The State Of Value-Based Care: Improving Care Quality While Reducing Medical Costs
By Andrei Gonzales, Change Healthcare
Results from the third biennial study “Finding the Value: The State of Value-Based Care in 2018” conducted by ORC International show value-based care models are doing what they were designed to do: improve care quality while reducing medical costs. Yet, these results also show payers and providers still have work to do in order to optimize these programs. Included below are the study’s top 10 findings along with related insights on how to push the industry forward.
#1. Value-Based Care Strategies Successfully Reduce Unnecessary Medical Costs
100 percent of payers report medical savings, with an average medical cost savings of 5.6 percent and nearly one quarter saving more than 7.5 percent. These cost savings can be realized in many different ways. Cost variation of medical devices or implants, provider or facility rates and/or excessive use of skilled nursing or inpatient rehabilitation, for instance, are often causes for unnecessary medical spending, particularly when alternate materials, providers, services and/or settings can be used with equal outcomes. The trick is understanding where variations exist in cost and quality and knowing how to eliminate them.
#2. Care Quality, Provider Relationships And Patient Engagement Are Improving
The results of this survey show we’ve made a lot of progress toward achieving value-based-care’s “triple aim,” with nearly 80 percent of payers reporting improvements in care quality, 64 percent reporting improvements in provider relationships, and 73 percent reporting improvements in patient engagement. This could be an indication of better care coordination across the continuum, which is also necessary for reducing costs. Moreover, these efforts can help keep patients engaged and increase their overall satisfaction.
#3. Commercial Health Plans Now Lead The Way In Value-Based Care
Historically, government lines of business have been the biggest adopters and innovators when it comes to value-based care models and strategies. However, commercial lines are now taking the lead in this arena. One reason for this might be because commercial plans are driven more by consumers’ perception of value—considering quality and cost—where government lines are influenced more by political drivers. With value-based care models proving successful in reducing costs while improving quality, commercial plans will likely continue moving in this direction.
#4. Exclusive Use Of Fee-For-Service Is Declining Ahead Of Forecast
Exclusive fee-for-service models now account for only 37.2 percent of reimbursement. In just another three years, exclusive fee-for-service models are forecasted to slip below 26 percent and most likely will continue to decline. Although fee-for-service will never go away completely, especially for rare or complicated medical conditions, it will be rather uncommon in the near future.
#5. Most Health Plans Lack Agility To Roll Out Timely Care Programs
Innovation agility remains problematic for payers, particularly in the ever-changing world of healthcare. Only 21 percent of payers are capable of rolling out a new episode-of-care program within a three to six-month timeframe. Over one-third of payers need at least a year; 21 percent require up to 18 months; and 13 percent require up to 24 months or more. In all fairness, moving quickly in this market is difficult, particularly with the associated regulations, reimbursement factors and the gamut of drugs, devices, and types of procedures involved. As value-based care models become more mature, payers will develop the innovation and agility to implement models more quickly and effectively.
#6. Payers Are Struggling To Engage Providers In Episode-Of-Care Programs
Between 43 and 58 percent of payers reported difficulty in getting providers interested in participating, agreeing on episode definitions, and gaining consensus on budgets, risk/gain sharing, and performance metrics. Though the industry is seeing value and adopting these models more frequently, shifting to value-based care is challenging. We’re asking providers to coordinate care across the continuum and participate in programs far beyond what’s been expected of them in the past. Providers need better education on value-based models and information sharing. Payers can also help by delivering well-constructed performance reports, indicating opportunities for improvement, and assisting them (as appropriate) with referrals to high-performing specialists and facility partners.
#7. Cost Savings Are Leading Payers To Invest In More Administrative Support
Payers are realizing the benefits and cost-savings of episode-of-care programs. Sixty-six percent are strategically focusing on improving their organizational and operational capabilities by investing in administrative staff to support future growth, which is a proactive approach because these programs will require less innovation and more scaling as they mature.
#8. Episode-Of-Care Models Prove Effective At Improving Care Quality
Accountable providers in value-based care models are incented to coordinate care across the continuum to ensure patients have positive outcomes at reasonable costs. Despite these models being relatively new, one-third to one-half of payers find episode-of-care models to be effective at improving care quality across all types of episodes. As previously mentioned, care coordination efforts across the continuum are not easy and are new expectations for providers. Care coordination, engagement and patient oversight should improve as these programs mature.
#9. Episode-Of-Care Models Deliver Additional Savings
On average, episode-of-care models deliver savings of about 5 percent depending on the episode type, with some payers reporting savings of 7.5 percent or more. As more episode-of-care models are rolled out, it will be extremely important for providers to understand variations in cost and quality and be able to eliminate unwarranted variations.
#10. There’s Still Room For Improvement When It Comes To Analytics, Automation And Reporting Capabilities
The healthcare industry is very complex, riddled with inefficient processes, interoperability challenges, and data management issues among many, many other hurdles. Some payers are finding their processes, technology and tools—many of which were developed in-house as value-based models were just emerging—are insufficient for meeting today’s growing demands. According to the study, over half of payers are unsatisfied with their current value-based analytics, automation and reporting capabilities. Many payers are looking to outside experts capable not only of managing their businesses more efficiently and profitably but also capable of evolving quickly with industry demands.