Aligning Incentives
How can analytics inform providers and help them feel more comfortable in taking on risk?
JR: Providers do not have full access to claims data, which means right out of the gate they will struggle to understand the population they are being asked to take risk for. It starts with understanding the risk contracts, their terms, and the financial model of the contract. Some contracts contain risks that you can manage but they can also contain risks that you do not have control over. However, the providers are not at a complete disadvantage here. They have EHR data that can be used to identify medical conditions in their populations, as well as used in a predictive manner to identify care management opportunities in their populations. That additional information that payers don’t necessarily have access to can help them make the right decision for their population.
GW: You need to have the talent to understand the data that you have. This talent needs to know what to look for and how to turn this data into the right actions, and that often involves an actuarial approach. Talent makes a difference in helping us feel more comfortable making data-driven decisions. It keeps coming back to the talent to build the data, aggregate it, understand it, use it and then create actions around it to drive the performance you need to succeed.
The complexity of patient conditions continues to increase, complicating risk for providers and payers. How should organizations solve for this in the development of risk-based agreements?
JR: At the end of the day, we are trying to understand what these risk contracts are attempting to achieve, which is most often improved outcomes at a more efficient cost. With that in mind, there is a lot of opportunity to achieve the Quadruple Aim by focusing on complex and chronic conditions. By aligning incentives to improve care for these conditions, we focus our energy on some of the biggest opportunities to reduce variation in care and create a better patient experience.
GW: There is a big difference between chronic and complex conditions, and I think it is critical on both sides that value-based agreements can continue to be a part of the solution as they mature. With gene and cell therapies, along with other complex conditions that may be rarer in terms of numbers of patients, you have more actuarial volatility around what to expect in a given population, whether it’s a payer population, or providers’ at-risk population. Either at-risk, or ACOs for valuebased contracts, or even through capitated agreements, that risk is far more volatile when the number of patients or treatments is less, but the cost per treatment, or patient, is higher. When a value-based contract is properly constructed and fairly negotiated, we ensure value under a pay-for-performance agreement. Patients can get their money back if the treatment, therapy, or care doesn’t work as expected, and that is where providers must take on a higher risk on the downside. How do we make sure the patients are cared for and have access to what they need, while also providing affordable care in our society and system? We need to be able to operationalize solutions that are good for the patients and for the parties involved.
The industry continues to have one foot in fee-for-service and another in value-based care. What changes need to take place for providers and payers to truly realize the full potential benefits of valuebased care?
JR: The incentives have to be aligned. Payers and providers each have different incentives for their businesses, but if we can align those incentives and have everyone working toward the Quadruple Aim, there could be great progress toward the full potential of value-based care. Other incentives currently exist for providers, such as access to data and a simplified quality reporting process. Aligning incentives and making them meaningful to both payers and providers success will entice payers and providers to work more closely together.
GW: Value-based contracts are not going to be the right strategy for each provider with every payer, or for each payer with every provider. It can go beyond even just a value-based contract into deeper alignment and collaboration such as a joint venture or co-creating new solutions that lead down that path. Incentive alignment is critical for getting the contracts completed, but takes more alignment in partnership strategy, culture and approach to go even further down that collaborative continuum.
“Payers and providers each have different incentives for their businesses, but if we can align those incentives and have everyone working toward the Quadruple Aim, there could be great progress toward the full potential of value-based care.” Jeremiah Reuter