Employers Are Catalyzing Payment Model Reform; Are You with Them?

Employers increasingly are holding providers accountable for outcomes, and providers that can’t adapt will have a hard time competing.

As they continue to seek solutions to rising healthcare cost, employers are working with providers and health systems to optimize the value of their healthcare spend through options such as onsite care clinics, wellness programs, and value-based payment models for healthcare.

The Centers for Medicare & Medicaid Services (CMS) may attract the most attention when it comes to alternative payment models (APMs), but innovation in commercial health plans is reaching more Americans. At the end of the first quarter of 2017, 923 active ACOs were covering more than 32 million lives through more than 1,300 contracts, according to the Accountable Care Learning Collaborative. Commercial contracts represented more than half (715) of those plans and 59% of covered lives.

Many of the major insurance carriers have, like CMS, set goals for shifting more payments in value-based payment models. According to the Health Care Payment Learning & Action Network, about 22% of healthcare dollars in commercial health plans are spent in APMs that incorporate population-based accountability, such as shared savings and capitation. That percentage is just a hair behind the average of 25% across all payer types, including Medicare Advantage and Medicaid plans.

Bundled Payment Initiatives

Several health care systems and providers have been developing their own APMs for specific medical conditions. Diabetes Care Group offers a bundled payment program for employer health plans and groups that combines clinical care, testing and education for a fixed amount per year. If the patient reaches their HbA1c goal, DCG receives a performance bonus. The result is that the patient is in control of their diabetes, cost is moderated, and the provider is paid for their performance. DCG is now a provider of onsite diabetes care for the 200,000-member Mississippi state health plan.

BARInet, a provider of bariatric surgery, also bundles the various cost of providing the surgery into one payment and combines an insurance product to cap the cost for the employer. One of the first bundled payment programs in the state, BARInet incentivizes the physician to coordinate care, increasing quality and reducing cost.

Onsite Health Clinics

Onsite and near-site health clinics represent another fast-growing trend among forward-thinking employers. Southern Farm Bureau Life Insurance Company is one example of 25 employers in Mississippi who are making healthcare more accessible, and therefore, more effective. Today, I am presenting on this case study at the 14th West Coast Forum on On-Site and Near-Site Employee Health Clinics.

Innovate or Die

As the value-based trend accelerates, innovative providers will begin eating into the market share of their more traditional brethren. In Mississippi, we have recently seen several out-of-state players set up shop. Just last year, Oschner Health System out of Louisiana entered a strategic partnership with Southwest Health System, and Cleveland Clinic partnered with the National Diabetes and Obesity Research Institute in South Mississippi.

APMs are here to stay as employers, health plans, and health systems work to reduce or moderate the increase to ongoing health costs. Employers are working with their brokers/consultants to identify effective vendors and benefit design strategies to improve care and quality to show more value of their investment. 

Providers should be aware of what is happening in their marketplace and learn from successful initiatives. Most important, be very clear about what your practice or health system does well, and start exploring ideas to bundle these services together in such a way as to provide better, more cost-efficient care.

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