There is a strong push for health care to move towards greater value-based care (VBC) arrangements. The prospect of VBC holds the opportunity to re-create partnerships designed to increase health care sustainability by strategically improving processes, care delivery, and patient outcomes to achieve higher quality output at a decreased cost. Furthermore, the held potential will not be optimized until providers, payers, patients, and communities are connected in this common goal and as equal stakeholders in health system redesign.

Providers, payers, and patients all stand to benefit from greater development and alignment of VBC arrangements. Patients want more connected and transparent care that is convenient to their needs and avoids unnecessary delays in services. Providers want to receive on-time accurate payments and reduce administrative burdens so they can spend more time connecting with the patient and focusing on health outcomes. Payers desire higher value (primarily assessed through performance on standardized quality metrics) with minimalized utilization waste while building patient and provider loyalty and trust.

Likewise, communities serve as the cohesion between patients, providers, and payers. Engaged communities fuel VBC models and preserve investment on behalf of providers and payers. Investing in and through the community leverages resources local to the patient and supports infrastructure efforts in improved quality of care.

A suboptimal system

VBC models need incentive transparency and mutually beneficial terms for all parties to meet value-based goals. Many payers lack health outcome data on members from provider EHR databases. Providers lack the billing and claims data on patients to which they provide care. Without full predictive data-mapping, providers and payers individually are unable to assess current and future risk planning decisions, and thus VBC contracts are being made via a marginalized roadmap.

Shared knowledge of comprehensive patient/member data currently only exists when payer and provider are in an exclusive relationship for care provision such as in a managed care model. However, it is feasible to create this same incentive in shared information through VBC contracts when established in the right terms.

Redesigning value-based care contracts

In efforts to promote VBC, we propose a new framework called the Value Compass to rethink the way value-based care contracts are designed and incentivized. The Value Compass concept focuses on meeting societal health care needs through four key stakeholders (payer, provider, patient, and community) and balancing between these groups to align value-based models. Imbalance in any stakeholder contribution causes the Compass to shift and makes value-based outcomes more difficult, if not impossible to achieve.

From the Value Compass Framework, specific value-based models are then designed to focus on data interoperability, clinical evidence protocols, collaboration, and other capabilities to enable value-based care contracts.

Incentives to form partnerships

Payers and providers have traditionally had different incentives and unequal balance in VBC agreements. This has led to complacency with continuation of traditional fee for service contracts and a slower adoption in VBC. In 2018 only an estimated 25 percent of all health payer contracts had a value-based component. To date, this estimation has not greatly shifted despite climbing health care costs and less than ideal outcomes in health care quality compared to cost.  One potential explanation is VBC negotiations’ portrayal as hostile and having the wrong expectations from the outset; often setting the union on unstable ground in developing a partnership of any enduring value. Thus, in redesigning the system, VBC needs to be a win-win partnership that incentives both parties from both a financial and non-financial aspect.

From a financial perspective, payers can encourage providers to take on more risk by providing better reimbursement rates and cost-savings revenue for high-performing providers. However, non-financial incentives should be leveraged to enhance hospitals and provider groups struggling to maintain single-digit operating margins. For example, payers can support providers and enable easier adoption of value-based care by adding new capabilities like detecting burnout or creating analytical tools. Thus, non-financial incentives can also dissipate previously hostile relationships and open dialogue around collaborative strategies to get to value-based care sooner.

Applying the Value Compass Framework to a value-based contract

A partnership between a community hospital system and a local payer in North Carolina is a prime example of the application of the Value Compass framework when establishing a value-based contract. A shared model with financial and non-financial goals allowed the community hospital system and payer to establish a progressive relationship invested in collaboration and assessment of mutual return on investment overtime.

Data sharing as terms of the arrangement addressed the problem of having incomplete data and provided both stakeholders the ability to utilize data insights, determine key performance metrics, and measures of quality monitoring. Since a comprehensive picture of the patient’s health journey was now obtainable, the provider was encouraged to take on more downside risk.

Data operability further informed standardization of quality metrics and specified benchmarks for improvement for the payer-provider population. The findings enabled sharper focus to align the payer-provider partnership with patient and community stakeholder needs, completing the balance of the Value Compass.

Moving value-based care forward

To redesign health care and promote VBC, it is recognized no single entity or organization by itself can redefine and extract value that benefits all a population. Instead, alignment amongst stakeholders who are not only willing to establish and participate in non-financial and financial engagements, but view all other stakeholders on an equal playing field is necessary to effectively address issues such as data interoperability, clinical evidence protocols, and sustainability of value-based contracts.  Engagement at the level of the four key stakeholders is critical and has the potential to move VBC from a place of stagnant rumination to a beneficial process towards health care redesign.

Kristan Langdon is a nurse practitioner. Timothy Lee is a health care strategist.

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