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How employers can use the power of the pen to improve quality, enhance equity and promote value

By François de Brantes on 9/21/21 12:10 PM

In a recent blog post examining what it will take to restore patient confidence in a fair and equitable delivery system, Dr. Daniel Wolfson, EVP and COO of the American Board of Internal Medicine Foundation, and I expose the significant challenges to establishing trust when money gets in the way. And money gets in the way when it drives both parties away from each other rather than towards each other. That happens all too often today, and here’s how.

Provider payments
Despite progress as reported by the National Health Care Payment and Learning Action Network, the majority of care is still paid one service at a time. This means that for every additional service completed, the provider organization billing for the service will get paid – in part or in its entirety by the health plan and the patient -- and that payment will take place whether the service is of high value to the patient, low value, no value, or even negative value. 

To avoid having patients pay for low/no/negative value services, some health plans have started denying claims for those services, deeming them not covered. Patients who have received those services may find themselves liable for paying out-of-pocket. Many provider organizations, however, are now paid using other formulas than for every service rendered. Providers can be paid a single price for a bundle of services that includes all the high-value care a patient should receive for a given condition or procedure, or they could be paid a fixed amount per month for all of the care a patient may need across all conditions and procedures. 

These alternative payment models are designed to encourage the use of high-value care and discourage the use of low/no/negative value services. Some of those higher value services include regular appointments to manage conditions, especially chronic conditions.

Patient coverage
Over the past 20 years, the out-of-pocket expenses paid by patients to cover healthcare services have increased considerably. That’s due to the proliferation of high deductible health plans, which include yearly up-front payments until the deductible is met and then a co-pay for or the share of every additional service until the plan member reaches the maximum amount to be paid by patients in any given plan year. 

This type of coverage can put the patient at odds with the physician -- whether the physician is paid fee-for-service or via an alternative payment model. Under fee-for-service, providers are likely to deliver more services than are needed, leading to higher out-of-pocket expenses for the patient than they would otherwise experience. And under alternative payment models, physicians may ask patients to schedule office visits more often for necessary treatment, which will also result in out-of-pocket expenses. As such, whether the service is of high value or low value, patient coverage and associated expenses for healthcare services can pull patients away from the physicians instead of toward them.

Finally -- truly actionable solutions
This isn’t just about building trust. It’s also about making sure that patients always get high-value care services and aren’t financially penalized when they do. It’s about making sure that how providers are paid -- and who pays them -- creates a positive impact on patients. And it’s the reason why Signify Health asked VBID Health to come up with concrete recommendations that employers, providers and health plans can and should adopt to solve this conundrum. 

Recommendations for employers and policy makers are detailed in this report and highlighted below:

Employers

  • Keep cost sharing low for high-value services, especially those used to determine provider quality
  • Measure and report low-value care and increase cost sharing for low-value services for which patients have some control
  • Hold carriers accountable for procuring high-value services and decreasing utilization of low-value services
  • Contract with carriers or third-party companies to leverage patient steerage to high-value providers
  • Pressure carriers to move to advanced forms of value-based payment where appropriate -- and to seek to align fee-for-service reimbursement rates with the value of care delivered

Policy recommendations

  • Define a set of high-value services for which providers may receive payment bonuses and that may be covered pre-deductible by health plans
  • Implement regulations such as Affordable Care Act Section 4105 that eliminate payment for specific low-value services
  • Encourage payors to publicly report the percentage of spending in alternative payment models by model type
  • Re-equilibrate the Medicare RBRVS Fee Schedule to increase payments for underprovided high value services and lower payments for low value services

These recommendations are all actionable and employers and policymakers can play a key role in aligning payment models and benefit design. 

As the report authors conclude, “Employers have the power of the pen when contracting with carriers. Better alignment of clinically driven payment with evidence-based benefit design can improve quality of care, enhance equity, and promote value.”

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François de Brantes is senior vice president, Episodes of Care Services, Signify Health