Health Plans

Health plans’ role in value-based care just got more complicated

April 28, 2020 | Article | 7-minute read

Health plans’ role in value-based care just got more complicated

As the public health crisis continues to unfold, health systems and independent provider practices are under increasing financial strain while their ability to deliver high-quality care is decreasing. These circumstances could unwind any progress that healthcare has made in replacing the traditional fee-for-service reimbursement model. During these extraordinary times, health plans can take immediate- and long-term steps to support these critical partners while furthering the shift to value-based care.


Despite the government’s fresh round of fiscal support to keep providers afloat, we still may see a prolonged period of financial turmoil for these entities due to loss of elective procedures, and record unemployment moving members to Medicaid. Declines in annual wellness visits for older adults, screenings, along with expected closure of independent PCP groups and family practices that serve as the first line of preventive care, bodes concern for patients’ long-term physical and mental health.

Immediate-term support: Health plans can offer protection

Health plans across the country have deployed various measures to support providers during this pressing time, with most of them focused on financial assistance in the near-term. In some instances, plans are going a step further to launch concierge-like programs that aim to assist providers in completing small business loan applications. This financial protection is critical in the immediate term as health plans look to maintain adequate networks in the communities they serve.


As we look beyond the immediate term, a few potential scenarios come to mind. While needed now, advanced payments and funding could leave an unintended effect by continuing to prop up the old fee-for-service healthcare model. Providers possibly could sour on risk-taking contracts that public and private payers have touted as critical to align incentives. And finally, financial headwinds could lead providers to close or consolidate—by joining large, local health systems and practices—and further erode price competition.

Long-term support: Health plans can preserve, position and plan to build lasting trust

Looking ahead, health plans must continue taking additional steps to build long-term trust with providers that will create more durable uptake of VBC programs. Why is trust so important (beyond the obvious reasons)? A ZS survey found that PCPs who are highly trusting of health plans are more than twice as willing to engage in partial- or full-risk sharing. A key building block of trust lies in health plans supporting providers in the ways they want to be supported. The survey also found that only a third of PCPs received the support they desired, but those who did were twice as likely to report feelings of high trust with their health plan.


Moving forward, health plans must take a partnership approach and continue to build trust by evolving the role they play to retain providers in VBC contracts and create positive experiences for providers still on the fence about moving down the risk “glide path.” We see three areas for health plans to explore:

  1. Preserve existing contracts: Health plans can simplify metrics and calculation methodologies to make it easier for providers to better comprehend VBC program characteristics, while keeping some guard rails. Now may be the right time to further streamline calculation and qualification methods—especially as regional indices and patient attribution may be irrelevant or challenging to execute at present. Doing this will ensure providers are exposed purely to performance risk rather than actuarial risk.   
  2. Position support offerings to fill gaps: Most providers are operating on a tight capacity focused on providing care and in many instances furloughing support staff. During this time, health plans can step in with support targeted at tasks that providers may be challenged to complete now. For instance, plans could perform many of the patient engagement functions that administrative staff ordinarily would handle (such as playing “matchmaker” with telehealth). This not only will mitigate the risks of long-term health but also assist providers in proactively addressing patient needs.
  3. Plan for new engagement models: Clinical/practice transformation personnel are key resources for provider partners in their transition to value. Historically, however, they have heavily relied on in-person meetings to engage with providers. Health plans should take this opportunity to evaluate their methods of connecting with providers and consider a greater mix of non-personal and digital channels. Moreover, this may create a forum for listening to provider sentiment on an ongoing basis—and from a broader group than those individuals selected to meet with the health plan periodically as part of a provider council.

Pursuing any of the avenues outlined above comes at a financial cost along with the time and effort required to create the desired impact. COVID-19 will leave a disparate impact on providers, and as a result, their needs will vary. Therefore, a one-size-fits all support model is both costly and ineffective. Health plans need to more deeply profile their provider partners—through supplementing internal data with secondary and third-party information—to better align supportive functions based on the provider’s unique needs and situation.


In many respects, the providers that are farther along the risk-taking continuum are better equipped to weather the near-term financial storm caused by COVID-19. The health plans that spend as much time preserving, positioning and planning their VBC program resets as they do providing financial protection to providers will be well-positioned to facilitate the shift to value-based healthcare. 

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