Today’s payer-provider partnerships are more collaborative than ever. Historically transactional and defined by reimbursement and coverage-based decisions, the association has shifted dramatically as providers find themselves increasingly accountable for cost and quality.
Hospitals and health systems are devising new holistic (and integrated) care models and technology-driven capabilities to enhance existing networks and capture new patient volumes. In many cases, providers are partnering with payers in the design of these health management capabilities to benefit all consumer types (and not just those at highest risk) and bring in additional covered lives. Payers are not immune from market forces either -- new entrant health plans (including provider-owned) that leverage data driven, technology-based platforms and narrow networks are looking to control costs and achieve high quality outcomes, elevating consumer expectations in the process.1
Population health principles – a requisite for success
Whether it’s through a provider-payer partnership or more traditional health plan (employer-sponsored or otherwise), successfully managing the health of a defined population is critical. At its most basic, population health refers to the health outcomes of a group of individuals. Working from this definition, we can identify a number of key strategies that 1) segment consumer cohorts for proactive, high value interventions; 2) employ disease management and other coordinated care models; 3) apply the resulting knowledge to develop and implement meaningful health policies; and 4) consider financial risk and clinical effectiveness in future decision making. Implicit in these principles is the Triple Aim – that is, the effective selection/application of resources based on financial outcomes and long term sustainability (cost); attainment of high quality outcomes through risk-based segmentation and coordinated care pathways; and providing consumers enhanced access through expanded primary care teams, integrated networks and technology-enabled solutions (e.g., remote monitoring, telemedicine capabilities). Population health investments will also include interventions aimed at addressing social determinants (i.e., social, environmental and physical factors), especially given the direct link between chronic conditions (including cancer) and diet, tobacco use and other lifestyle factors. A population health strategy that addresses the individual and their environment, and can then be levered up or down to drive utilization decisions, best reflects a whole-person care model.
Applying these basic principles of population health management, hospital/health system leaders and health plan directors/executives can better coordinate and deliver the most appropriate (and efficient) care model for member populations and sub-populations.
Payer-provider arrangements are far from standard, varying by degree of organizational/financial integration, as well as level of risk the provider is willing to assume. Types include co-branded 50-50 joint ventures, and more loosely affiliated accountable care organizations (ACOs), patient-centered medical homes (PCMH) and bundled payment models. While characteristics differ, all such initiatives rely on interoperability and data-sharing, as well as some degree of shared governance (and reduced administrative burden). Joint ventures and co-branded initiatives have steadily grown and a few noteworthy examples include Aetna and its collaborations with Banner Health, Inova and Texas Health Resources. Aetna’s joint venture with Banner, for example, is based in part on a previously successful ACO that realized nearly $10M in savings and a significant drop in avoidable surgical admissions.2 Moving forward, Aetna has committed 75% of its contracts to value-based arrangements by 2020. Also illustrative is Blue Cross Blue Shield of Michigan’s patient centered medical home (PCMH), an alternative payment model in which primary care physicians are employed as quarterbacks of multidisciplinary (including specialist) care teams. Key measures that speak to this particular PCMH arrangement’s success include lower rates of emergency room visits and inpatient stays, as well as reductions in hospital per-member per-month costs.2
In a co-branded 50-50 joint venture, both parties ideally play to their respective strengths, integrating providers and administrative services, aligning incentives and then achieving scale. This last point is not without challenges, and as markets show, there is not a one size fits all to partnership type. Many different kinds of payer-provider relationships exist, and more are likely to develop depending on geographic location, provider and payer type, and market needs.2
New health plan entrants – an opportunity for disruption
