Industry Voices—No risk, no reward: How health plans are helping providers take on more risk in the transition to value-based care

For several years now, the healthcare industry has been slowly but surely inching toward the tipping point of value-based care.

While the Health Care Payment Learning & Action Network (HCPLAN) states that just 39.3% of all payments had no link to quality or performance in 2020, the organization also found that only 17.9% of reimbursements flowed through the most sophisticated two-sided risk models built on population-based payment structures. That means approximately 40% of payments are still sitting somewhere in the gap between traditional fee-for-service and advanced levels of risk.

To date, health plans, regulators, and forward-thinking providers have done a good job of using payment reform to lay the groundwork for controlling costs and improving outcomes. But the next challenge for health plans will be shifting this middle bucket of largely upside-only reimbursements into more robust and equitable two-sided arrangements. 

With the Centers for Medicare and Medicaid Services (CMS) setting the goal of having all Part A and Part B Medicare beneficiaries and the vast majority of Medicaid beneficiaries in some sort of value-based model by 2030, this movement has to start accelerating sooner rather than later.

To meet these targets, health plans need to offer their provider partners the right tools and incentives to make risk sharing less intimidating. With support in the form of personalized patient support and education, as well as smart home monitoring equipment and wearables, providers and health plans can effectively collaborate to control costs, improve experiences, and help members facing debilitating and costly chronic diseases better manage their own care.

Equipping providers and patients with proactive health management tools

Since the vast majority of healthcare dollars are tied to chronic disease patients, such as people with diabetes, getting ahead of avoidable exacerbations is a top priority in value-based arrangements. Health plans can further the success of their provider partners in a variety of ways when it comes to their patient population living with complex diabetes.

Make sure providers understand the math: Reluctance to take on financial accountability stems from fear of the unknown. Ensuring that providers have access to detailed and personalized actuarial insights can strengthen the argument for two-sided incentive structures. Plans should work collaboratively with providers to design contracts that are advantageous for both parties to encourage participation and increase the odds of shared success.

Focus on the costs that are controllable: If you’re in healthcare, you likely already know that 5% of patients make up 50% of the spend. A third of this 50% is chronic condition management, which can often be positively influenced by better preventive care. Instead of going broad, health plans should collaborate with providers to focus on more narrow, costly populations of patients. Doing so can help reduce hesitation by providers to enter into risk-based arrangements mapping to specific populations of patients — and will most often drive the most impact on both patient outcomes and costs of care. 

Educate members about the benefits available to them: Many plans offer a wide range of benefits that members simply don’t know about. People with diabetes may be able to get reimbursable remote patient monitoring technology or even shoes and insoles to prevent issues such as foot ulcers and other wounds, or there may be transportation benefits to help them get to their medical appointments. When members know how to take full advantage of the benefits designed to complement their care, they are more likely to have better outcomes and lower costs of care over time by avoiding costly issues such as emergency room visits.

Prioritize the social determinants of health (SDOHs): Non-clinical factors play a huge role in costs and outcomes. Assisting providers with collecting — and acting upon — SDOH data can dramatically reduce avoidable spending and increase adherence to medications and treatment plans. A comprehensive SDOH response plan can be the difference between a successful contract and a failure.

Transform the home into a smart environment: Home-based care is exploding in popularity, thanks to an aging population, a new generation of smart devices, and the lingering impact of COVID-19. Integrating home-based monitoring tools, such as Bluetooth-enabled blood pressure monitors, smart scales, blood glucose monitors, and other devices, can empower patients to take control of their health. It can also help improve scalability of our healthcare delivery by allowing providers to keep a careful eye on concerning changes from remote care settings. 

Demonstrating the value of embracing shared accountability

The combination of technology and strategy can produce powerful results for all parties involved in value-based arrangements. For example, one integrated not-for-profit healthcare system has long been a leader in innovative financial modeling and value-based patient care, taking on full accountability for costs and outcomes through its vertically integrated payer-provider structure.

To further enhance their chronic disease management capabilities, this same not-for-profit healthcare system began to offer enhanced diabetes foot ulcer checks for people with advanced diabetes. Using home-based, remote patient monitoring and associated care support services, this provider remotely monitored the temperature of patients’ feet to detect early signs of newly forming wounds. On average, 82% of patients scanned their feet consistently, and the smart devices detected one inflammation episode per patient. Half of these events required a low-cost clinical intervention.

This type of proactive approach can significantly reduce the likelihood of diabetic foot ulcers progressing to costly hospitalizations and potentially devastating amputations. Previous research has indicated that leveraging noninvasive smart mats to get upstream of diabetic foot ulcers can result in a 71% reduction in amputations and a 52% reduction in all-cause hospitalizations, as well as an estimated $8,000 to $13,000 in savings per member annually.

For providers adopting more risk, this approach ticks all the boxes for everyone involved in the care process. The patient gets access to smart devices in the home, regardless of any socioeconomic barriers to seeking care; providers create leverage by implementing focused, high-yield programs associated with outsized total costs; they have more tools to understand their patients’ clinical status; and the anticipated reductions in utilization and costs can lead to better performance in risk-based financial arrangements.

With direct and clear wins shared equally across the members of the care community, providers are more likely to feel secure in the decision to accept more financial risk.

The healthcare system’s ambitious goals for moving payments into advanced risk models are attainable if health plans and providers truly act upon the central principle of value-based care: aligning incentives and reinventing historically adversarial relationships to bring better outcomes for patients and lower costs for all.

Health plans need to take the initiative in this revolution by sharing knowledge, resources, and technologies with providers. By empowering providers and patients with the best possible tools, health plans can encourage their partners to take on additional risk and share the rewards of delivering high-quality, proactive, and cost-effective healthcare.

Jon Bloom, M.D. is the co-founder and CEO of Podimetrics, Inc.