How will the COVID-19 pandemic affect healthcare’s shift to value-based care payment models? Tamara Cull, DHA, Senior Vice President of Portfolio Management, shares her thoughts.
By Tamara Cull, DHA, Senior Vice President of Portfolio Management, Medecision
Yes, it’s a weird, scary and uncertain time to be in healthcare, but it’s also an exciting time, because it demands our best. The world needs us. And we will rise to the occasion because that’s what we do.
Of course, there will be challenges, but when the pandemic is finally behind us, we will be stronger for the struggle. We will have learned new lessons in care, compassion, service, efficiency and cost control.
One of the many challenges during this time revolves around fee-for-service vs. value-based care (VBC) models. The fee-for service model has been hard hit by this crisis as services are difficult to provide (i.e. get paid for) during a pandemic, which highlights as never before how important the VBC model can be in the hands of healthcare providers as a better way to provide care. You’ve heard how the move to value is the future of healthcare. You may have already adopted it for your provision of care. I’ve spent much of my three decades in healthcare as an implementer of, and passionate advocate for, the VBC model. I remain a staunch believer, even as the model faces an onslaught of serious threats (if old payment and quality structures remain) and massive opportunities (if we increase adoption) from the coronavirus.
Here are three areas where the pandemic has taken a toll on payers:
- High-cost patients. Some regional health plans are struggling because of an influx of COVID-19 patients who are not of Medicare age. A COVID-19 patient is the highest-cost patient you can have, and if a lot are on your books, it will very quickly have a financial impact that can’t be as easily offset with a lowering of your elective procedure cases.
- Declining volume. Many health plans contract with employers, and contracts are based on volume of employees. As unemployment skyrockets around the country, the number of covered employees is going down, and that impacts payer revenue.
- Rising Medicaid business. Because of the unemployment and poverty caused by the coronavirus, Medicaid business will increase. For a lot of payers, that’s the highest-cost business to provide because these people are living in poverty with a lot of issues related to social determinants of health. That’s challenging for a health plan and requires more care management services to manage which equals more cost.
For health plans in value-based contracts, and for providers participating in accountable care organizations (ACOs) or other value-based contracting that are early in their VBC journey, the pain points may be even more acute. These payers and providers have made investments that may not pay off for a while.
A Timely Shot in the Arm
A timely bit of good news for ACOs arrived April 30 when the Centers for Medicare and Medicaid Services (CMS) finalized multiple temporary changes to Medicare and Medicaid in response to the coronavirus.
Provider groups had sought protection from financial penalties related to pandemic treatment costs. The CMS came through with several changes aimed at helping providers continue their participation in ACO models throughout the crisis, including allowing ACOs to carry over their current level of risk for an extra year. There are new exceptions for the value-based purchasing program for hospitals, delayed reporting requirements for post-acute care facilities, and a one-year delay of some requirements for the merit-based incentive payment system (MIPS).
In its ruling, the CMS acknowledged the “lack of predictability,” “uncertainty” and “disrupted population health activities” faced by ACOs as a result of the coronavirus fight.
The Silver Lining in the Crisis
COVID-19 is dramatically highlighting why we need value-based care: because it works. And the pandemic is speeding the rate of change and innovation. Three of the long-term positive effects of this healthcare crisis will be:
- A holistic model of care. A key belief in VBC models is the need for a holistic model of care. You don’t just look at a person and the disease or ailment they have; you look at them holistically, with more of a population health-structured model. You care about their social determinants of health: if they have food, medicine, support, and access to resources.
- Increased virtual care delivery. We’ve always had clinical telehealth services. But we’ve not had widespread adoption of telehealth for virtual face-to-face visits with your provider, which is hugely important in this crisis. This crisis is demonstrating that those models work and they’re actually highly cost-effective.
- Increased community-based care models. This pandemic is going to affect our economy for years to come. It is unrealistic to think that the populations we care for will suddenly have everything at their disposal. Community integration is essential as we look at populations that are in need and at risk. Where are the gaps in community resources? How can we fill them?
The spread of the coronavirus has pushed us to more quickly and fully embrace these models that VBC teams have always known would be effective but that were never reimbursed in a way that would encourage widespread adoption.
Patience Is Essential
Changing reimbursement models in the era of VBC is not easy. The models are both complex and high touch, meaning providers and case managers must work directly with these plan members, sometimes daily. This requires a substantial investment in technology, analytics and care management—and with the people providing the services. That’s a large outlay on the front end. It takes a while to show a return on investment.
Patience is essential as we find our way. We know that, post-pandemic, the world won’t return to normal. We’ll continue living in the new normal. VBC teams that were running their programs before the crisis and generating a financial return will be successful if they leverage the investments they’re already made around telehealth, holistic care and so forth. Our big concern is for the new entrants who may get nervous and jump ship in the midst of the storm.
Coordination between payers and providers is critical to make a complex value-based reimbursement (VBR) model work. Both entities have teams working in the same space, so duplication of effort can occur if a solid plan is not established. In the midst of COVID-19, payers may need to help providers adjust their short-time VBR arrangements.
My advice? Don’t waste this crisis. Leverage your investments and look to the future. Value-based care is a skillset that you have to learn. Those teams that haven’t had enough time to learn these models and understand them will struggle more. But those that stay the course and forge smart partnerships are likely to reap long-term benefits.
I am excited about the possibilities.