Health Plans

With analytics innovations, VBC prepares to make a splash after years of treading water

Feb. 7, 2023 | White Paper | 12-minute read

With analytics innovations, VBC prepares to make a splash after years of treading water

Across the healthcare ecosystem, we see consensus on the premise and promise of value-based care (VBC). Health plans, including government payers, and providers increasingly recognize shared-risk payment models as a better alternative to fee-for-service (FFS) arrangements. And the core technology has matured to a stage where real-time collaboration is finally feasible, at-scale, to improve treatment experiences and outcomes, while lowering costs.

The quantum steps to get VBC right

In the years we’ve been discussing VBC, though, progress toward its full potential has been disproportionate. The VBC models themselves have yet to reach a maturity point where they’re consistently executable to deliver value, and the industry is still not approaching VBC from a comprehensive-enough aperture. The most pressing challenge for payers and providers is how to fully account for the quantum steps and landing points they need to get VBC right.


At this critical juncture, health plans and providers recognize that long-term VBC success hinges on more than technology and data integration. In many ways, the nuanced issues healthcare leaders confront are surfacing challenges that have existed, all along, in three key areas:


Shift to collaborative mindsets. While a legacy of adversarial thinking persists, we are seeing this friction give way to a more optimistic outlook as payers and providers collaborate and compromise on specific arrangements. Given their negotiating power, payers may need to take the lead in fostering trust with providers and removing real or perceived barriers, including operational challenges. For the industry to move beyond pilot programs toward transformational, at-scale deployments, providers must be confident they can continue to deliver evidence-based care and will be appropriately reimbursed for that care. Additionally, they need reassurance that payers can document the right performance metrics and that those measures are built on trustworthy, high-quality data.


Share information. On the road to a VBC-led healthcare ecosystem, greater trust must translate into an easier flow of information. When patient and population data is freely exchanged, payers and providers can collaborate on care with next-best-action treatment recommendations in ways they cannot with FFS. Interoperability marks an essential step forward by putting standards in place for how information is shared and by creating the expectation that it will be. The real value comes when payers and providers combine clinical data with claims data and therapeutic decisions factor in rich, longitudinal data—and, most importantly, when they deliver these insights to the few operational actions and decision points that matter most.


Align incentives. While VBC savings will be driven by incentive alignment between payers and providers, significant work remains. Payers may need to take the lead in being more prescriptive in their therapeutic guidance to providers by putting data in the context of actual interventions. For example, payer data can identify population segments that are at risk for both developing diabetes and experiencing complications unless medication adherence issues are addressed. Subsequently, if a payer is prescribing these types of actions, the provider reimbursements should not be based on whether a treatment outcome is good or bad but on whether the given provider followed the recommended regimen. By making this definitional shift in incentive criteria, the payer sends a dramatically different signal of trust. This approach helps payers and providers truly reduce and share risk and accelerate adoption and value.


The shift from FFS to VBC is imperative—and will require sustained effort. We’re seeing provider segments that are ready to adopt the model—most notably high-performing physician networks with their own ability to invest and be innovative. That’s where we need to focus. Breaking through to the next level of VBC success will require payers to be more selective in how they choose participating providers and in how they optimize their investment. Providers must feel empowered to effect real change.


Download our white paper to learn more about the logistical complexities and common administrative processes health plans and healthcare providers must confront. Guest author Ben Carroll discusses this critical path and the VBC opportunities we all want to unlock.

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