As companies continue to feel the pressure from increasing costs of employee benefit plans and healthcare costs, they need solutions. Their employees, who face greater and greater cost-sharing requirements like deductibles and co-pays, also need relief.
One healthcare strategy that has received increasing attention over the years is Value-Based Care. It can take the form of Accountable Care Organizations or ACOs, or innovative plan design by TPAs and carriers.
Value-Based Care is a payment model where providers, hospitals, medical groups, and others are financially incentivized to meet certain quality measures. The alternative is the ubiquitous Preferred Provider Organization or PPO, also known as “Fee-for-service,” in which providers are paid for what they do to patients, rather than how patients do. From this perspective, value-based care makes sense. Let’s pay for quality outcomes and healthy patients, not for services rendered.
But while Medicare can run value-based and risk-taking experiments with its 61 million members, individual employers with 50, 150, or 500 employees may wonder how they can adopt a progressive payment model that will keep their employees healthy and cost less than their standard health insurance plans.
And on top of that, many employers are expecting more from their carrier partners in technology, member experience, and the ability to offer more predictable, on top of affordable, healthcare.
Primary Care-Centered ACO
The use of “Accountable” in ACO implies that providers and healthcare systems have skin in the game. When providers are compensated in part by the outcomes of their patients, they practice differently.
By emphasizing primary care to drive quality employee health outcomes, health plans are leaning into the research on payment models and outcomes.
For example, research has found that by enrolling in primary care through an integrated health system, members experienced higher measures of quality of care, lower rates for some acute care utilization, and lower total costs paid to the health system. Additionally, other research found that integrated care models for a non-elderly adult population reduced total cost of care by 9% overall, with a 12% reduction in outpatient cost.
And the additional advantage of this plan design is the ability to partner with a local health system to drive quality results for employees. This model allows for Direct Contracting, which we’ve discussed on this blog previously in What is Direct Contracting. This enables the health plan and us as consultants to obtain market competitive healthcare prices. Understand that the aforementioned Fee for Service model forces an employer to pay a high reimbursement rate in order to include a number of providers in the network.
By challenging this practice through the steerage of employees to an accountable local health system, employers deliver better care to employees at lower costs. This is the promise of Value-Based Care for employers.
Better Quality for Less Overall Cost
This is the promise of Value-Based Care. For employers, health plan costs are reduced and the trend, the increase year over year, is reduced. Costs and claims are transparent, while fully insured health plans are still a black box. And the modularity of these plans means they are highly customizable and can be tailored to the specific needs of an employee population.
From the employee side, they and their families receive affordable care with fewer out-of-pocket expenses. We recognize that employees see providers and consume primary care at higher levels when deductibles are zero and co-pays low. On top of this, an integrated and holistic primary care team delivers higher-quality outcomes to employees in a much more engaging manner than the reactive nature of our “sickcare” delivery system.
Our approach is to help employers take a new perspective on healthcare and a major step of this is putting the spotlight on value-based care. If we can directly address the underlying cost drivers of healthcare, employers can reduce their costs and still deliver higher quality benefits to their employees. It’s our job to communicate and implement these solutions.