Health benefit plan and associated provider network design are foundational to meeting plan sponsor objectives. Here are two key health plan and network design considerations for employers and payers/administrators as they shift to increasingly value based and consumer directed healthcare plans for their employees and members.

Let’s define “value” as the buyer’s definition of performance objectives for the best balance between cost, quality, access, and service. “Accountable” means that providers are rewarded for achieving those objectives and balance across a population. “Integrated” refers to the level of both clinical and administrative coordination between providers, payers, sponsors, and patients.

Value vs. Activity

A critical question is the extent to which the plan emphasizes value-based versus activity-based provider reimbursement. Providers are generally very suspicious of being paid based on value. They are not used to it. Most will have to change their business models and practice patterns. They can see that the whole concept is designed to decrease their patients’ individual need for services. They don’t trust that payers will be able to make up that decrease in need with additional patient volume to sustain – let alone grow – revenue.

They don’t trust the validity of metrics and methods that will be used to pay them. Additionally, they may even need to make investments in new systems and technology to support new clinical processes and performance reporting.

If you push value based design, there may be resistance from providers to participation in your network. Since facilities are generally better able to manage the transition than smaller provider practices, some plans are focusing value based reimbursement initiatives on facilities first, thus leaving physicians on a fee for service schedule for now.

To the extent that you emphasize value based reimbursement in the plan and network design and contracting you need to:

  • Plan for using new approaches including bundling, shared savings, and/or partial or full capitation
  • Consider how to set baselines against which to evaluate performance
  • Define, measure, and report performance metrics
  • Work out how reimbursements for population care or episodes of care will be allocated across multiple providers that contribute to value.

None of this is simple at the beginning. Expect to invest considerable effort and resources in moving along this path.

Scope of Value Based Focus – Episode or Population

A key approach to improving care quality while managing cost is the integration of clinical care for a patient across multiple providers. Plan and network contracting design should emphasize this integration at an episode level.

Design features that shift financial risk to providers and directly relate reimbursement to quality outcomes such as bundling nicely dovetail with an episode of care focus.

An additional and broader consideration is the notion of designing and contracting to encourage the management and integration of care for an entire population of employees and dependents longitudinally across time. Integrating the following, from both a population and an individual perspective is projected to be very effective at cost and quality management:

  • Wellness initiatives
  • Primary care
  • Chronic disease management
  • Acute and post-acute care
  • Long term care

This will be achieved mainly through clinical coordination supported by effective information sharing across all the providers in this spectrum. Plan, network, and contracting design should encourage this integration through targeted provider selection and strategic incentive alignment. This can be done by using financial risk shifting pay for performance driven approaches such as shared savings, capitation, etc. Support for proven common care protocols and state of the art concepts such as patient centered medical homes is also key.

For more information on optimizing value based benefit plan and provider network design, download this related ebook: Optimizing Plan & Network Design for Value Based Care.

Optimizing Plan & Network Design for Value Based Care free eBook

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