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Health Reform Driving Payer-Provider Partnerships


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"92% of partnerships emphasize value-based compensation in some shape via @OliverWyman"

Here, in an article first published in Healthcare Dive, Oliver Wyman Health & Life Sciences Partner Tom Robinson discusses the ongoing trend of payer-provider partnerships in a climate increasingly focused on value. 

Payers and providers have for decades stayed in their silos, leading to a more fractured and adversarial healthcare system. That relationship, however, is starting to soften for many in the industry. Payer-provider partnerships put the two groups on the same team in hopes of reducing costs and improving care and outcomes through sharing data and better communication.

 A major driver of these partnerships is the move away from fee-for-service payments and toward valued-based payments and population health management.

“We’ve been tracking these partnerships for many years now and of the approximately 200 that have launched in the last five years, 92% are emphasizing value-based compensation in some shape,” Thomas Robinson, partner at Oliver Wyman, told Healthcare Dive.

The payer-provider partnerships popping up across healthcare vary in type, size, location and model. There are 50/50 joint ventures with co-branding, and less intensive partnerships like accountable care organizations (ACO), patient-centered medical homes (PCMH), pay for performance and bundled payments. Oliver Wyman found the partnerships can be broken down depending on providers’ appetite for risk.

The differences are endless, but they all focus on improving care for the individual patient. They do this through close communication between stakeholders, better interoperability and data-sharing, using data analytics to track patients and reducing administrative burdens.

Keys to partnerships: Trust, communication and a focus on the patient

The first step in these partnerships is building trust between payers and providers. Robinson said that can be difficult, as payers and providers may have an fractured relationship. Payers and providers can overcome differences by aligning around the big issues as early as possible, and establishing the right governance model.

Chuck Lehn, president of Banner Health Network, told Healthcare Dive a successful joint venture allows each organization to offer its administrative strengths and have a clear understanding of its roles and accountabilities.

“In our experience, we have found that streamlining the administrative pieces of our product can lead to better efficiency and a great member experience,” said Lehn.

Brigitte Nettesheim, president of transformative markets for Aetna, told Healthcare Dive partnerships necessitate a culture change, and participants need to understand they’re both in it for the long run. This requires aligning responsibilities and carefully crafting, negotiating and planning down to the most minute detail before the partnership is signed and executed.

Another key is communication. Lehn acknowledged that communicating across systems and platforms between two organizations and healthcare providers requires time, attention and resources. In a successful partnership, both sides need to communicate regularly and invest in technology, such as portals, so the two sides can share data seamlessly.

Caring for the whole patient works best when payers and providers share data, so there is improved care management, better interventions and better analytics around population health. This requires a capital commitment, so there is communication between not only payers and providers, but also between those two groups and patients, said Robinson.

The two sides can go much deeper into care for patients by going beyond claims. In partnerships, payers shouldn't have to wait for claims to see how their members are doing and doctors shouldn't have to hope that their patients tell them when they have received care elsewhere. All of that data should be shared freely and promptly.

James Leatherwood, marketing communications manager at Availity, told Healthcare Dive.

In addition to regular back and forth, payers and providers need regular meetings, whether monthly or quarterly, that focus on strategic issues about the partnership, said Leatherwood.

The third part of a successful partnership is aligning incentives that focus on keeping people healthy and creating a positive healthcare experience, said Robinson.

Partnerships must provide patients the right incentives, integration, investment, insight and innovation to work with the plan to deliver improvements across cost, quality, outcomes and experience, said Robinson.

“The point of these partnerships is to create something new, rather than just building the same old offerings with a narrow network. Successful partnerships will take the opportunity to innovate around the product and experience now that the incentives, insight, investment and integration are all for it,” said Robinson.

Partnerships to watch

Payers that are involved in partnerships vary from new players in the payer space like Oscar Health and Bright Health to large, established insurers like Aetna, various Blues and Cigna.

Here is a handful of the closely watched partnerships:

Aetna is one payer to watch in the partnership arena. Nettesheim said the company has committed to moving 75% of its contracts to value-based arrangements by 2020. Aetna is currently at 48%.

Aetna and Banner Health agreed on the partnership in October 2016 and have been laying out the groundwork before its launch this month in Maricopa and Pinal counties in Arizona. The two companies hope to expand the program statewide ultimately.

To prepare for the partnership, Tom Grote, who became CEO of Banner | Aetna joint venture in May, told Healthcare Dive that Banner Health and Aetna have developed joint operating committees, including marketing/sales and population health, that include members from both organizations.

