As the prolonged pandemic continues, every executive in every industry is asking the question, “what’s next?” The health care sector has been completely upended by the pandemic crisis. From our analysis, it appears that the “next normal” holds more focus on “whole person” health management models, “hybrid” service programs with a mix of telehealth and face-to-face services, more leverage of technology, and more focus on value (see my recent presentation, Navigating From Challenge To Opportunity: The Best Of The 2020 OPEN MINDS Management Best Practices Institute).
That last piece—the focus on value—will be a move away from fee-for-service (FFS) reimbursement to some type of non-FFS alternative payment methodology (APM): bundled rates, case rates, episodic payments, and capitation reimbursement. I’m not certain what exactly that will look like and there will likely be significant variance by payer, consumer typology, and service models. Skeptics will say that we’ve been inching toward widespread acceptance of value-based reimbursement (VBR) for a decade or more with limited adoption. In 2018, 39% of payments were FFS, and another 25% were FFS with some link to quality and/or value, such as pay-for-reporting and pay-for-performance (see Entering The Next Phase Of Value-Based Payment Reform).
But that was before the pandemic. Moving to non-FFS APMs addresses multiple issues for payers and health plans. APMs support integrated care models. They allow health plans to address the growing prevalence of behavioral health conditions. They provide steady income for provider organizations. They address the likely budget compression that lies ahead by getting more alignment with provider organizations by increasing their downside financial risk—and shifting some administrative costs to them as well.
Immediately prior to the pandemic, the Centers for Medicare and Medicaid Services (CMS) implemented Patient Driven Groupings Model (PDGM) for home health agencies (HHAs) on January 1, 2020. PDGM was the most significant change to HHA reimbursement in 20 years, tying payment to an individual’s overall health condition rather than to therapy visits. Prior to implementation, there was widespread “the sky is falling” fear of the financial impact. The sky didn’t fall. There was the expected interruption in cash flow, but overall documentation, coding accuracy, and timeliness of claims submission have all improved, and reimbursement rates are better than projected. In some ways, PDGM helped HHAs prepare for the very sudden drop in utilization with the onset of COVID-19. That too, is turning around. Skilled nursing facilities (SNFs) had similar experiences with its new payment model, the Patient Driven Payment Model (PDPM). SNF utilization is declining, as expected, as the industry shifts to right person, right treatment, right setting with home being the preferred care delivery location.
And in anticipation of the “next normal,” on Tuesday, September 15, 2020, CMS released new guidance to help state Medicaid plans continue their shift towards VBR (see Value-Based Care State Medicaid Directors Letter). And, the CMS’ innovation center is about to roll out new risk-based model for those dually eligible for Medicare and Medicaid (see CMS Innovation Agency To Launch Risk-Based Model For Dual Eligibles). The model will allow Medicaid health plans to take on financial risk for a consumer’s FFS Medicare services.
In addition to CMS, health plans are also increasing their use of APMs. On September 14, 2020, Humana announced it was adding two more episode-based payment models—the Coronary Artery Bypass Grafting (CABG) model and the Total Shoulder Specialist Reward Program. These two episode-based models are in addition to Humana’s Maternity Episode-Based Model and Oncology Model of Care. Humana now offers a total of six specialty care payment models, with more than 2.6 million individual Medicare Advantage (MA) and commercial members receiving care through 1,000 value-based relationships across 43 states and Puerto Rico (see Humana Launches Two More Value-Based Programs for Specialty Care).
The implications are clear. More health and human service reimbursement is moving to non-fee-for-service payment models. And the provider organizations that are best prepared to accept value-based contracts with managed care plans are the organizations with a competitive edge. To get your team up to speed, these are some of the best OPEN MINDS resources on VBR models.
Assessments & Educational Programs
OPEN MINDS has developed a Managed Care Competencies Assessment, focused on the organizational and technical competencies needed to make the transition successful. This online self-assessment helps to evaluate and identify improvements in 12 domains.
To help provider organizations navigate the management challenges of transition to VBR, OPEN MINDS has developed a web-based readiness self-assessment for value-based reimbursement readiness, focused on scoring organizational and technical competencies needed for the transition. This tool was designed to evaluate and identify improvements in six domains.
The evolution of health and human services away from a focus on cost-based/volume-based reimbursement—and the growing expectations of consumers, caregivers, and health plans—are changing both the successful business model and the market role of many service provider organizations. This evolution is one that will (like in retail, banking, and publishing) create new winners.
In this presentation at the 2020 OPEN MINDS Management Best Practices Institute, OPEN MINDS Senior Associate Paul Duck discussed how to develop relationships with the payers in your market, initiate strategic conversations, demonstrate value, and secure and optimize service agreements. He also discussed how to help payers meet their performance requirements, align programs and services with their goals, and provide data to show that how service lines can deliver quality outcomes with lower costs.
