Will The Move To Value-Based Payments Be A Long-Term Trend Or A Short-Term Fad?

Rahul Dubey
Senior Vice President 
Innovation and Solutions
America’s Health Insurance Plans (AHIP)
Innovation Lab 

Shahid N. Shah
Entrepreneur in Residence and Strategic Adviser 
America’s Health Insurance Plans (AHIP)
Innovation Lab 

The Affordable Care Act (ACA), Medicare Access & CHIP Reauthorization Act of 2015 (MACRA), Merit-Based Incentive Payment System (MIPS), Alternative Payment Models (APMs), Precision Medicine Initiative (PMI), and Patient-Centered Outcomes Research through PCORI are all taking us towards a more value-driven payment system for the U.S. healthcare system. Physicians and hospitals have been, for decades, paid fees for services they perform on patients and the higher their volume the more money they made (regardless of outcomes). Given the unsustainable growth rates in national healthcare spending, all health insurers and the federal government are working to figure out how to pay providers and health systems for the value they deliver to patients and the public health system.

The question on the minds of many skeptical health systems and front line healthcare professionals, who have lived through multiple cycles of managed care that were going to “revolutionize the industry” in the past, is whether value-based payments are a long-term trend or short term fad?

To help answer that question, America’s Health Insurance Plans’ (AHIP) Innovation Lab (IL) has been facilitating and moderating many “Solution Working Groups” (SWGs) between payers (insurers), providers (health professionals and systems), retailers (pharmacies, clinics), and pharmaceutical manufacturers. An SWG is a collaborative session usually focused on an insurer’s “stated need” and centered on a specific, tough- to- solve problem which typically involves health systems and care providers. 

For every SWG, AHIP IL convenes major stakeholders across multiple institutions, value-added technology, and services partners. Stakeholders could be as wide and varied as physicians, nurses, call center personnel, pharmacists, dentists, or even actuaries. Anyone willing to help eliminate innovation logjams is welcome. Once we get all the stakeholders into a single room for one or two days we’re able to speak not from siloes but from a collaborative patient team’s point of view. Instead of looking at the problem from a particular institutional viewpoint, we try to imagine what’s best for the patient’s long-term care and sustainability from a financial perspective. Too often solutions are envisioned without sustainable business models but, when multiple stakeholders work together, our solution working group participants have been able to create sustainable innovations.

1. The path to payments in VBR and FFS both remain complicated

After running dozens of SWGs at AHIP IL, we’ve come to the practical conclusion that value based reimbursement (“VBR”) initiatives are real and that insurers are serious about implementation. There is little reason to believe that VBR is a fad, especially because it’s hard to unwind later. The other major learning from AHIP IL’s SWGs is that most of the pressing problems in healthcare cannot be solved without significant reworking of agile multi-stakeholder and multi-institution workflows and information architecture. 

The entire healthcare industry’s aspirations to shift from fees for services (FFS) to value-based care is now well understood. However, repeatable evidence-driven execution plans of how we’re going to go from FFS to VBR remains elusive. CMS’s new MACRA and MIPS programs along with substantial bi-partisan work being done on the yet to be passed 21st Century Cures Act indicate that the Federal Government is very serious about value-based care. However, the significant IT, data interoperability, and unparalleled cooperation among traditional competitors that will be required to make value-based care a reality are not really well understood. Will these value driven aspirations stand the test of time or will we end up falling back on old models because the industry’s structural problems of reliance on volume and state-specific licensure requirements not let the fees for services business models die? 

ACA, MACRA, MIPS, APMs, PMI, PCORI, and the many other initiatives the healthcare industry has embarked upon all have an insatiable appetite for data. Through our SWGs, we’ve come to a consensus that existing workflows and data architectures built on siloes across institutions prove that the efficiencies in cost and improvements in outcomes that we need across the healthcare industry cannot be created without changing the reimbursement model to a more value-driven system. Many institutions cannot handle complex next generation value-based business models which require more collaborative and flexible multi-organizational structures. This means that the best will survive and we’ll need to figure out how to fold in the rest into centers of excellence.

If insurers and more sophisticated organizations can help health systems and providers become more agile, then value based reimbursements will move from aspirational to operationally capable and sustainable initiatives. VBR is real, it’s here, but it’s unevenly applied because the path to defining, agreeing upon and measuring outcomes along with payments attribution issues remains complicated. We still have a lot to learn, especially through our collaborative experience at the AHIP Innovation Lab, but it’s clear there’s no turning back.

The AHIP IL is an open lab – if you have payment reform, patient facing tools, payer focused solutions, or ideas around provider led care management please reach out to Rahul Dubey and see how we can run a Solution Working Group (SWG) centered on one or more of your ideas. 

Rahul Dubey is currently responsible for collaborating with the C-level executives at AHIP's Health Plan Membership to develop and implement innovative, best in class, emerging solutions and approaches that accelerate utilization of these mission critical applications in order to deliver a higher quality of care, improve the wellbeing of consumers and drive down the cost of care received.  

Rahul is responsible for creating the Lab's one of a kind concept, continues to fulfill its mission of delivering an invaluable resource for AHIP Membership and leads all of the Lab's collaborative and confidential Solution Working Groups that involve individual payers, providers, manufacturers, MedTech, innovative solution providers  and the AHIP Innovation Lab's trusted and crucial Inaugural Partners. 

Shahid N. Shah is an award-winning and influential healthcare IT thought leader who is known as “The Healthcare IT Guy” across the Internet. He is AHIP Innovation Lab’s technology strategist, business modeling specialist, and entrepreneur in residence responsible for helping insurance plans define and create solutions to major innovation challenges.