In this white paper, Silas Goldman, AVP of Operations, discusses the commercial and federal payer shift from fee-for-service (or volume-based) plans to performance-based payment models.
Please click on the video to the right to learn more about Silas, his paper’s key takeaways, and his motivation for writing on this topic.
To discuss this white paper in more detail, please contact the author using the information provided at the end of the article.
The demand and cost of healthcare services continues to increase at a relentless pace. For many physicians and health systems, they are scrutinized by governing bodies, commercial payers, and “consumer-minded” patients to decrease the cost of care while maintaining its overall quality. Global healthcare costs account for roughly 10% of the global GDP and continue to increase in GDP spending at a more rapid rate compared to the growth of most economies.
The U.S. healthcare system has historically been the “bull in the china shop,” with health spending approaching an estimated 20% of GDP by 2027, according to Centers for Medicare & Medicaid Services (CMS).2 Geographic regions with aging and chronically ill populations exacerbate the disparity between patients with a high severity of illness that consume healthcare to patients who are paying for healthcare, perpetuating the draining of our health systems.
A provider network of 2,000 physicians operating in multiple states in the western United States responded to the commercial and federal payer push to shift from fee-for-service plans to performance-based payment models that accentuate observance to outcomes, high-quality processes, and the overall patient experience.
Fee-for-service (also referred to as volume-based medicine) was the foremost inherent barrier to achieving cost containment. Integrating an immediate adoption of value-based payment models became the highest priority for the organization. Using a proprietary risk (severity of chronic illnesses) stratification model, the providers collaborated with payers leveraging beneficiary data to slowly force the payer’s agreement to a shared risk distribution reimbursement model.
This bodes well for the providers who are on the front lines of hyper-aware consumer-minded patients who were shopping plans and publicizing their dissatisfaction with volume-based reimbursement.
Year one was met with scrutiny from the plans who struggled to see the economic gain in the new shared-risk model. Years two and three were focused on the adoption of quality controls that enhanced the overall patient experience. The new provider-payer-patient contract focused on a payment model that forced care pathways and cost-conscious behaviors at all levels. These included, but were not limited to, prospective clinical reviews and reimbursement analysis to optimize access to care, authorizations and eligibility, care continuum support, and drug therapy costs.
With a proof of concept that met the fiscal, operational, and quality thesis, the providers looked to social determinants of health as the new wave of innovation to significantly reduce cost, improve outcomes, and avert acute clinical interventions. A shift to value-based medicine with integration of SDoH addressed the unmet needs of the local participating beneficiaries and strengthened the community ecosystem.
The societal impact of having a provider network and payer collaboration that was willing to finance and hedge the overall risk of a patient’s health outcomes spread like wildfire throughout the region. Overall enrollments tripled from years one to three and continue to grow. Noncommunicable chronic diseases, (such as COPD, cardiovascular disease, CAD, DM, hypertension), began to decrease as systemic lifestyle changes prevented acute adverse events related to each disease from occurring.
As costs continue to climb, aligning provider-payer incentives across a diverse dichotomy of beneficiaries will help achieve scale. This population health model is a hybrid of technology investments, ecosystem support, clinical competency, and patient-provider-payer stakeholder collaboration to reach the triple aim of patient experience, overall health, and controlling costs.