Critical mistakes to avoid in value-based payment models

March 22, 2016

As alternative payment models gain traction, payers and providers must take the appropriate steps to thrive.

As alternative payment models gain traction, payers and providers forming these models and participating in them need to ensure they are taking the appropriate steps to ensure success.

Read: Seven risk-sharing payment mistakes

During their March 17 keynote presentation at the Advanced Payment Models in Healthcare Conference 2016, “Advancing Opportunities for High Quality Care through Physician Payment Reform,” Matt DoBias, senior manager at PwC Health Research Institute and Igor Belokrinitsky, principal in the health industries practice at PwC, explained how recent legislation will affect physician reimbursement.

Read:MACRA will drive value-based reimbursement momentum

Just prior to the conference, DoBias and Belokrinitsky shared some of the biggest mistakes they believe payers and providers should avoid when creating and participating in alternative payment models.

Top mistakes to avoid

“One mistake we frequently see is providers or payers engaging only the financial lever of transformation, and hoping that physicians, patients and systems will come along, prompted by better incentives,” DoBias told Managed Healthcare Executive. “However, we believe that achieving meaningful change in healthcare requires pulling all three levers: redesigning care, aligning incentives and engaging consumers more efficiently. Otherwise, there is a risk of further fragmentation, unintended consequences, and zero-sum thinking.”

In addition and related, many organizations tend to “focus inwards,” and design a value-based offering that everyone in the organization agrees upon, said Belokrinitsky. The mistake, however, is that they don’t actually test whether the market wants this offering.

“For example, our annual bundles survey from the fourth quarter of 2015 indicates that while providers have been busy overcoming internal resistance and churning out acute and procedural bundles, employers are looking for a very different kind of bundle,” he said.

Employers want to see a clearer articulation of benefits and a focus on chronic conditions such as diabetes, obesity, COPD, cancer, and chronic back pain, as these issues impact more of their employees more frequently, said Belokrinitsky.

“The supply and the demand for alternate payment models are failing to meet right now, creating a unique opportunity for providers to create more compelling offerings and for payers to become market-makers.”