The rise of the payvider

The lines between payer and provider are blurring, as providers take on risk and health plans partner or acquire providers.

If providers can successfully manage risk, they have an opportunity to improve their margins in a reimbursement landscape that in recent years have faced successive rate cuts. Insurance companies and healthcare delivery systems joining forces for mutual benefit is not an entirely new concept. A few cutting-edge healthcare organizations evolved into “payviders” long before the current trend took off. Kaiser Permanente, a pioneer in the payer-provider model, now covers 12.2 million members under its insurance plans. The thesis is that payviders can deliver higher value, cost-effective care because as the provider, they have direct control over the care that members receive. Traditional health plans are one-step removed and therefore lack that visibility.

While payviders operate as integrated delivery networks with acute and ambulatory assets, they often have limited visibility into post-acute – nursing homes, home health agencies, etc. In the commercial population, utilization is low. For example, a 35-year-old does not typically need nursing home care. In the Medicare Advantage population however, where members are 65 and older with more health issues at baseline, post-acute care is a critical driver of spend.

Speaking of Medicare Advantage, any discussion on the rise of the payvider must take its massive growth into consideration. With over 10,000 people aging into Medicare on a daily basis in the United States, Medicare Advantage is projected to eclipse the entire size of the commercial market. To even be relevant in the years to come, managing the 65-and-older population must be a core competency that payviders develop. Therefore, while payviders may have the ability to impact the delivery of care in the hospitals and clinics, a strategy is needed to successfully manage post-acute care where direct visibility is often lacking.


Why Post-Acute Care Matters So Much in a Medicare Advantage-Driven Market

With the right strategy in place, payviders can be well-positioned to manage post-acute care starting from the initial hospital stay. When a member is identified as needing post-acute care, the provider arm can help guide patients to high-value post-acute providers. Payviders should evaluate the capabilities and competencies of the post-acute providers in their coverage area and identify high-value providers to include in their contracted network. By helping members choose the right providers, members have a higher likelihood of staying well rather than being readmitted. From the point of hospital discharge, members are set up for success with the right post-acute provider.

Once the member is in the post-acute setting, payviders need continued visibility into the care being delivered. Managing post-acute length of stay and readmissions is critical from a cost perspective. In order to manage both cost and quality, payviders are employing care coordination teams that continue to follow the member post-discharge. The challenge here though is that post-acute providers are on different EHRs than the acute or ambulatory settings. Payviders have tried different strategies to bridge this gap – from stationing care teams in high volume post-acute facilities to technology solutions that enable connectivity and real-time exchange of clinical information. A comprehensive post-acute strategy is one that encompasses the right balance of staffing, care processes and enabling technology.

Managing More Lives: Value-Based Arrangements

The rise of Medicare Advantage offers a one-in-a-generation opportunity for payviders. Those that are able to successfully manage Medicare Advantage will have lasting and significant financial advantages in the years to come.

In preparation for the transition to payvider, many providers are engaging in value-based payment programs to prepare for taking on risk. The government’s value-based programs offer an excellent testing ground for managing Medicare Advantage for example. In the case of the Medicare Shared Savings Program where organizations had the flexibility to remain in upside-only risk models virtually indefinitely, provider participants benefited from gaining access to claims data from CMS and receiving funding to build out their care coordination teams. The BPCI initiative is another example of CMS providing a relatively low-stakes testing ground for managing Medicare lives on a condition-by-condition basis.

Payviders are likely more than just a passing trend. The ability to control providers’ delivery and payment of care has many competitive advantages. However, by no means is success guaranteed. In this article, I hope to have pointed out some blind spots such as post-acute care and strategies to address those blind spots so as to increase your organization’s chance of success in operating as a payvider.

 

 

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