How Payer-Provider Collaboration Is Helping to Change Healthcare

Group of medical professionals gather in a circle to discuss how payer-provider collaborations are improving healthcare.

As the healthcare industry continues to evolve, payors and providers are finding new ways to collaborate in an increasingly value-based healthcare industry.

Payers are increasingly partnering with hospital groups and other medical organizations to better align incentives, and explore how new technologies and processes can lead to meaningful change in areas like lowering the cost of care and improving patient outcomes. (In one example, Epic and Humana are collaborating to help providers choose cost-effective medications. Cerner and other payers have entered similar partnerships.)

Meaningful change, however, can be difficult to effect in any area of the healthcare industry.

The sector is now a full decade out from the 2009 passage of the Health Information Technology for Economic and Clinical Health Act (HITECH Act), which mandated the “meaningful use” of electronic health records (EHRs) by providers to earn government incentives. Currently, usage gaps still limit the potential advantages of EHR technologies. Value-based care (VBC) initiatives also have great potential to lower costs across the market, but stakeholders are still wrangling with new payment models introduced in the Medicare Access and CHIP Reauthorization Act (MACRA) law of 2015.

Despite their challenges, however, these shifts are enabling many aspects of healthcare administration and treatment to “go digital.” Now, we’re getting closer to the industry’s next era—one in which effective payer-provider partnerships use technology and data to help providers and patients make better decisions.

Creating a More Cost-Effective Market

The rise of “healthcare consumerism” and the transition to a model where providers are compensated based on the quality of care they deliver to patients are top-of-mind for nearly everyone in the U.S. healthcare space. With high drug costs and coverage issues plaguing patients across the country, these trends are helping the industry take steps toward a better future, and one that aligns financial incentives with clinical outcomes.

A full 98% of eligible clinicians, for example, are already participating in MACRA's Merit-Based Incentive Payment System (MIPS)—which uses a score based on providers’ reported quality- and cost-related data to determine their Medicare reimbursements. (MIPS is also just one of multiple VBC mechanisms from the Center for Medicare & Medicaid Services, or CMS.)

Outside of Medicare, such alternative payment models (APM) for VBC are less prevalent. But payers like Aetna and others are increasingly bullish on APMs’ ability to improve patient health and provider performance. Already, payer research has shown that total healthcare costs are lower with VBC plans than traditional fee-for-service ones, and lead to better patient satisfaction rates and health outcomes.

Making patients’ participation in the healthcare market easier will help drive satisfaction higher. Industry stakeholders—who ranked “consumerism and patient empowerment” as the number two healthcare trend for 2020—recognize that patients today want greater control, access and choice from their healthcare experiences (and are eager to make that possible).

Making Collaboration More Feasible

The most effective payer-provider collaboration programs in place today stem from stakeholders with strong alignment on objectives and strong connectivity across participants.

To support alignment, experts advise payers and providers to co-design VBC contracts so that the success metrics and incentives are as clear as possible. Payer-provider relationships take many forms, after all, and large-scale programs like MIPS are confusing enough for providers—even with defined (if ever-evolving) guidance from the CMS. Smaller private APMs are unlikely to work if doctors don’t know or understand their reporting requirements.

Plenty of private plans are working, though. Compared to its traditional programs, for example, Blue Cross Blue Shield of Michigan’s patient-centered medical home (PCMH) program has seen lower rates of patient emergency room visits and inpatient stays, as well as reductions in hospital costs per-member per-month. Aetna also realized nearly $10M in savings and a reduction in avoidable surgical admissions through a past accountable care organization (ACO) program; the insurer used that project as a model for its current joint venture with Banner Health.

Keys to the success of both programs, among others, include the use of analytics to track and manage patient activity across the entire "continuum of care" (using technology platforms that help link participating provider groups' administrative systems). Investments into IT solutions, staff and provider training, and process transformation facilitate the connectivity that makes collaboration possible in ACO or PCMH programs.

Working Better, Together

The emergence of more substantive interoperability and data standards may help new healthcare delivery and reimbursement models gain more traction. For example, the FHIER—for ‘Fast Healthcare Interoperability Resources’—is a fast-developing open-source standard for exchanging healthcare information electronically that gained significant traction in 2019. (Microsoft and Humana will leverage it as part of a new seven-year partnership.) The CMS has also opened up an API where doctors can access patients’ billing data, creating a model for private insurers to potentially follow.

Mergers will likely improve interoperability, as well. The number one healthcare trend for 2020 is consolidation, with 40% of health executives looking at M&A this year (and most frequently citing “access to technology” as a key reason their companies would pursue a deal.)

And while patients are still mostly neutral as to how such mergers would affect them, there will be benefits down the line. A smaller payer market will make data sharing easier, leading to greater potential for personalized care and better cost-to-value ratios.

Mergers also create “makeover” opportunities for insurers, whose reputations have suffered in recent years due to cost and coverage issues. (Ben Isgur of PricewaterhouseCoopers says mergers and partnership activity in 2020 may reflect how payers “create the identity that they want to go out to the market with” in the future of the industry.)

In the meantime, high healthcare costs and coverage issues remain major problems—and reaching meaningful change may require more substantive shifts in the realms of regulation and policy. Still, technology and digital collaboration are evolving the industry for the better, and further partnerships among payers and providers will get us closer than ever to a patient-centered era of healthcare.

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