By 2018, one in three Medicare beneficiaries – 20.4 million people – was enrolled in a private health plan (Medicare Advantage), and enrollment in these private plans has more than tripled since 2005. Moreover, the Congressional Budget Office (CBO) projects that Medicare Advantage enrollment will continue to grow over the next decade, covering 42% of eligible beneficiaries by 2028.3,4 Given the baby boom demographics and prevalence of chronic diseases, it’s no wonder that leading insurers are well entrenched in this space.4 And yet, despite the consolidated nature of the Medicare Advantage marketplace (UnitedHealthcare, Humana and BCBS affiliates comprised roughly 60% of all enrollees in 2018), the abovementioned market dynamics present an economic opportunity for new health plan entrants, particularly if they can manage costs and build high quality networks.3
Several new insurers are leveraging technology to create consumer-friendly, reasonably priced insurance options, and building impressive health system alliances to win over customers in both the individual and Medicare Advantage marketplace. Bright Health, for example, established in 2016 and headquartered in Minneapolis, is creating single, tightly integrated relationships with leading health systems in each market it serves.5 Recent Bright Health partnerships include individual/family and Medicare Advantage plan alliances with health systems in Memphis, Nashville and Knoxville, Tennessee, as well as a Medicare Advantage collaboration with Mount Sinai Health Partners, the clinically integrated network of Mount Sinai Health System in New York City.6,7
The medical loss ratios (MLRs) of these new health plans do exceed traditional payers, indicating they are using more of each premium dollar on claims and services. Moving forward, it will be interesting to see if these MLRs can be reasonably reduced (while still meeting the minimum ACA-mandated threshold).5 With member enrollments dwarfed by leading players, these health plans certainly have room to grow without disrupting the overall marketplace. With that said, could a nimble, high growth health plan become an acquisition target? We’ve seen leading technology players eager to move into healthcare, and it’s certainly plausible that such an acquisition could drive new revenue streams and help to manage employees’ health insurance costs in the process.5
A viewpoint on data sharing
Moving forward, health plans must leverage their information and technology advantage. Claims systems have traditionally been a reliable source of truth in the healthcare system, accurately detailing providers visited and procedures and tests performed. While admittedly short on deep clinical insights, this claims data offers a rich canvas on which to augment with natural language processing (NLP) and optical character recognition (OCR) derived insights (from unstructured and paper-based provider documents respectively). While mechanisms for collecting and sharing information continue to be developed, new vehicles for data collection, management and integration (e.g., centralized data storage repositories) will allow greater volume and speed of access, all supported by HITRUST settings. Within this environment, providers should gain a much clearer understanding of the problems their patients face, identifying vulnerable segments for the right intervention earlier, growing networks and reducing patient leakage. From these enhanced interactions, risk-based payment models can continue to gain traction, enabling partners to successfully advance the Triple Aim in 2019 and beyond.
Key terms and definitions
ACO -- Groups of physicians, hospitals and other providers that agree to assume responsibility of care for a well-defined population of beneficiaries. ACOs that succeed in delivering value will share in the savings they achieve
PCMH – Model of care whereby patient treatment is coordinated through their primary care physician. Objective is to ensure patients receive the necessary care when and where they need it through a team-based approach
Bundled payments – Providers and/or healthcare facilities are paid a single payment for all services rendered under a single, clinically defined episode of care. These bundled payments may be structured to offer upside risk, downside risk or both. That is, providers may bear all of the savings and/or excess costs, or they may bear a fraction of the risk while payers continue to bear the rest
Bundled Payments for Care Improvement (BPCI) Advanced – A new voluntary episode payment model launched by CMS Innovation Center. The model includes 32 clinical episodes (29 inpatient and three outpatient), with payment tied to performance on quality measures. The first cohort of participants began October 2018, with performance period running through December 2023
MLR – A basic financial measure used in the Affordable Care Act (ACA) to encourage health plans to provide value to enrollees. The ratio reflects the amount of each premium dollar used to pay member medical claims and other health-related activities. The ACA requires health insurers to submit data on the proportion of premium revenues spent on clinical services and quality improvement; if the insurer fails to meet the applicable MLR standard in a given year (80% or 85% depending on group size), that insurer (as of 2012) is required to provide a rebate to its enrollees. Of note, the 80/20 rebate rule does not apply to carriers with fewer than 1,000 enrollees in a particular state or market
4. Neuman P, Jacobson, G. Medicare Advantage Checkup. The New England Journal of Medicine. 2018; Vol 379. 2163-2172.