In this interview, we sit down with Real Time Medical Systems (Real Time) Senior Health Plan Advisor, Nancy Cocozza, to discuss the important role value-based care (VBC) plays in healthcare, specifically among payers and providers. Nancy will address the challenges facing aligning value-based programs, the opportunities they present to improve care and costs, and how data driven technologies can bridge the gap in achieving successful VBC outcomes.
Real Time: Nancy, what role does VBC play in healthcare?
Nancy Cocozza: Value-based care plays a significant role in healthcare as it presents the opportunity to align incentives amongst all stakeholders (payers, providers, patients). Ultimately, it is transforming the way we deliver and are reimbursed for care, by moving away from a fee-for-service model to a pay-for-performance model. It is a substantial initiative that is placing considerable efforts on achieving total health transformation in terms of improved health outcomes, patient experience, and cost. VBC financially incentivizes stakeholders to collaboratively work together to enhance access to care, improve patient outcomes, and reduce total cost of care.
Real Time: With VBC being an integral component in healthcare, why is it important for payers to partake in VBC?
Cocozza: Prior to VBC the tool most used by payers, to make care more efficient, was primarily to drive down price through negotiation leveraging volume. This ultimately created a lot of contention in the relationship between payers and providers. Providers sought to maximize reimbursement, while payers looked to minimize reimbursement, which you can imagine led to competing agendas. Eventually, we got to a pay-per-volume structure where providers would, in essence, consent to price reductions if payers could deliver on volume. Potentially, both stakeholders were getting something out of the deal, but the patient, who is a key stakeholder, was somewhat absent from this conversation. From a payer perspective, relationships with providers started to deteriorate. There was a big “anti-manage care” backlash where providers started to really object to the burden that managed care companies were creating. Additionally, managed care companies were creating administrative hurdles because providers would find creative ways to increase reimbursement. However, as VBC began to gain momentum, it created an opportunity for payers and providers to get on the same page and do something that was in both of their best interest, with the primary goal to benefit the patient.
Value-based care initiatives are important to payers for several reasons. It opens the door for providers and payers to begin collaborating towards sharing risk, allows them to partner on what they want to achieve, and then provides a framework for sharing risk together – which is the definitive alignment of interest. So, from a payer perspective, the opportunity to achieve the triple aim (if you will) is much more probable in a VBC environment as opposed to any other e-schedule/volume-based arrangement.
It’s also important because the Centers for Medicare & Medicaid Services (the largest US payer) is increasingly embracing more VBC initiatives. Medicare and Medicaid programs, which are a large part of the health plans business, is driven by quality measures and star ratings that go into determining ultimate reimbursement from these government programs. And patients are beginning to pay more attention to the quality of their health plans and the quality of the services they receive, which is becoming a bigger determinate in the overall star rating a plan receives. For payers, having a good collaborative relationship with providers, figuring out how to promote better access, and provide better patient experience is essential to a Medicare Advantage plan because a plan that cannot achieve at least a 4-star rating is not a sustainable MA plan in the long run. They will simply lose the ability to preserve a competitive value proposition, and with that, the ability to grow and sustain membership.
Real Time: What role do payers play in VBC?
Cocozza: Payers are really the financiers of healthcare and are the ones who determine how healthcare is paid for across the system. They play a pretty important role in terms of understanding risk, designing reimbursement and reward systems that are meant to be equitable, and sustainable for patients and providers.
Not only are the payers the financiers of healthcare, but they are also the collectors of the most amount of patient and provider data. Payers who have an abundance of information on their members history, preferences, and utilization of benefits can drive better outcomes and improve care. They have the most complete clinical history, it might not include narrative notes, but it certainly has all the administrative data. We are seeing in more value-based arrangements, providers giving full access of the medical records to payers that they are sharing risk with. Payers are enriching this very valuable repository of information that they are collecting around the consumer, their preferences, their health profile, and all the interactions that the consumer has -everything that you can imagine that would be impactful to that consumer’s health. This puts the payers in a position of being able to harness that data and make best use of that information when payers design the benefit programs and reward systems, both for patients and providers.
Real Time: What are some of the challenges payers face in VBC?
Cocozza: There are several challenges faced by payers, but the most significant one is that every provider is at a different level of understanding and capability in how to manage risk or how to do population health. This is especially challenging when you consider the different provider care settings that payers must collaborate with to truly impact value-based outcomes: acute hospitals, physician groups, post-acute and long-term care, home health etc. The payer must figure out where that provider group is on the risk continuum, in their capabilities, and experience of being able to be successful in population health and VBC.
