Value-Based Purchasing: 7 Calls to Action for the Health Care Industry and Employers – Executive Summary

Value-based purchasing has made strides in enabling improvements in the health care delivery system, but much work needs to be done to expand and optimize efforts in the future.

October 03, 2022

Employer-led value-based purchasing approaches have made strides in driving improvements in health care delivery, but there is much more work to be done across multiple stakeholders.

With health care costs continuing to rise, patient experience and life expectancy on the decline and outcomes subpar, it is time for the health care industry to shift to value-based and alternative payment models. Unfortunately, progress over the last 10 years to deploy effective value-based payment models has been uneven across the U.S. But the good news is that there are many bright spots of successful partnerships among employers, providers, health plans and other companies to advance value-based purchasing arrangements and delivery system improvements. They are proof that value-based payments can work well.

Changing the way health care is paid for is hard, and many organizations are profitable in the current fee-for-service payment paradigm. Even organizations that are conceptually aligned with value-based payment arrangements cite challenges in implementation and delivery reforms. Still, the cause should not be abandoned, and we call on the health care industry to heed the following as they move forward.

Business Group Efforts Informing Calls to Action

The Business Group convenes an Executive Committee on Value Purchasing several times a year to strategize on how employers can work with their partners to advance the adoption of effective value based purchasing strategies to drive delivery system improvements. Committee members represent leading large employers, health plans, provider groups and others whose input and discussions have informed these calls to action. The 2023 Large Employers’ Health Care Strategy and Plan Design Survey also provides a wealth of additional data on employer efforts engaging the health care delivery system to drive value and is available to Business Group members; a summary report is available publicly.

1 | Health plans must use their leverage in geographical markets to move away more aggressively from fee-for-service.

Health plans, third-party administrators (TPAs) and other network contract administrators have purchasing power that is massive in most markets compared to that of any given employer. They are key players in driving reforms in how health care is organized and paid for. They should pool plan member populations (funded through employers, Medicare Advantage, Medicaid managed care, individual marketplaces, etc.) to increase their significant leverage to move providers into value-based contracts that reward high-quality care.

2 | Provider groups must embrace value-based delivery models or expect employers to increasingly partner with health care organizations that are innovating in value-based care.

According to the Business Group’s 2023 Annual Large Employer Survey, adoption of virtual and on-site primary care are the fastest growing employer strategies for steering employees to advanced primary care. These approaches afford employers more influence over how care is directed in primary care and how it is referred downstream for specialty services. Likewise, steering patients to high-performing Centers of Excellence (COEs) is the fastest growing delivery system approach for large employers in 2023 and beyond, benefiting providers taking on value-based reimbursement for quality outcomes.

3 | Consultants, brokers and other organizations that advise employers must move to assessments of value on total cost of care rather than fee-for-service network discounts.

When employers are making decisions on which vendors to partner with and networks to select, they need to have total cost of care (TCOC), paired with quality data, to pick the best approach. Unfortunately, they often do not have this information available. Moving to measurements of total cost of care and incorporating quality into assessments is difficult, but a worthwhile endeavor. Health plans, providers, consultants and other partners should make data available to perform TCOC measurements and make decisions based on them.

4 | Where value-based care is successfully controlling costs and improving health outcomes, employers should reduce cost sharing for members using those providers.

When providers are willing to take on financial risk and are succeeding in delivering high-quality care, employers should explore opportunities to reduce out-of-pocket costs for members receiving care from those providers. The Business Group’s annual survey details many ways in which employers are paying for travel and accommodation, as well as reducing cost sharing for and improving access to several high-value sites of care and services, including COEs, advanced primary care and mental health treatment.

Several payment and delivery reform partnerships have increased value for years, including:

5 | All stakeholders (health plans, pharmacy benefit managers, providers, third-party vendors, employers, etc.) must be willing to meaningfully share data to enable effective implementation of value-based care.

The question of who owns health care data has been a point of contention for decades. Sharing relevant data related to patient care and outcomes across health care stakeholders, even when organizations are working together, can be difficult given current limitations and roadblocks. With new regulations requiring health care cost data to be made public, there are opportunities to use this data to guide value-based care contracting and health care delivery strategy. But cost data without related quality has limited ability to inform meaningful increases in value and inconsistencies in reporting make comparisons difficult. More needs to be done to deploy secure data sharing and shift the paradigm to one of active coordination of information in ways that benefit patients and enable the best outcomes for them.

6 | Value-based care should incorporate an equity lens, which requires capturing demographic data and measuring disparate impact.

Value-based care is not a panacea for addressing disparities. But it can empower providers to deliver services using more innovative care delivery approaches that invest in support services like interpreters that are not reimbursable in a fee-for-service model. To make a meaningful and measurable improvement on disparities, providers, telehealth vendors and others who take care of patients should collect relevant social determinants of health (SDOH) and demographic data and be measured and paid for the quality of the care and care outcomes impacting different populations.

7 | All parties must continue to incorporate virtual care into their value-based care strategies.

Providers leveraging virtual services and virtual platforms themselves should be accountable for outcomes and overall costs. Value-based payment eliminates concerns about payment for virtual visits followed by in-person visits when the virtual visits didn’t resolve the patient’s issue. It shifts the discretion – and accountability – to the provider, who is in the best position to determine when a virtual visit, text message, email or phone call might be appropriate compared to an in-person visit.

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