Pressure is rising in 2016 for hospitals and health plans to make the foray into value-based arrangements, however a recent study from Deloitte suggests many providers are overlooking the potential of Medicare Advantage in devising successful value-based care models.
Results from Deloitte's study of Medicare Advantage, health plans and providers suggest there is great — and thus far under-realized — potential for health plans and providers to devise value-based arrangements for the MA population.
Using a data-driven approach, Deloitte surveyed 30 health plans and 25 providers as to their respective opportunities, challenges and opinions in using MA as a testing ground for value-based care.
Brian Flanigan, the value-based care consulting leader with Deloitte, spoke with Becker's Hospital Review about the study's implications for providers and health plans.
Q: What was the inspiration for examining Medicare Advantage specifically with a focus on value-based care?
Brian Flanigan: Since its inception, Medicare Advantage has been a line of business health plans have looked to as a way to drive penetration into the senior segment.
As we see the shift from volume to value, more providers are evaluating opportunities to take on MA specific risks, either directly in terms of offering their own risk-based product, through a traditional contracting model, or through a subordinated risk arrangement whereby a health plan manages relations with CMS but a provider is attributed with a significant amount of the risk.
Given these trends, we thought it would be interesting and relevant to do some data-driven research and analysis on what both health plans and providers see as the issues, challenges, opportunities and key strategic considerations associated with moving toward risk-based, value-based care models.
Q: Why is Medicare Advantage a better option than traditional Medicare for providers and plans to begin experimenting with value-based care models?
BF: MA is very much by definition a risk-based, value-based care, capitated arrangement. Based on the particular dynamics of the local market, how the health plan submits the bid and how it gets approved, a Medicare Advantage beneficiary ultimately ends up with a capitated rate. It is fundamentally different from traditional Medicare Part A or Part B, or other volume based plans.
With the MA population as compared to a commercial population, there is generally a very high per member per month revenue amount as plans and providers work together to manage the medical cost for an individual MA member.
To the extent a plan and provider effectively manage the medical cost below the monthly per member per month rate, they drive earnings. As value-based care models move down the maturity curve, it becomes clear there are a lot of reasons and financial incentives for providers and plans to work together to manage both the quality and cost of care.
Q: Some providers and health plans have expressed trepidation in brokering new conversations around value-based care arrangements. From Deloitte's study, what are the advantages and challenges at stake for health plans and providers in working together to manage MA populations?
BF: If done properly, collaboration around value-based care in MA can be a win-win. There is a mutual interest and mutual benefit in plans and providers working together to effectively manage clinical quality and cost effectiveness of [the MA] population.
Health plans bring strong capabilities to the partnership, in terms of managing relationships with CMS, ensuring compliance, managing bid submissions, pricing and member reach-out. Unlike providers, plans have the necessary administrative platforms to track members across the continuum of the patient experience, including ancillary care settings.
Providers bring clinical capabilities, engagement, treatment, management and coordination of care to the partnership. In bridging their complimentary capabilities, providers and plans can effectively manage both the clinical and financial risks to produce and share more earnings.
In that sense, provider-owned health plans are really well positioned to capitalize on this intersection of value-based care and MA because they manage the whole universe of clinical and financial capabilities under one executive umbrella.
In terms of challenges from the provider side — there is still a good segment of the provider population still trying to figure out both value-based pricing models as well as the particular nuances associated with MA, ranging from bid submissions and compliance to product sales and distribution. The reason why value-based care in MA has not caught on more quickly is that the industry is still in a learning stage. We [at Deloitte] expect a lot of activity between providers and health plans at this intersection of MA and value-based care as providers and plans continue to mature and grow their business models and experience.
Q: What are some the most interesting implications from the study and its analysis for providers and health plans to know?
BF: In terms of "the how" to get from where the industry is today to more integrated value-based care models in MA, data integration and data sharing capabilities between providers and plans stood out as critical to the advancement of effective value-based care models.
Our view [at Deloitte] is that having, sharing and developing analytics and data-sharing capabilities is vital to effectively managing the risk for a population. Providers and health plans will have to work out an investment strategy to determine who is responsible for developing, managing and integrating these different data capabilities, as well as who will finance them.
Currently it is very difficult for providers to manage the multiple different forms of commercial value-based care arrangements they have with other health plans within their portfolio. To the extent health plans and providers can synchronize their value-based care arrangements between MA and commercial populations, this will enable a broader set of enterprise integration capabilities between their respective organizations.
More integrated value-based care arrangements under MA can provide a jumping-off point for providers and plans to understand and tackle the financial, administrative, operational and technological elements for commercial populations.