As more and more payers move the majority of their provider contracts to value-based payment models, there’s little doubt that the relationship between the two parties will continue to be adversarial.
It’s hard not for it to be, as reimbursement discussions are normally part of the vicious cycle. The big question is whether it would be less combative with more transparency, and if so, how? However, the first question is how we got here.
For provider organizations, it costs a ton of money to run a successful practice: ensuring they have the most innovative treatment and technology while also remaining compliant with the ever-changing regulatory landscape. Every single reimbursement dollar is essential.
For payers, consumer pressure over steadily rising premiums, managing operating expenses while enhancing benefits, and the constant battle to prevent fraud and overuse make it extremely difficult to guarantee they are controlling costs while also ensuring its members receive high-quality care.
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So when the two come together to negotiate over value-based payment arrangements, there already is a high level of distrust and skepticism, as both sides usually feel the other isn’t being completely transparent. And, historically, there has been some truth behind that.
The problem is that providers have had a hard time understanding how they are performing in the various payer value-based payment arrangements until it’s too late. And, payers have had a tough time engaging their networks fast enough to meet contractual benchmarks.
All value-based payment models have their own performance metrics that are continually benchmarking provider outcomes, but it’s not until the provider organization receives its final settlement that it “understands” how it performed—both collectively as a business and down to the individual provider level. That’s usually when the actuaries, lawyers and mediators step in from both sides to pour over every patient encounter, formulaic quality measurement and little data nuance, each debating why this reimbursement should be higher, that performance metric wasn’t met, or what was inherently flawed with the contract to begin with.
Not only does all of this add friction to the relationship, it also adds considerable cost to an arrangement that is, ironically, supposed to reduce system-wide costs. The truth is that the only ones getting any real monetary benefit over this whole opaque process are the lawyers—all on the patients’ dime.
But why such a lack of transparency? It seems a little antiquated, if you ask me. Provider organizations should be able to see how they’re performing under a value-based payment model in near real time so they can best make adjustments.
That’s what the value-based care movement was supposed to be about: a technology-driven evolution that uses data to better incentivize providers to deliver high-quality patient outcomes. And that's what the whole data-driven revolution in enterprise was supposed to do for us: allow us to use data and technology to better predict outcomes and take corrective action as soon as possible.
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For the entire value-based care movement to sustain its momentum, it’s imperative that both sides look to innovation that directly addresses the transparency problem.
If you’re a provider organization, imagine being able to understand how lower performing groups or individual clinicians that aren’t hitting benchmarks are affecting your performance and financial impact in the value-based arrangement.
Armed with that data, you can either make some changes or, at least, understand what the reimbursement will look like when that final settlement arrives. On the payer side, if you are continuously monitoring high-cost members while also giving your network providers intra-period performance data, you might be able to help intervene before the costs of that member spiral out of control—both for you and the provider.
For example, let’s say a payer has a bunch of members with chronic conditions that are also high emergency department utilizers. ED visits are typically the most expensive forms of care, yet are normally the least effective—often the result of that person not effectively managing their condition. These patients can have tremendous impacts on an individual provider’s cost performance and quality scores, which can negatively impact reimbursement for his or her entire organization.
But, if a payer was able to proactively identify who the high ED utilizers are then share that information with provider organizations—along with how it affects benchmarks and reimbursements—those organizations would be incentivized to take immediate action to ensure the problems don’t get worse.
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Additionally, they would know what the financial impacts would be if they worked to improve and eventually meet their contract targets and other industry benchmarks. At the very least, those provider organizations wouldn’t be surprised by their final settlement.
Will adding more real-time transparency into performance periods be the sunlight that disinfects all of the issues between payers and providers? No, but it seems like an easy place to start. In the end, both sides will see the same data at some point. What’s the use of gathering it all if we aren’t ready to use it to be more collaborative?
Kevin Hutchinson has more than 30 years of experience in growing companies that deliver innovative services by using disruptive technology. Formerly the founding CEO and president of Surescripts, Kevin now serves as CEO of Apervita.