If there is an annoyingly vague policy term that gets bandied about when discussing Medicaid, it’s “value-based care.” How do we define “value-based care?” What are the policy triggers that indicate “value-based care?” How do we know if “value-based care” is being achieved? Frankly, “value-based care” gets thrown out so often and so casually that it starts to lose any practical meaning.
How do we know if “value-based care” is being achieved?
After 6 years of developing the Center for Medicaid Policy at the Center for Community Solutions, I left to explore an opportunity to become the Head of Policy and Programs at Yuvo Health. Inevitably, for many with whom I worked in the policy and advocacy space while serving in that role, the most common question I get regarding that transition is “why?” Partly because I felt I needed to understand value-based design, in more practical application. That can be difficult, though, without a common understanding of the term and goals.
Value-based care doesn’t mean squat to most people
Whether it’s in my role as an instructor for a medical school or talking about managed care reform or the benefits of making doula services reimbursable, much of the work I’ve done to date relied on the presumption of understood, common meaning to the term “value-based.” But, as time went on, and as I started to understand more of the policy goals of Ohio’s new managed care system, I realized that this abstraction served only to disbenefit a cost-effective, high quality Medicaid program for all Ohioans. I also realized that the people who stood to benefit most from this abstraction were the large institutions and organizations that could wield enough economic power to achieve value, imperiling Ohio’s fabric of community-based providers and organizations too long left out of our system.
Two Futures: who takes on the greatest risk?
Value-based care centers on the idea that providers need to move away from getting paid for managing disease. Instead of paying every time a service is given, more if the issue is worse, providers will be paid based on prevention and achieving an outcome. Ask yourself: shouldn’t we pay providers more to manage or prevent diabetes rather than perform a diabetic amputation?
It makes sense, intuitively, but our system, built around this model of “fee-for-service” means the payers (Ohio Medicaid and their contracted managed care partners) are the ones “at risk.” Simply put, value-based care is about transferring “risk” from the payers to the providers so there is greater reward in wellness, rather than disease. However, on a high level, I believe the transition to value is likely going to happen in one of two ways:
Option 1: Consolidation at Large Systems
As value-based care moves our reimbursement mechanisms to reflect social risk as insurance risk, acknowledging the fact that prevention is the best medicine, institutions with economic power will seek to control all aspects of the delivery system. Rather than partner with community-based organizations or defer to them in terms of governance and patient management, they will seek to “own” as much as possible, serving as the main administrative entity through which managed care can connect and negotiate.
Because vertical integration (ownership and control of multiple parts of a business process) is the quickest, simplest way to take on risk and ensure any aspect of risk is fully under control. So if we know that 80 percent of health outcomes have nothing to do with the medical care being provided, and that value, in contracting terms, is paying for outcomes, then you better control as much of that other 80 percent as possible. In other words – economies of scale will lead to commercial efficiency.
Option 2: Empower Community-based Organizations
Community-based organizations are at an inherent disadvantage in our system of reimbursement. Traditionally, whether we’re talking about licensure, administrative capacity, patient volume, IT systems, etc., it is smaller, community-based organizations that are left behind. They often don’t have the resources or ability to take advantage of this new system and are too often put in the position to rely on intermittent funding to fulfill their mission. They can’t do it alone as the proverbial David negotiating against multiple institutional Goliaths.
Community-based providers and their partners need to work together and think about ways to achieve the type of scale that puts them on equal footing with large delivery systems to create a meaningful alternative for managed care.
To address this, community-based providers and their partners need to work together and think about ways to achieve the type of scale that puts them on equal footing with large delivery systems to create a meaningful alternative for managed care to work with. Especially as these community-based organizations are already cost-efficient and prevention oriented, it will take less of an effort to achieve better outcomes because they’re already doing it. They’re just not getting the same advantages of scale.
Making value more accessible and policy more powerful
When I made the move to Yuvo, it was because I felt I needed to understand value-based design, practically, and build on this idea that empowering community-oriented providers like Federally Qualified Health Centers (FQHCs) and community-based organizations could be a transformational opportunity to achieve the promise of Ohio’s new managed care system. However, even when providers work together to contract, they are often still operating in a fee-for-service system; they are not taking on the insurance risk associated with the delivery of care. In fact, with FQHCs, they legally can’t. But what happens when they aren’t the ones who take on the risk? What happens when you can negotiate with plans beyond the medical loss ratio and instead collectively share in the benefits of a community-centered delivery system? How can we design systems that advantage smaller organizations over large, disease-oriented systems?
I wanted to be able to communicate the lessons I am learning so that terms like value can not only be more accessible but enable a policy framework.
After leaving the Center for Medicaid Policy, I worked with Community Solutions to create a Visiting Fellow for Value-Based Health Care position. I wanted to be able to communicate the lessons I am learning so that terms like value can not only be more accessible but enable a policy framework that meaningfully moves us out of the bottom tier of states when it comes to value as defined by the Health Policy Institute of Ohio.
But rather than try to describe it here and get into wonkish descriptions of capitation and case management fees and risk adjustment, I would invite you to learn more from another state who is already on this journey and hear from those who are experiencing it, firsthand.
Value-based webinar: June 15
On June 15th, Community Solutions will be hosting a panel discussion on value-based care can enable population health policy. The conversation will be moderated by Andrey Ostrovsky, MD, the former chief medical officer of the U.S. Medicaid program, who will provide a general background as to why policy is headed this direction. Joining him will be individuals representing Medicaid managed care, a FQHC engaged in value-based contract, and a community-based organization focused on addressing the social determinants of health. In this dialogue you will learn more about what collaboration can look like when we maximize the policy opportunities in value-based contracting and, more importantly, provide some insight as to what it may mean for you in Ohio’s new system.