Value-based health insurer contracts growing in number, but not risk adoption

So far, the transition to value-based care and reimbursement is happening largely in name only.

While the number of value-based payment arrangements between payers and providers may be soaring, many of these relationships are structured in such a way that the incentive to improve health is not all that great.

And according to some payers and others, that’s the way providers want it. “Some of the providers we see, they are still more interested in filling hospitals beds,” said Dr. Anthony Nguyen, senior vice president of population health at UnitedHealthcare.

The Minnetonka, Minn.-based insurer reports that nearly $75 billion in annual payments to providers are now tied to value-based payment but Nguyen said he frequently finds providers aren’t actually interested in working with them.

In fact, Nguyen said getting providers to sign up for the contracts is the “easy part”; encouraging them to work with UnitedHealthcare to achieve shared savings is much more challenging.

Despite this dynamic, commercial insurers often boast about the number of value-based contracts they are in with providers. A 2018 survey of 120 U.S. commercial insurers found nearly two-thirds of their payments are tied to some kind of value-based arrangement rather than fee-for-service. And by 2021 the insurers expect only 26% of their claims to be from straight fee-for-service.

Although the volume of these contracts is only expected to rise, impactful arrangements are still hard to come by as providers continue to shy away from taking on downside risk, according to analysts, payers and providers.

Lack of transparency, poor data and the use of generic quality measures are all problems that prevent providers from taking the plunge into risk.

“I confess I thought I’d hear from more members saying that these arrangements are positive, but it’s more uniformly them saying there are significant challenges,” said Chet Speed, chief policy officer at AMGA who spoke to about a dozen physician practices about their value-based payment contracts with payers.

Providers may have some good reasons for moving slowly. Inaccurate and incomplete data are the biggest challenges providers face when entering into value-based payment contracts and that discourages them from taking on downside risk.

Data analysis is an essential part of a value-based payment arrangement, offering providers a deeper understanding of their patients including all the interactions they’ve had with the healthcare system. Additionally, data are used to determine improvement on performance metrics.

For WakeMed Health & Hospitals, based in Raleigh, N.C., data accuracy has been a problem in its work with Blue Cross and Blue Shield of North Carolina, WakeMed executives said. The health system formed a value-based arrangement in 2014 with the Blues plan when the insurer joined its ACO, WakeMed Key Community Care.

Claims sometimes aren’t processed correctly or at all, health system executives said. The discrepancy may even be the fault of the clinician who didn’t record the interaction correctly, but it still causes frustration, said Dr. Brian Klausner, chief medical officer of WakeMed Key Community Care. “If the data isn’t accurate you’re not going to get provider buy-in and you’re not going to get clinical change,” he said.

It’s also caused some hesitancy to take on downside risk initially. “You can’t go into downside risk unless you have good data and clean data,” Klausner said.

In an attempt to address the problem, both WakeMed and the North Carolina Blues now share their data with each other, making it easier to sort through discrepancies, said Dr. Leslie McKinney, lead medical director for value-based provider engagement at the Blues plan. “We’re learning from each other and iterating as we go forward in the relationship,” she added.

Still, imperfect data from insurers shouldn’t be much of a barrier for providers to be successful in value-based payment models, argued Kevin Sears, director of BDC Advisors, a consulting firm for providers and health plans. Physician practices and health systems now have sophisticated electronic health record systems that can perform detailed analyses for them. “While it might be true they aren’t getting great data (from insurers), there is plenty that can be done with basic EHRs,” he said. “It’s really about taking the time to think through how to harness that data and use it to drive performance improvement.”

Incomplete data is often a problem, too. Insurers can’t offer all the information to providers regarding pricing information due to privacy agreements with other provider networks. “That is absolutely frustrating at times,” said Dr. Christopher Crow, president of Texas-based Catalyst Health Network, which includes about 600 primary-care providers.

The network is in value-based payment contracts with UnitedHealthcare, Aetna and other large commercial payers. Crow said sections of data reports from insurers are left blank because they can’t disclose the total cost of care for services at certain organizations.

