By Mike Polen
For the past 20 years, the fundamentals of health care delivery have remained largely unchanged. Health plans rely on cost-shifting and utilization management to bend the cost curve, and doctors and hospitals accept lower prices in exchange for increased patient volumes. However, with the predominance of managed care, this value proposition is being traded-in for more nuanced forms of care management that emphasize whole patient care and cost reduction. And while medical costs have stabilized over the past five years, health care spending still represents a major share of the U.S. economy, exceeding $3 trillion in 2016 and expected to reach $5.7 trillion by 2026. Moreover, there are growing constraints on access due to primary care provider shortages and an aging population whose longevity is increased by expensive new specialty pharmaceuticals, technologies, and treatments.
Adding to the cost pressures are the nearly 12 million dual-eligible individuals who qualify for both Medicare and Medicaid benefits. While much progress has been made to simplify access and improve coordination of services for these individuals through integration of Medicare and Medicaid managed care programs, many beneficiaries are still enrolled in unrelated entities for both programs, further complicating an already fragmented system for this highly vulnerable group. And, while this group represents just 20 percent of all Medicare beneficiaries, they account for 34 percent of program spending, which is largely attributable to their complex health needs and unique social factors. In 2012 alone, federal and state governments spent a total of more than $306 billion on health care benefits for this population, or $30,619 per beneficiary about twice the amount spent on other Medicare beneficiaries.
Enter Value-Based Care: Managing Costs, Improving Health Outcomes
It’s difficult to dispute the “value” of value-based care. Aligning provider and health plan reimbursements with patient outcomes has a far more positive impact on patient health and well-being than the traditional fee-for-service model.
Value-based care shifts the focus to “value” over “volume” and encourages providers to be more focused on quality outcomes. This model presents a real opportunity to fundamentally change the way the system works—especially when it comes to transforming the historically adversarial relationship between health plans and providers to one of partnership and collaboration, with each party bringing their expertise to help improve overall health outcomes.
Aligning incentives becomes even more important for the dual-eligible population given their health care needs, comorbidity profile, and the role of social determinants or risk factors. A successful shift to value-based care for the dual-eligible population requires a few important components.
First, there are contracting models with aligned incentives that reward providers for both cost and quality performance. Effective value-based care models are those that involve distributing financial risks and rewards between the health plan and the provider, with an opportunity for providers to receive a higher percentage of the total revenue if both cost and quality objectives are met. But it’s important for providers and health plans to enter these more advanced partnerships cautiously. While the prospect of additional reimbursement can be attractive, if practice patterns have not transitioned away from the traditional fee-for-service mentality, the objectives of value-based care will never be achieved.
The second key component to value-based care for the dual-eligible population is patient engagement. High-performing providers (HPPs), practitioners who effectively manage costs and improve quality, are also successful at increasing patient engagement, integrating into the communities they serve, and overcoming the inherent barriers to care experienced by this population. In addition, HPPs understand the importance of caregiver engagement, which is critical for patients with special needs. Caregivers—including parents, children, and spouses, among others—often translate physician instructions to members. Providers who invest in strengthening an independent patient-caregiver relationship are well-positioned to create the patient engagement necessary to drive improved outcomes.
A third key component to consider is social risk factors or social determinants of health. While incentives exist for providers who close care gaps—with process and outcomes improvements theoretically rewarded with higher quality scores thanks to measure-specific incentives-- physicians who care primarily for dual-eligible members tend to do worse on quality measures that focus exclusively on health performance than providers who primarily care for non-dual-eligible populations. HPPs recognize the impact these social risk factors have on a patient’s health and work with their health plan partners to address these important barriers to quality care.
Let’s look at a few examples of the impact of social determinants of health. If patients do not receive support such as home care or Instrumental Activities of Daily Living (IADL) services, those patients are unlikely to be able to achieve stability in daily life. This uncertainty may undermine adherence to medication protocols or disease management engagement with primary care, and lead to unnecessary utilization of higher-cost care such as the emergency department or the acute care inpatient setting. Furthermore, individuals who lack access to home care services are five times more likely to end up in a nursing home, and they also experience higher mortality rates. Access to these services helps keep more patients in their homes, which is safer, lower-cost, and generally preferred by patients.
if dietary and nutritional needs remain unaddressed. HPPs know how to navigate these non-health-care related barriers for patients and their caregivers. Under the traditional fee-for-service model, the provider would be financially constrained from investing and supporting such patient engagement efforts. However, increased incentives within a value-based model allow the provider to offer services that go above and beyond the traditional delivery of health care, helping to chip away at the barriers historically faced by these populations while creating stability in their lives.
The role of value-based care will continue to expand in the care of the dual-eligible population. But effective patient engagement depends on health plans working with high-performing providers. At WellCare, we find our highest-performing practices also care for a high proportion of the dual-eligible population. In some cases up to 35 percent of their patients belong to this population. Risk-sharing is also a critical component with specific incentives tied to quality; it’s not enough just to control costs.
The savings and increased premiums associated with value-based purchasing enable health plans to reinvest in supplemental benefits and allow providers to offer value-added services addressing the social risk factors these individuals face. Value-based care is a proven approach to lowering costs, improving quality, and increasing patient satisfaction. We will see more providers become successful HPPs—especially those caring for dual-eligible patients—as they harness the benefits of the value-based model, recognize the importance of patient engagement, and positively influence social risk factors.
Mike Polen is the executive vice president, Medicare and operations, WellCare Health Plans.