Employers Play an Increasingly Important Role in the Move to Value-Based Care

Employers may not look forward to purchasing healthcare, but they, and other large purchasers, are in the position to transform the market, explained Suzanne Delbanco, PhD, MPH, executive director of Catalyst for Payment Reform (CPR), during her keynote speech at The American Journal of Managed Care^®’s Accountable Care Delivery Congress (formerly called the ACO & Emerging Healthcare Delivery Coalition^®).

Delbanco’s organization was created as a way to catalyze employers, public purchasers, and others to implement strategies that drive high-value healthcare. Purchasers have a track record of influence. CPR helped spark the price transparency and payment reform movements, the Leapfrog Group drove standard quality measurement and reporting, and the Bridges to Excellence (incubated by an employer) led the move to pay for performance.

“Even though [purchasers] don’t understand healthcare as well as you do,” Delbanco said to attendees, “and they’re sort of intimidated by the idea of sitting across the table from any of you, in their own ways they have really influenced the fabric of the healthcare system as you know it today.”

CPR might be an advocate for payment reform, but it believes that the myriad of payment types in healthcare all have a place, including fee-for-service. However, it does believe that payment reform means payment, in some way, has to be connected to quality of care. That could mean a bonus that rewards high-quality care or a payment that is more conducive to creating an environment for quality improvement.

“We don’t believe that we’re necessarily moving from traditional fee-for-service all the way to global payment and reach Nirvana and then we’re done,” she said.

For instance, when there are services where there isn’t enough supply, fee-for-service might still have a purpose to encourage more supply. “There’s a time and place for each of these [payment models],” she said.

Although the majority of payments are still fee-for-service with reforms being layered on top, CPR has found that the level of payment reform has steadily increased year after year. In 2010, just 1% to 3% of payments were tied to performance, but by 2015, 40% of payments were value-oriented.

One health plan executive told CPR that the escalation in payments tied to value is part of “an arms race” and that everyone is racing to have more payment reform and be able to put out more press releases than their competitors.

During this time, the biggest growth was in pay for performance, while bundled payments remain at 2% of less. The challenge with bundled payments is that they are not scalable and cannot be automated, but the big national plans are starting to get there, Delbanco said. She expects to see bundled payments take off in the next few years.

In addition to new payment models, Delbanco highlighted other ways employers are working to control costs without impacting quality, such as new benefit designs that encourage patients to use certain providers and treatments. These include value-based insurance design, which seeks to remove barriers for patients to receive needed services and treatments, and high-deductible health plans, which share greater costs with patients in an attempt to make them savvier healthcare consumers.

“There’s a lot of effort right now to think more carefully about how to encourage consumers to think about the services they’re seeking and from whom they’re seeking them,” she explained.

Provider network designs are a part of employer efforts. Not too long ago, “Americans were holding on for dear life to their love of choice,” but now they are more willing to trade off choice for affordability, she said. Employers working with CPR are seeing higher-than-expected enrollment in selected or limited-network products.

Provider consolidation provides a real challenge for these employer decisions. It will be difficult to steer employees to better value providers if there is 1 dominant player in the market with anticompetitive practices, Delbanco explained.

To combat increased consolidation, which leads to higher prices, employers are looking for alternative sites of less expensive care, such as using retail clinics and urgent care centers, telehealth, and onsite or near-site clinics that employers put in place.

“It might not be enough, what employers are trying to do,” she admitted. “I think we’re likely to see more legal action [and] legislative action taken if this continues and healthcare continues to be less affordable.”

During a discussion after her presentation, moderator Clifford Goodman, PhD, senior vice president of The Lewin Group, wondered if employers are losing ground, as far as leverage goes, as providers consolidate and whether that might make employers recede from the healthcare market.

Delbanco said that trends with employers trying to make healthcare more convenient by providing services like onsite or near-site clinics indicate the opposite is happening. Employers, at least those she works with, are actually getting more involved. Employers are just changing the way they think about healthcare—they no longer feel like they need to keep every provider in the network. In fact, the future might actually hold narrower networks with employers slicing off the top 10% most expensive providers.

However, speculation about whether or not employers are looking to leave the healthcare market is not uncommon. Just 5 years ago, there was talk that private exchanges were the next step in healthcare and that employers would recede from the market and everyone would be on private exchanges.

Delbanco believes that employers often ask themselves if there is a way to shop out insurance purchasing to another entity that will do a good enough job to keep the employees healthy and productive. For the most part, the answer remains “no.”

“Anything is possible, but I don’t see [employers leaving the market] anytime soon,” Delbanco said.