While UnitedHealthcare can’t reveal specific prices among its customers, it tries to get around that by breaking down cost of services into tiers, Nguyen said.

“We give them a general idea of the potential savings, not explicitly, so we don’t violate contracts,” he said.

Crow said the lack of transparency has stunted what Catalyst Health has been able to achieve. Most of the gains so far have been made by focusing on easy targets such as directing patients to receive scans and colonoscopies in outpatient rather than inpatient settings, but more detailed pricing information data will help them “do more tactical things,” he said. The joint ACO that Catalyst has with UnitedHealthcare has led to $28 million in savings over a two-year period.

Another concern involves the quality measures used in value-based payment contracts. Most major payers use a standard set of quality measures for all their value-based payment arrangements that mirror each other. Insurers say the tactic is in response to the popularity of these contracts. It’s not uncommon for a provider to now have value-based care arrangements with all the payers in its region.

Payers typically use the Healthcare Effectiveness Data and Information Set, also known as HEDIS measures, as well as measures on Hospital Compare.

Some see it as a solid approach. “It’s easier to have one transparent, consistent set of quality metrics so that when a physician sees a patient, they don’t have to assess them” by their insurance, said Dr. Paul Merrick, president and co-CEO of DuPage Medical Group in west suburban Chicago. “We want to have principles that govern decisions across payer lines.”

DuPage Medical, which is made up of more than 750 primary-care and specialty physicians, is in a value-based payment arrangement with most of the major insurers in the market including Blue Cross and Blue Shield of Illinois.

“Physicians and hospitals can’t have 10 sets of measures they are working on. From an operational standpoint, you want alignment,” said Dan Mendelson, founder of Avalere Health.

But there are providers who find it discouraging.

Klausner at WakeMed said that when his system started working with the North Carolina Blues plan five years ago, the organizations came up with a set of quality measures specific to areas where WakeMed physicians saw the most opportunity for improvement. Now, the Blues plan has assigned WakeMed and four other health systems in the state to the same set of quality measures for a recent downside-risk contract.

The model, called Blue Premier, puts health systems and their ACOs on the hook for penalties based on total cost of care and clinical performance.

Debi Hueter, executive director of WakeMed Key Community Care, said she’s not a fan of the change because it’s not motivating. “We are already up to the 90th percentile on most of the measures and you compare us to another ACO in the state that is just starting their journey,” she said.

Some physicians also see the strategy as preventing a true partnership between them and the payer, Speed at AMGA said. Assigning quality measures feels like requirements are being imposed on them, he said.

Bloomfield, Conn.-based insurer Cigna has acknowledged that not all the measures it uses for value-based contracts will be relevant to providers, so it has established a minimum volume threshold for the 16 measures it uses for its standard set. Providers must meet the threshold in order for the measure to be included in their contract.

“Occasionally we have to do further re-customization and we have a collegial approach with these groups … the goal is mutual success,” said Dr. Richard Salmon, Cigna’s national medical director.

But insurers might not care to establish provider-specific measurement sets because quality improvement isn’t their main concern, Sears added.

Insurers “are under an incredible amount of pressure from their clients to improve savings and that’s understandable, so sometimes in these programs carriers may view quality as ensuring a minimally accepted level of performance as opposed to pushing the nation’s health systems toward advanced levels of quality,” he said.

Some health systems even prefer the hands-off approach insurers have taken on quality because it allows them to maintain autonomy over improvement work. For instance, San Diego-based Scripps Health focuses on just 10 measures across all its value-based payment contracts even though there are many more that could be included.

Dr. Anil Keswani, corporate vice president for population health at Scripps, said it would’ve been too challenging for clinicians to focus on the areas included in all the contracts. In order to see improvement on measures, changes must be built into the work flow, which takes time. 

Even though some health systems prefer not to work so closely with payers on contracts, Speed said that’s the path forward.

“We are slowly getting to value, but we are not going to get there with one side moving forward and the other side not,” he said. “The partnerships have to be sincere and meaningful. Not just, here is a press release saying we are moving to value.”