Alignment between payers and providers is hard to come by, even in health systems that feature their own health plan.
Take, for instance, Spectrum Health, a Grand Rapids, Michigan–based integrated health system with 10 hospitals and a large medical group as well as a health plan, Priority Health. System Chief Medical Officer Seth Wolk, MD, MHSA, says Spectrum and Priority are more aligned than most providers and payers, but “dynamic tension” still exists between the plan model and the delivery system model. He expects the transition to value-based care to ease that friction.
Jay LaBine, MD, has an inside view of the relationship in his positions as Associate Chief Medical Officer for Spectrum Health and, before that, Chief Medical Officer at Priority Health. “The competencies of health plans are very focused on managing financial risk. As there is movement to transfer that financial risk to delivery systems, what you see is misalignment because the capability of delivery systems to manage that financial risk is still embryonic,” he says. “Value-based care holds a lot of promise to incrementally bring about greater alignment.”
Wolk’s and LaBine’s assessments are in line with NEJM Catalyst’s recent Insights Council New Marketplace survey, “Payers and Providers Remain Far Apart.” More than half of the Insights Council respondents — a selected group of executives, clinical leaders, and clinicians — report that payers and providers are not very aligned in their organization, and three-fourths say these stakeholders are not aligned at the industry level.
Spectrum has started to address this imbalance by tilting resources in favor of primary care. The system is building “a robust primary care base,” shifting away from its “DNA” of hospitals and specialty groups, Wolk says. To attract and retain primary care talent, Spectrum is making changes such as ensuring care visits are no longer scheduled in 15-minute increments and committing to team-based care. “Priority has led this. They are the catalyst,” LaBine says, adding that the health plan has invested significant monetary resources in Spectrum’s new emphasis on primary care.
University of Utah Health also operates its own health plan, but nonetheless struggles with alignment, says John Sweetenham, MD, Senior Director for Clinical Affairs and Executive Medical Director at the Huntsman Cancer Institute, which is part of University of Utah Health on the main campus in Salt Lake City. He attributes the tension to the gap between the plan’s focus on the population level and providers’ focus on the individual.
He says analytics could prove to be the great leveler between payers and providers, if implemented properly. For instance, research shows chemotherapy given to patients at end of life shortens lives, and payers have access to algorithms that predict the likelihood of inpatient death due to cancer. This data could help providers decide whether to administer chemotherapy to certain cancer patients, Sweetenham says. “We might be able to get the patients out of the hospital sooner and into an environment that best suits their needs.”
Data isn’t cut and dried, though; it still requires value judgments. For instance, if a payer reports a 60% survival rate for a patient based on type of cancer, co-morbidities, and socioeconomic factors, it would be hard for a provider — ethically and culturally — to determine whether to discharge that patient or not. “As an individual physician, you don’t know which side of that 60% your patient lies [on],” Sweetenham says.
Another source of misalignment between payers and providers can be the cost of quality care. Academic oncology centers such as Huntsman are considered a high-cost provider in the region they serve, so much so that they are excluded by some payers, Sweetenham says. Therefore, it’s up to the providers to either convince payers of the merits of subsidizing the highly specialized nature of their care (including staffing and equipment costs) or to figure out ways to bring their costs down without jeopardizing quality. He points to the end-of-life chemotherapy example as an opportunity to lower costs without sacrificing care.
Like Wolk and LaBine, he believes value-based care will help the situation. In oncology, hospitals in volume-based environments make money on readmissions, even accounting for penalties from the Centers for Medicare and Medicaid Services. In other words, they lack the incentive to reduce unplanned 30-day readmissions. This would change dramatically in a fully value-based care model, he says.
Lack of a strong incentive for one of the involved parties to proceed ranks as the top barrier to implementing value-based payment, according to nearly a third of survey respondents. In some cases, that lack of incentive can be lack of scale. “There are many times where delivery systems will come to a health plan with a value-based idea, thinking it would be good for patients, the system, and the plan. The health plan often doesn’t bite because of scale — they are interested in broad, meaningful changes,” Spectrum’s LaBine says.
Wolk believes providers also can lack incentive and get very comfortable with the status quo. Analytics can stir them out of this, he says. For instance, rather than be rewarded for their ability to take care of acute hip fractures, providers should be incented to identify elderly patients who are at high risk for falls, and then work to prevent those falls.
Houston Methodist, comprising an academic medical center, six community hospitals, a long-term care facility, and primary care and specialty care groups in Southeast Texas, also experiences a lack of alignment with payers, despite its willingness to take on risk, according to Robert Phillips, MD, PhD, FACC, Executive Vice President, Chief Medical Officer, and Specialty Physician Group CEO.
Home to more than a dozen Fortune 500 companies, Houston is filled with large organizations that are self-insured and firmly entrenched in fee-for-service, Phillips says. Without strong incentives for the payer side, Houston Methodist finds it difficult to pursue shared risk agreements. “We are eager to partner with payers on programs that promote safety and quality and efficiency,” he says.
But that hasn’t stopped the health system from pursuing risk. “Our ACO has been engaging physicians around the advantages and benefits of providing coordinated care in a risk-based Medicare shared savings program, and what we’re seeing is providers are finding meaning in that,” Phillips says. “Maybe as physicians are doing more value-based care and delivering better care, payers and employers might see it and want in on that.”