Tag: healthcare financing

The Opportunities & Challenges Of VBR – Making It Work On The Ground

By Monica E. Oss, Chief Executive Officer

Despite significant movement, behavioral health is trailing the rest of health care domains in value-based reimbursement contracting. Forty-five percent of specialty provider organizations have some value-based reimbursement (VBR)—compared to 72% of primary care organizations (for more, see, The OPEN MINDS 2022 Survey On Value-Based Reimbursement In Specialty And Primary Care). And at the health plan level, 22% of plans report having some form of VBR for mental health services in 2021, compared to 79% in the cardiovascular services and 54% in respiratory services (see 56% Of Payers Had Outcomes-Based Provider Reimbursement In Place As Of September 2021).

This gap is due to a combination of factors. Some are due to the structure of financing and reimbursement in health plans. (For more on key opportunities for specialty provider organization value-based contracting, see Treatment Transformation Ahead and The Sustainability Challenge – Capitalizing On Emerging Market Opportunities In Behavioral Health.) Others are due to issues as diverse as consumer choice and provider organization readiness.

How can executives of provider organizations and health plans work together to make this happen in the behavioral health space? Getting to the answer for that question was central to the recent 2022 OPEN MINDS Health Plan Partnership Summit session, “Looking For Quality Outcomes? It Starts With Innovative Value-Based Contracting,” delivered by Monica Collins, senior director, system transformation, Magellan Behavioral Health of Pennsylvania, and Charlotte Chew, vice president, outpatient operations, Pyramid Healthcare.

In January of 2018, the Pennsylvania Medicaid program implemented new requirements for the value-based purchasing (VBP) initiative for the behavioral health HealthChoices program. The state’s goal was to have an increasing percentage of total medical expenses paid through VBP over a three year period (for more, see Pennsylvania Medicaid Moving To Value-Based Reimbursement For Behavioral Health and Pennsylvania Medicaid Managed Care Contracts). Pennsylvania’s value-based strategies requirements fall along a continuum. There are fee-for-service payments linked to performance (low risk), supplemental payments attached to shared savings and risk (medium risk), bundled payment arrangements (medium risk), and global payments based on quality measures (high risk). Eventually, 30% of total medical cost must be in VBR arrangements by year five (originally set for 2022). Pennsylvania originally set staggered targets, beginning with 5% in year one, and increasing to 10% each year.

While the pandemic has slowed the implementation timeframe, Ms. Chew and Ms. Collins discussed the planned value-based relationship between Magellan and Pyramid Healthcare—and the steps required to make it work. In the model, there are limited shared savings models based on spending targets that encourage coordination of behavioral health care. The model also requires addressing social determinants of health (SDOH) issues.

But challenges to getting this up and running are substantial. There are multiple provider organizations among consumers and across episodes of care, which makes it harder to coordinate care. There also exists a lack of medication assisted treatment (MAT) services available and resources for follow up care. The speakers offered two pieces of advice—develop a collaborative model to solve problems and engage at a ‘grassroots’ level to assure success.

Work together to solve hurdles. Operationalizing value-based models has a number of hurdles to overcome—including attribution, managing care transitions, and having the right staff in place. Much of the time well spent involves connecting consumers through various points of care transitions from inpatient to outpatient community models. It’s also difficult to define what ‘value’ is and what drives outcomes—from reduced emergency room visits, medication adherence, better nutrition, less comorbidities, etc. To maximize effectiveness, the whole care delivery system needs to work together to attribute consumer outcomes back to the providers that serve them (see Specialty Primary Care As A Growth Strategy). Magellan and Pyramid Healthcare recommend having weekly touchpoints to examine data, discuss successes and opportunities, and share information among teams to clinically shape what happens next.

Get to the grassroots level. For both payer and provider organization management teams, this requires a cultural shift, centered around the consumer experience, utilizing peers, and making sure all the right information gets to provider organizations (see Nimble Applies To Information Too). Ms. Chew explained how “much of the work has to happen at a local level in different pockets or pilots, balancing expectations and taking the best parts of certain programs and models and adapting and integrating them into others.” One strategy that Pyramid Healthcare introduced is an alumni program, where consumer peers can continue to be involved and integrated into the community, with certified training, job placement assistance, and linkages to wellness programs.

Specialty provider organization executive teams need to renew their focus on getting in ‘first-position’ with health plans by creating opportunities for financial alignment—and for increasing revenues through achieving superior outcomes. In a health care landscape where fee-for-service reimbursement is not keeping pace with inflation (even before this year of hyper-inflation), this shift is a key to sustainability.

For an assessment of organizational preparedness for value-based reimbursement, take the OPEN MINDS Value-Based Reimbursement Readiness Assessment. For more information on value-based reimbursement strategies and partnerships, checkout these resources in the OPEN MINDS Industry Library:

And for more discussion on value-based payment and strategies, join me for the following executive seminars at The 2022 OPEN MINDS Management and Best Practices Institute in Newport Beach, California on August 30: How To Build Value-Based Payer Partnerships: An OPEN MINDS Executive Seminar On Best Practices In Marketing, Negotiating & Contracting With Health Plans.