Breaking the Pattern: Reimbursement Battles are Challenging the Adoption of Value-Based Maternity Care. Here’s How We Find Balance and Win Together
Before we get started, let’s once again state the obvious. Value-based care models offer tremendous promise for positively impacting maternal health outcomes in this country. And, implementing such a model is very complicated. It’s not as simple as steering patients to lower cost care options. Success requires a commitment to improving outcomes across a lengthy and complex episode with numerous risk factors that can shift over time.
In a recent blog, we talked about the importance of working collaboratively with providers to design value-based maternity care models that are actually built on shared value. For that discussion, we focused on clearly defining the differences between bundled episodes, global payments and true value-based care approaches, stressing the importance of sharing both risk and rewards with providers, instead of arrangements that put provider fees at risk with no upside.
Let’s continue the discussion by peeling the onion back another layer. Because not all risk, and not all rewards, are created equally. Even when providers are engaged on both sides of the coin, risk AND reward, the details matter. If we want providers to be active, willing and collaborative partners in value-based care models, we have to make certain these models are not being used as yet another blunt instrument in the fight over provider reimbursement.
Here is a common design we’ve come across in the market recently. A savings threshold is set out of the gate by the payer. For illustration, let’s say this threshold is 5 percent. Providers who participate in this model must reduce total cost of care by the savings target before they are eligible to share in any financial rewards. Score 1 for the payer. Once providers drive costs below the savings target, they are eligible to share in additional savings generated by the outcomes they deliver. At this stage, the provider receives a smaller share of the additional savings than the payer. Score 2 for the payer. A pattern is emerging. The provider is responsible for investing in the systems, tools and processes to improve outcomes, but the payer benefits more from the value being created. Isn’t this equation a bit lopsided?
To be fair, payers play an important role in this equation, and they clearly need to participate in the value (reduced cost) to meet their customers’ expectations. Payers bear the true risk here. If costs go up, the payer is the party without a chair when the music stops. Additionally, the payer needs to manage potential benefit design changes, claims administration, performance monitoring and payment dispersants to make a VBC model work.
And yet, it still doesn’t feel like we are arriving at the right balance when it comes to sharing value creation.
So what impact is our current state having on the adoption of value-based maternity care?
Not surprisingly, payers are finding it difficult to engage OB providers and scale value-based maternity programs when value sharing isn’t properly aligned. Where is the incentive for providers to voluntarily abandon the predictable revenue from a traditional fee-for-service arrangement for an unbalanced model? They will have to invest in tools, technology and training to transform the way care is delivered, while only being eligible to share in a portion of the value they create. That’s a tough sell, even if providers believe in the power of value-based care to improve patient outcomes. Which many do believe.
How do we fix this?
First, models simply can’t cut providers out of the initial value-share opportunity. If providers help drive cost of care down, they should share in the financial benefit, from the very first dollar. If we’re all in this together to lower costs, and more importantly, improve the health of patients, we all need to act like it.
Secondly, the model must be balanced. Providers have to make a serious commitment to participate in value-based care. They are on the hook to improve the outcomes. It’s only fair to give them a more equitable stake in the savings that are generated. Having 70 to 80 percent of the total savings value flow to other stakeholders while providers are bearing the brunt of the responsibility isn’t a sustainable approach.
Finally, we have to work creatively with providers from the very beginning to design models that financially reward improved outcomes. It is also crucial that we provide clinical practices with the tools and technology they need to successfully execute within an outcomes-focused value-based model. Failure to enable providers sets them up for failure in value-based care delivery, and we will continue to fail our mothers in the process.
Here's the bottom line. If value-based maternity care is a one-sided design, with risk on the shoulders of providers and reward in the pockets of payers, it will fail. Value-based care must be a win-win-win-win scenario.
If designed properly, it can benefit payers, providers, purchasers and patients. It can drive a transformation of the U.S. healthcare system that dramatically lowers total cost of care while drastically improving the quality of care, and the experience of receiving care. It is the single most powerful opportunity we have to make healthcare work better for everyone. But the details matter. Value-based models have to appropriately reward and support providers for the work they do, and for the outcomes they produce. If not, value-based care will be the biggest missed opportunity for healthcare in this country. Specifically for maternal health. We can’t allow that to happen.
For the providers out there, make sure you have an equitable share of both risk and reward when it comes to value-based contracts. If you aren’t a partner in the process, that is a red flag. For payers, make sure you engage the providers in your network in true partnership. This is the only way forward. Together, payers and providers can build value-based models that benefit both sides while ultimately delivering a higher-quality and more cost-effective product to the consumer. We can all sign up for that.
Want to learn more about how to design successful models for value-based maternity care that balance rewards for providers and payers? Contact us today.