Payers outpace providers in making value work to save money, experts say

In the transition to value-based reimbursement, insurers are ahead of providers in making the new models work financially, according to a new McKesson study.

Sixty-one percent of payers see themselves profiting from value-based reimbursement compared to 41 percent of providers, according to Andrei Gonzales, MD, director of value-based reimbursement for McKesson Health Solutions.

In collaborations with hospitals, 81 percent of payers told McKesson they are getting more selective about their networks, choosing providers that have higher star ratings and other quality measures, Gonzales said.

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The progression is for commercial plans to focus on the upside benefit and then move into more risk, he said.

Insurers have embraced Medicare Advantage as a major value player, though the Centers for Medicare and Medicaid Services has said it would not consider MA as an alternative payment model under MACRA at least until 2019.

Medicare Advantage represents about 30 percent of Medicare enrollment, according to Andy Slavitt, acting administrator for CMS.

"It's grown about 60 percent since the Affordable Care Act," Slavitt told insurers recently at a meeting of America's Health Insurance Plans. "Does it plateau or does it make significant steps to approaching half the population? No one knows the answer to that."

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The Medicare Advantage value-based insurance design model is attracting much attention from insurers, who have long wanted to tailor plans rather than follow CMS's mandate of offering the same benefit and cost sharing to all enrollees.

The best way to shape the new design model is to participate, said Patrick Conway, CMS's deputy administrator for Innovation and Quality.

For the five-year pilot starting in 2017, CMS has selected nine Medicare Advantage organizations to participate in seven states. The application window reopens in 2018.

Value-based insurance is testing the theory that flexibility improves the quality of care and reduces costs by allowing plans to give members incentives to use beneficial clinical services. One example is for plans to offer a zero copay for eye exams to patients who have diabetes.

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There is no additional funding under the MA-VBID model, according to Adam Finkelstein, who is leading value-based insurance design for CMS's Innovation Center. Plans going into the model should at least be cost neutral or show savings.

As complex care drives 60 to 70 percent of healthcare costs, according to McKesson, CMS is testing the MA value-design model for the chronic conditions of diabetes, obstructive pulmonary disease, congestive heart failure, patients with past stroke, hypertension, coronary artery disease, mood disorders, and starting in 2018, rheumatoid arthritis and dementia.

Most payers have said they would like to take on more risk, Gonzales said, but physicians need to participate as well.

Part of the answer to implementing value-based care is physician involvement.

Where physicians are practicing in value-based arrangements, what they do in the quality of care models is spilling over in the treatment of their fee-for-service patients, according to Austin Frakt of Harvard University and Jose Figueroa of Harvard Medical School.

MA growth is associated with reduced spending growth, Figueroa said. The average benchmark payment rate for Medicare Advantage was 113 percent per enrollee in 2008, and it's currently 102 percent, Figueroa said.

But lower spending in areas where Medicare Advantage plans exist is spilling over in reducing fee-for-service costs in the same area, roughly by 11 percent, Frakt said.

"Why?" he asked. "We don't know for certain."

Medicare Advantage plans are accused of being overpaid, but the spillover effect is a good argument in their favor, said Frakt.

The McKesson study showed 58 percent of payers compared to 50 percent of providers are in value-based models.

While payers are further along the value-based trail than providers, both have made gains since 2014 when less than half -- 48 and 46 percent respectively -- of payers and providers were in value-based arrangements, according to Gonzales.

Twitter: @SusanJMorse