Payer-Provider Convergence
On the path to a fee-for-value model, payers and providers must be increasingly moving in lockstep to solve provider outcomes. Whether this means that the payvider method is most effective remains to be seen. However, I did have the recent opportunity to share my thoughts with the KLAS team on the impeding payer-provider convergence.
What is the role of regulation in payer-provider convergence?
There are regulatory efforts at the state and federal levels to really push payers and providers toward value-based care (VBC), which is the driving force behind payer-provider convergence. States are starting to bake requirements and incentives to use VBC models into their contracts. We are really starting to see more ACO-type arrangements in which a health system or large physician group takes on risk and is in more of a payer role.
What factors (like VBC) are driving payer-provider partnerships?
VBC is really the big factor. Margin compression drives partnerships as well. Some other drivers are increased competition among health plans and consumerism of healthcare. More health plans are purchasing providers to create a more integrated product and develop narrower networks in order to lower costs and remain competitive.
In some markets, we have also seen health plans partner with large hospitals and physician groups in joint-venture models. The idea is to drive increased enrollment and volume by partnering with a hospital or physician group that has an established, trusted, and well-known brand in the market.
What challenges do provider organizations solve for healthcare IT?
Regarding payvider relationships in which the providers are taking on increasing risk and moving toward a payer role, technology and data are key factors for success. Provider organizations need to have the tools in place to be able to analyze patient data and track outcomes.
Payers can share data and IT services with the provider because the payers own a lot of the data and can see the whole picture for a given patient. Whereas, the provider typically has more limited information. So in order to map out costs, assess risks, coordinate care, and do all that is needed to have a successful VBC model, collaboration of IT tools and data is really key.
Payviders are looking for solutions to identify unnecessary variations in care that are driving up costs—tools that can help the physicians with clinical pathways that really lead to the best outcomes and that can compare physician performance with scorecards. Some successful providers that we've seen have been able to create or use tools that remove or minimize unnecessary variations and care to ensure that high-risk patients get needed care services.
Recently there has been a lot of discussion around social determinants of health (SDOH), particularly for the Medicaid population—solutions to identify SDOH and track whether members are getting the assistance that they need. There are concerns around members driving up ED utilization unnecessarily due to housing insecurity or other SDOH-related issues. There is not only a clinical benefit for payviders but also a financial benefit when they are taking on risk.
Do payviders present any challenges? What steps can be taken to address these concerns?
Taking on risk is always challenging. Which IT solutions will be the most helpful? Which are cost effective? Are the physicians on board and engaged? Is the data actionable? Are we getting what we need from the reports? Are they easy to run? Can the solution engage with consumers effectively?
There is a lot of overconcern about having access to actionable data and reports, which are key. We also hear a lot about providers that have different systems in place that don't necessarily speak to one another. So ensuring that the data can flow from one system to another is also key.
What are best practices or keys that lead to strong working relationships between payer providers?
Ensure that goals are aligned, that you have physician buy-in, and that you can share data. Know the terms of the agreement and whether they make the provider successful. Has the risk-sharing-model work phased in over time? Over the course of a few years, are you taking on more risk? On the provider side, how are you being compensated for taking on risk?
Ensure that the terms of the agreement work for both sides, that you have a really good handle on your patient data, and that you understand the makeup of your patient population, the costs, and how your cost compares to competitors or to the market average. And ensure that you have a solution in place to really identify and manage outliers.
There is going to be a lot of growth in this area, particularly for Medicaid and Medicare.
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