Value-Based Care: Making Health Plans Work Better

By Alina Pabin

Jan. 4, 2019

Health care is costly. That’s nothing new.

Consider this: The average annual cost of health care has increased from $146 per person in 1960 to more than $10,000 per person in 2016, and care costs are expected to increase by six percent in 2019. So, while offering high-quality health care is a great way to take care of your employees, it’s becoming increasingly difficult to juggle the cost of their care with your company’s bottom line.

An option that’s become more available in recent years is the value-based health plan. In value-based health plans, payors share data and analysis to help providers improve their patient care outcomes. Through enhanced reporting and collaboration, doctors can identify areas to gain efficiencies, reduce unnecessary care, and most importantly, improve patient satisfaction and health.

Then, providers earn additional reimbursement based on their performance on cost, quality and outcomes measures. In value-based payment arrangements, health plans pay doctors more for improved patient outcomes and higher quality, and the total cost of care is better controlled.

Many companies are moving away from traditional fee-for-service agreements and toward these value-based payment arrangements. According to an analysis, the number of available alternative payment plans grew from 67 in 2011 to 823 in 2017.

Value-based payment arrangements get to the heart of the major drivers of health costs — hospital stays, ER visits, over treatment and chronic conditions like diabetes. So, when patients get the care they need at the right time, in the right setting, they have fewer complications, and require fewer hospital stays, ER visits and readmissions. These improvements help reduce costs paid by employers and insured members.

Value-Based Care
The average annual cost of health care has increased from $146 per person in 1960 to more than $10,000 per person in 2016

Nationally, the Michigan Blue Cross plan shares data and analysis with other Blue plans across the United States, so they can not only measure performance on a national scale, but use the data to create tailored, value-based health plans for companies with employees in multiple states.

For example, value-based Blue plans nationally have shown a 10 percent decline in ER visits, 2 percent decline in hospital stays, and an increase in prevention and chronic care management.

When it’s time for companies to decide on health plans for their employees, they should first ask their health plan some important questions.

  1. Are value-based plans available where you have employees? Does your plan have enough value-based providers and programs to benefit your team? Make sure to check the geographic distribution and depth of services available, so your employees can realistically use the services of these value-based providers.
  2. How long has your plan’s value-based program been in place? Find out if the program is mature, and whether they have a measurable trend in value. Programs that are older or more established typically have data that demonstrates the results they’ve been able to achieve.
  3. Do the health plan and its providers collaborate? This will show whether they understand the local dynamics, and whether the plan supports the providers in achieving improved performance.
  4. How extensive is the plan’s member base and value-based network? The larger the plan, the greater its ability to share meaningful data and influence care delivery practices.
  5. Does the plan offer flexible options? A one-size-fits-all approach to value-based networks doesn’t necessarily fit the unique needs of your employee base. Take some time to ask your plan how it measures provider performance and how it rewards members for choosing high-performing providers.

Value-based payment arrangements and value-based network design are two trends that have been demonstrating results for companies. Health care is costly. But now, there are strategies that help companies manage health costs while improving health care for employees.

Also read: Performing a Check-up on Value-based Health Care

Alina Pabin is the director of national programs at Blue Cross Blue Shield of Michigan.

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