not doing so will render plan efforts useless.

New path-to-value strategies post-pandemic

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  • Strategy

    Prevent providers in downside risk from backsliding

    Read More Collapse
  • Strategy

    Convert providers in upside risk to downside

    Read More Collapse
  • Strategy

    Focus providers not in risk on the end goal

    Read More Collapse
 

What this means for you

Don’t formulate one risk strategy, but three.

  1. Overinvest in providers already taking on downside risk to prevent backslide.
  2. Providers in upside risk will naturally pursue more upside opportunities. Your job is to convert them to downside risk.
  3. Save the hardest (providers not in risk) for last. When you approach them, focus them on the end goal

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