Pivoting to Value-Based Care: Analytics Architecture – for Payers

By Philip Nelson

To properly make the pivot from fee-for-service (FFS) to value-based payment (VBP) models as a payer, it’s important to know exactly what your providers will need from you so they can understand what they’re getting into and succeed in these new value-based payment models.

But how do you do this for your providers?

Payers and providers succeed in value-based care when they are in alignment on how to achieve shared savings. A comprehensive value-based care analytics architecture, powered by actionable, transparent analytics, brings this alignment into focus.  So, what then do you need to do to ensure that you have a comprehensive analytics architecture that can deliver the actionable insights your providers need?

You can start by asking yourself these four important questions:

How do you align the interests of payers and providers?

To best understand how to align payer and provider interests, first we must examine what sorts of incentives exist for each party within different contract structures.

Under traditional FFS arrangements, payers are incentivized towards lower loss ratio (more profitable for them) which can be achieved in a number of ways, including lower utilization of services for patients and steerage for lower-cost services for patients. For providers, the incentives under FFS arrangements are completely flipped, as they’re encouraged towards increased utilization of services for patients and higher-cost services.

Within VBC arrangements, payers and providers aren’t pitted against each other in this way. The alignment is organic to the structure of the contracts payers and providers negotiate, where lower costs result in shared savings and increased profits for everyone.

How do you select the appropriate VBP model for your health systems?

There’s a plethora of VBP models out there, from shared savings to shared risk to minimal loss ratio and on and on. The questions your plan needs to consider first are; what model are you capable of administering? What analytics data do you have readily available? and, what external reporting capabilities do you have?

Similarly, you need to think about your provider networks and ask what models they are capable of implementing. What is the size of the provider group? If it’s 100 versus 1,000, that’ll likely change the scope of what models they might be suited to implement. Also worth considering, how experienced are your provider networks in taking on risk? The more experienced they are, the more amenable they will be in taking on risk in future contracts.

The last sub-question to consider here is, how are the members of your plan assigned and attributed? Within that, which providers are seeing members of your network the most (family care, OB/GYN, nurse practitioners, etc.), and who is best positioned to influence decisions around patient care? For your value-based arrangements to succeed, a lot of rigor needs to be placed around answering this question.

How do you properly adjust for patient risk and cost trends?

As a payer, you will hear plenty of concerns from your providers on their end, such as sicker patients, increases in operational costs (drugs, staffing) and questioning the validity of risk adjustment methodologies. These provider concerns are just a part of value-based contracting, so it’s important as a payer that you carefully evaluate what’s fair and appropriate when setting risk and cost trends in your arrangements.

As a part of this, you’ll need to decide what criteria you’re using to determine expense benchmarks. How are you selecting the patient population in this equation? What quality metrics are appropriate for the given patient population? How are provider expenses trending over time? Are providers reasonably capable of submitting all of the data needed for your model?

How do you enable providers to manage your member population?

It’s important to remind yourself as the payer that providers do not always have access to the same data for their patients that you do, such as when your members receive services outside of their attributed provider’s network. As such, the more of this info you can offer to your providers, the better they will be at managing your patient population.

You’ll want to make sure your providers have knowledge of and access to information on attributed population, risk adjustment, and financial results as a baseline. Additionally, how medical utilization, drug utilization, quality, and chronic conditions ultimately finalize in the payer’s adjudicated claims helps providers optimize their performance on both the quality and cost fronts. An open exchange of this data to your providers will be imperative to their success.

Interested in learning more about the value of a well-thought-out analytics architecture? For a more in-depth examination of this topic, check out our On-Demand Webinar, “Pivoting to Value-Based Care: Analytics Architecture – for Payers”.

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