The partnership looks to improve consumer experience by fully integrating providers, Aetna and administrative services, while eliminating redundancies in care and administrative problems. Aetna and Banner Health expect streamlining care and services will lead to savings for patients and employers.

Nettersheim said the partnerships are about “each side playing to its strengths, aligning incentives and driving scale.”

The two companies have worked together for more than five years on a separate ACO. The ACO has resulted in nearly $10 million in savings, a 24% drop in avoidable surgical admissions and increased generic drug prescribing rates by 4%, according to Aetna.

Grote said the key to partnerships is a common vision between the entities and leadership that healthcare needs to move to a value-based system.

“If we keep the customer — the end user — in mind and build partnerships with that as our North Star, we believe we will have a more successful, efficient and collaborative health system,” said Grote.

Nettersheim said most provider-sponsored health plans formed since 2010 haven’t shown a profit yet. In some cases, this is because they aren't yet able to scale up to what is needed to create profits.

Aetna’s partnerships with Banner, Allina and Sutter Health are still too new to find results, but Nettersheim is confident that Aetna’s partnerships will achieve scale by offering stability, expertise, volume and market power.

Another partnership to watch is Blue Cross Blue Shield of Michigan’s (BCBSM) PCMH, which is the largest medical home project in the country. The model is part of BCBSM’s Value Partnerships, which works with physician organizations and hospitals to improve patient care and provide value to members and customers.

The PCMH program isn’t a 50/50 co-branded joint venture like Banner | Aetna, but is an example of a less intensive partnership looking to have a similar result. The PCMH started nine years ago and includes 4,692 physicians in 1,709 practices. There are PCMH practices in 81 of Michigan’s 83 counties.

The idea of a PCMH began a decade ago as a way to improve care and outcomes while cutting costs. The model has primary care physicians leading care teams, which include specialists, that focus on each patient by tracking conditions and making sure patients get care “at the appropriate time and in the most appropriate setting,” according to BCBSM.

The payer said they have seen success. This year, PCMH practices are performing better than other practices. Blue Cross Blue Shield of Michigan said PCMH practices have seen 19% lower rate of emergency room (ER) visits for adults; 23% lower rate for primary care sensitive ER visits for adults; 25% lower rate of ambulatory care sensitive inpatient stays for adults and 15% lower rate of pediatric ER visits.

A recent Health Services Research report also found that hospital per-member per-month cost was reduced by 17.2% and emergency department per-member per-month cost was reduced by 9.4% for Blue Cross PCMH patients with asthma, angina, diabetes, chronic obstructive pulmonary disease, high blood pressure and congestive heart failure.

Tom Leyden, director II of the Value Partnerships Program at BCBSM, told Healthcare Dive members actively engaged with their primary care physicians are seeing better outcomes. What’s made the BCBSM program a success is “strong relationships that have been cultivated within the Michigan healthcare community,” he said.  

Leyden said providers want to be active participants in system transformation.

“This requires ongoing support from the payer and demonstrated evidence of practice transformation and clinic results from the provider community,” said Leyden. “Administration of these programs is an integral aspect of measuring performance.”

Leyden said the payer strives to make the programs as manageable as possible because physicians need to perform many administrative tasks on an ongoing basis. BCBSM regularly solicits feedback from providers during quarterly meetings and phone calls, emails, webinars and in-person meetings on what’s working, what’s not and what needs to be changed.

Barriers to overcome

One barrier that still needs resolution in partnerships is moving providers away from phone communication. Availity recently published a survey of 40 health plans and more than 400 practice- and facility-based providers that found respondents said phone communication is the preferred way for providers to communicate with payers.

Leatherwood said a more efficient way is a queue system. In this system, a provider could check the status of all claims and get alerts when they need to provide more information. The system would allow providers to look in one queue, update the claims information and then move on with their day. Payers would have their own queue and would get alerts when providers have questions. This would reduce phone calls and create immediacy.

Leatherwood said the healthcare system is stuck in a “chart chase” between providers and payers, and moving to an automated queue system would be a gamechanger.

Another big question is whether partnerships can scale. Expanding these partnerships beyond local or state boundaries may be difficult. Grote said partnerships are intensive and require close relationships, so joint ventures work best on a regional or state level.

It’s still too early in the process to say how partnerships will morph down the road. There are many different types of partnerships and more are likely to develop depending on locations, providers, payers and needs.

“I think in the near-term what we’re going to see is larger healthcare providers are going to be more strategic, working directly with payers. The health plans are going to be more interested not just in working with the staff level, but executive levels,” said Leatherwood.


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