Strategic Implications Of VBR
Despite the significant upset to the health and human service system caused by the pandemic crisis, the move to value-based reimbursement (VBR) seems to be moving along. On June 3, The Centers for Medicare and Medicaid Services (CMS) announced adjustments to 16 value-based care (VBC) models, with goals of accounting for COVID-19-related changes in health care delivery (and the uptick in costs), as well as allowing more time for participating provider organizations to transition to VBC (see CMS Makes COVID-19-Related Changes To Value-Based Care Models). And, on June 19, CMS issued a proposed rule to grant state Medicaid programs and other payers flexibility to enter value-based payment (VBP) arrangements with drug manufacturers (see CMS Proposes Regulatory Changes To Promote Medicaid Value-Based Drug Purchasing).
On June 17, CMS issued a proposed rule to grant state Medicaid programs and other payers flexibility to enter value-based payment (VBP) arrangements with drug manufacturers. The rule’s definition of VBP is an arrangement intended to align payments to therapeutic or clinical value in a population, such as evidence-based measures. The cost should be linked to existing evidence of the effectiveness and/or outcomes-based measures. Or payment should be linked to the drug’s actual performance in a consumer or a population—such as reduction in medical expenses.
One key tool for executive teams planning for recovery after this crisis period is having the metrics to make the right decisions. I tend to think of this data in three domains. There is financial data for short-term cash management strategy. There is strategic market information for planning long-term post-recovery strategy (this includes both external and internal data). And there is service performance data to optimize value.
This year, what has been top of mind for many executives attending the Institute is how to adapt your strategy in the current crisis—and how to use innovation to succeed in an altered health and human service landscape. But one question keeps coming up—where do “value” and “value-based” reimbursement fit in all of this?
In the past two weeks, we’ve covered two initiatives sponsored by Blues plans to move behavioral health to some value-based arrangement. Blue Cross and Blue Shield of North Carolina launched a new value-based purchasing model, Blue Premier Behavioral Health, which allows behavioral health professionals who either meet or exceed quality benchmarks to earn higher reimbursement rates. In New York, BlueCross BlueShield of Western New York announced that it entered into a value-based reimbursement arrangement with Value Network.
We’re seeing more use of episodic payments, case rates, and bundled rates. Our recent health plan survey found the number of health plans using bundled payments or case rates rose from 39% to 59% from 2017 to 2019 (see Trends in Behavioral Health: A Population Health Manager’s Reference Guide on the U.S. Behavioral Health Financing and Delivery System and What Are The Health Plans Doing About VBR?). And, our recent survey of specialty provider organizations found that 24% of those organizations have some bundled rate contracts (see 2020 OPEN MINDS Performance Management Executive Survey: Where Are We On The Road To Value).
Greetings from Florida and the opening day of The 2020 OPEN MINDS Performance Management Institute. It’s a power-packed agenda full of sessions focused on optimizing performance and sustainability in the complex consumer market. I opened the institute with results from our 4th annual survey on the state of value-based reimbursement (VBR) in the market (see Where Are We On The Road To Value? The 2020 OPEN MINDS Performance Management Survey). The findings reminded me of the 1980s advertisement for Wendy’s with the woman, the insistent Clara Peller, asking, “Where’s The Beef?” (see Where’s The Beef) – and saying “I don’t think there is anybody back there…”
This presentation was delivered on August 26, 2020 at The 2020 OPEN MINDS Management Best Practices Institute. Speakers discuss how the problem of access in behavioral health requires new partnerships, integrated care, collaboration, and a shared vision between payers and provider organizations; and how each payer is working to solve the access problem.
OPEN MINDS hosted an executive web forum for executives of health and human service organizations. Led by OPEN MINDS Senior Associate Paul M. Duck, the forum took a deeper dive into different tactics and strategies provider organizations can leverage with payers to negotiate optimal fees and reimbursement rates.
Alternative payment methods (APMs) for mental health and addiction disorder treatment are associated with lower behavioral health service utilization and lower spending, as well as improvements in process of care outcomes, according to a review of evaluations of 17 APM implementations. Of the 17 APM implementation evaluations, 11 assessed utilization changes and five found lower utilization. Eight evaluations assessed spending, and half found an association with lower spending. Fifteen evaluations assessed process of care, and 12 reported statistically significant improvements due to the APM.
On August 11, 2020, the Centers for Medicare & Medicaid Services (CMS) announced an alternative payment methodology (APM) for rural health care services. The APM is called the Community Health Access and Rural Transformation (CHART) Model. CHART has two value-based payment models: the Community Transformation model and the Accountable Care Organization (ACO) Transformation model.
On July 15, 2020, Blue Cross Blue Shield of Massachusetts (BCBSMA) announced plans to pilot a new value-based payment model for small practices that provides financial support through a global payment, upside risk incentives, and an immediate support payment.