Additionally, it becomes more challenging for payers who have providers that have been previously “hurt” in risk sharing, or who have not been successful in incentive arrangements. It’s important to work with providers to be able to understand these prior obstacles and work together to provide reassurance that past failures need not be repeated with better information, tools, and governance. There’s lots of history if you look back over time where payers encouraged providers to take risks, perhaps before they were ready and providers stepped up to do that, but not entirely successfully. Payers quickly learned that if a provider “goes under” because they simply failed to effectively manage risk, it’s the payer who is ultimately responsible financially. Thankfully, payers got smarter about collecting and sharing more complete data, timelier and across all care settings including post-acute care. Post-acute care is an important setting where the data may not be as available through a health system EHR and may require a more creative and focused solution.
The second challenge is figuring out how to operate together. Both providers and payers have things they think they are both good at and have expectations of the roles and responsibilities they should each have. Being able to come to an agreement on how they’re going to work together to affect this care and population is crucial. Along the way, it’s essential that there be a building of trust between both parties in terms of how this is going to work.
The third challenge is for the payer to enlist all stakeholders that are necessary to make this value-based arrangement work and that’s ultimately sharing the data. It all starts with collecting data: clinical, member preference, Rx, diagnostics, and the administrative data in a way that is useful and as close to real-time as possible. It is also essential to collect data from all care settings. Often hospital data is available from the EHR, but data from post-acute or home care agencies is not collected. Once collected, data should be mined for insights and should be accessible to the treating providers and care managers. To the extent possible, give the data context. Make it actionable by using technology to support next best action, prioritize the interventions based on risk level, and effective governance with provider partners.
Real Time: What role does technology play in VBC?
Cocozza: Technology is an essential part in VBC because at the end of the day stakeholders must have a certain level of trust in one another, certain level of transparency, and being able to operate off the same set of data that both parties (provider and payer) believe is credible. Secondly, timely access to the right data can help determine how resource investments are made. In the past, providers completely relied on payers to provide claims data to help them figure out who needs what test, or whether their conditions are exacerbating. Payers were not always quick to be able to provide that data because there’s a claims lag, or technical impediment or an incomplete picture. In many cases, payers would provide these feeds on a quarterly basis, with a one quarter lag. The first time a provider group might get access to what’s happening in that population, it might be 6 months after the start of a contract year, which is too late to make a positive impact on outcomes.
In the early years of VBC, the ability of technology was not great in supporting timely transmission of the right data between parties. Additionally, technology that just dumps a load of data on either partner isn’t tremendously helpful. You have to be able to draw out what’s meaningful in the data and bring to the surface what’s actionable to prioritize what providers should pay attention to today, this week, or in the next 90 days.
Technology plays an important part because without the data and without making that data meaningful, it’s hard to drive the right action. We have a healthcare system where resources are scarce and so the ability to deploy these rare resources according to risk and need is important and that’s really one of the things that makes value-based healthcare very valuable. If you have partners that are collaborating well together, there’s a handshake in the data, understanding of capabilities on both sides, and there’s a well-coordinated plan of action that the patient benefits from in an effective VBC arrangement.
Real Time: What do you foresee as the future of technology & VBC?
Cocozza: VBC is the future. There’s going to be lots of trends with technology, the ability to do more virtually, a bigger transition of care into the home, more practitioners practicing at the top of their license and more effective care coordination. But ultimately all these things are going to rely on how they are incented and paid for, how we harness scarce resources, manage risk, how we allocate these resources across a population that needs care.
In many ways, the value-based reimbursement system has the right alignment for all stakeholders so that people at the highest risk levels are getting attention when they should, and that all these new programs that promote good health, management of chronic conditions etc. are accessible to all people equitably when needed. With tech-based innovations, I think all of this has a place and would be used equitably and properly in a value-based arrangement. The science is evolving, and the science must continue to evolve. Look at all these amazing things happening with gene therapy, personalized medicine, specialty drugs and bio-similar that are treating dread conditions that previously went untreated. These are often very expensive advances, but wonderful. The technology advancements with virtual care, digital monitoring, and all the things we’re seeing with moving care into the home are all amazing, but they all have costs. So having the ability to know how to deploy these kinds of resources across a population at the right time, in the right setting, based on risk, equitably, is best done with the VBC model.
Want to hear more from Nancy? Make sure to tune into Becker’s Healthcare Payer Virtual Event as she shares her insights on how payers can begin preparing for the future of VBC.