Industry-wide pressure is forcing home care providers to move away from traditional fee-for-service models, but payer trends and other factors can complicate the process of establishing innovative reimbursement systems.
Some of the momentum toward value-based care in managed care is slowing due to pressure on payers, experts said in a recent Home Health Care News webinar. Despite some stagnation in the trend toward value-based care, healthcare providers are seeing opportunities to innovate and are developing strategies to support the development of alternative payment models.
“The pressures that payers are facing will trickle down to health care providers,” Hilary Loeffler, vice president of policy and regulation at the National Home Care Alliance, said in a webinar. “I think our members want to demonstrate their value and get more value-based contracts in their (Medicare Advantage) plans. It seems like it's going to be difficult to get some members off pay-per-visit.”
Devin Woodley, vice president of managed care contracting at VNS Health, says establishing value-based or alternative payment plans requires providers to understand what payers want, and payers want evidence that a provider is doing something different before offering an upwardly priced contract.
“What payers really want to know is… what value-add do we bring to get a piece of that pie?” Woodley said during the webinar. “This is the same with alternative reimbursement models. What are you doing that is alternative? What are you doing differently now to deserve this different payment method?”
New York-based VNS Health is a nonprofit home care organization that provides home health, hospice, and behavioral health services. The company serves more than 73,000 patients, members and customers every day. Two-thirds of the organization's revenue comes from its health planning division.
Trends in alternative payment models
Payer interests have changed significantly, necessitating new and innovative payment models. Woodley said payers are less interested in “sharing the pie” than they were a few years ago.
“As new models and value-based opportunities emerge, payers are demanding much higher return on investment calculations than they were a few years ago,” he said. “A few years ago, they might have been looking for 1.5x to 2.5x ROI, but now they're looking for more than 3x, preferably closer to the 4x range. So before they invest and take a chance, they want to see programs that deliver amazing results, like amazing results.”
Leffler said one-time payments and payments every 30 days are still relatively common, with payers primarily paying on a per-visit basis. He suggested that although there has been a move toward bundled value-based payment models, Medicare Advantage headwinds will increase pressure on payers, which will be passed on to providers.
Leffler said alliance members are currently dealing with lengthy approval processes due to strict utilization management practices for Medicare Advantage plans.
Leffler said one of the major hurdles in moving to more value-based care models is that payers are often focused solely on reducing the total cost of care, sometimes to the detriment of improving outcomes.
He said value-based models can come with certain risks if you don't ensure you focus on quality. Mitigating these risks requires a delicate balance between reducing total treatment costs while ensuring patients receive the care they need.
“I'm concerned that some home health agencies are getting so caught up in cutting costs that they're losing sight of improving the quality of value-based care,” Loeffler said. “I'm a little concerned about the lack of investment in services and perhaps the incentives that some of these models create.”
Breaking away from paid services
Achieving beneficial alternative payment arrangements requires evidence of value, efficiency and innovation, and may require adjustments to clinical models.
VNS Health successfully renegotiated managed care payer contracts by leveraging value-based programs to enable other alternative reimbursement models.
“As an example, in the case of certified home health care, we only add value-based upside to prove our value and prove that we're doing really well. That could be the path to an episode,” Woodley said. Now, almost all of our home health, Medicare, Medicare Advantage books of business are episodic arrangements, and we still have value-based (elements) to stay true and prove ongoing value. ”
With new pressures for higher returns from health plans, VNS is now refining the programs it offers to payers with an increased focus on operational efficiency and performance.
The shift to mostly temporary contracts has forced VNS Health to change its care delivery model, Woodley said.
“We had to layer on other things, like CMS not recognizing virtual visits at this time,” he said. “But now we have temporary bundles from our payers so we can layer virtual visits, remote patient monitoring, NP escalation. We can layer community urgent care. We can create this bundle that we know can provide a lot of value and reduce readmissions.”
For providers, the pain of creating value-based or alternative models can be rewarding.
“One of our treasurers was here today and he was talking about a $1.9 million bonus that was being paid to him by one of our payers based on the payer's analysis of our performance last year,” Woodley said. “This is a single-payer story, which means if you structure your contract correctly and deliver on it, you have a huge opportunity.”
