Health insurers, providers don't have to settle for 'frenemy' status

There's a curious dichotomy going on in the healthcare industry.

On one hand, in recent hearings on Capitol Hill, healthcare providers and insurers acted like true adversaries, with the provider side whipping out fiery rhetoric in its arguments against proposed health insurer mergers. And there's the studies that detail how much physicians distrust insurers, noting that many believe that payers interfere with their efforts to provide high-quality care.

Even when payers and providers emulate each other, their motives are less than friendly. 

Large health systems are getting into the insurance game, especially in the lucrative Medicare Advantage space. And thanks in no small part to the Affordable Care Act, insurers are finding it's advantageous to focus on decidedly provider-like concepts, such as care coordination and population health management.

Still, the two sometimes-warring sides also collaborate by forming official alliances to promote higher quality care at lower costs, and there seems to be an accountable care organization announcement every few days.

Basically, payers and providers are healthcare's version of "frenemies."

But for Kaiser Permanente, one of the few examples of a fully integrated healthcare system, a payer-provider hybrid business model has served it well since the Great Depression, Bernadette Loftus, M.D., associate executive director of the Permanente Medical Group, told me in a recent interview.

In fact, Kaiser Permanente of the Mid-Atlantic States was recently named by the National Committee for Quality Assurance as one of only two health plans in the nation to score the highest mark in both private and Medicare plans.

The secret behind that success, though, doesn't have much to do with insurers' typical business concerns, Loftus says.

"It has very little to do with the payer part," she says. Kaiser, she notes, has been able to offer quality healthcare services and insurance because it has doggedly focused on the concept of population health long before the term became a buzzword.

Kaiser accomplishes that goal by dually focusing on both the patients currently in its care as well as a group of "shadow patients" for whom it must plan to care for as a population, according to Loftus. Yet how the company pays for care also influences how it designs care.

Its prepaid system of reimbursement is one that "really forces you, in a healthy way, to be very mindful and plan care very carefully," she says. "And it also forces you to be evidence-based."

That means thinking critically about whether some healthcare trends that may lack solid science behind them--such as full-body diagnostic scans--offer value to patients.

"The payer part of us, the mindful planning part of us says: 'Well gee-whiz, if we give a total body scan to every patient that comes in the door, because they're asking for it and because this group is advertising it, maybe it would make our patients happy--but if we did that, we couldn't then spend the dollars that we do on immunizing children at such high rates as we do, or screening for breast cancer at such rates as we do,'" Loftus says.

Along similar lines, payers and providers alike have started to pursue value-based contracts with device and pharmaceutical manufacturers that link payments to efficacy. And alternative payment models, from patient-centered medical homes to accountable care organizations, abound.

Loftus says that while the lines between provider and payer are blurring, if the two sides want to "maintain a strict separation of powers" there's plenty of latitude on both the commercial and Medicare side to design reimbursement systems that create an incentive for mindful planning of care.

But regardless of what form new care models take, Loftus' best advice for payers or providers that find themselves at a crossroads is to always take the path with the patient at the center of it.

"It's hard to go wrong in healthcare delivery if you operate that way," she says. "Usually doing the right thing immediately is going to save you money in the long run."

Even frenemies can agree on that. - Leslie @HealthPayer

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