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Fed up providers pursue provider-sponsored health plans


A recent survey suggests suggest a lack of access to appropriate commercial payer arrangements is causing health systems to explore alternatives.

More providers, fed up with a perceived lack of willingness among payers to embrace value-based reimbursement, are considering forming their own health plans.

That’s according to a recent survey of 60 C-suite healthcare system executives (CEO, COO, CMO, CFO, CIO or CTIO) by Premier Inc., a healthcare alliance with approximately 3,750 U.S. hospital and 130,000 other provider members.

According to Premier, the findings suggest a lack of access to appropriate commercial payer arrangements is causing health systems to explore alternatives-such as forming their own health plans or working with already-established provider-owned plans.

A recent

report from McKinsey & Company

indicates that this is, in fact, the case. About 13% of all U.S. health systems currently offer health plans, covering about 18 million members-or 8% of insured lives.

Also according to McKinsey, the number of provider-owned health plans is increasing about 6% each year.

“Without high-level, meaningful partnerships, some providers are frustrated as they take on a majority of the upfront investment in technology, performance improvement and care redesign efforts, with limited ability to share in the savings generated with commercial payers,” says Joe Damore, vice president of population health management at Premier Inc.

“Providers are 100% accountable for moving the needle on improving quality and reducing costs in order to receive maximum reimbursement through Medicare pay-for-performance plans,” he says. “However, they aren’t limiting these improvements to just Medicare patients. They scale them across the board to include patients who use commercial insurance as well, generating savings for both private and public payers. So, commercial payers are in essence getting a ‘free ride’ as they benefit from care delivery changes that reduce their overall costs, while limiting the gains accrued back to the providers.”

While Damore acknowledges that a few private payers have been pioneers in embracing value-based agreements, the shift has lagged in the areas of shared accountability, transparency and risk with providers, especially in markets where there is little competition among commercial payers.

Here are some key findings from the survey:

Providers are pursuing their own initiatives. Sixty-seven percent of respondents said they are interested in starting their own health plan or working with an already-established provider-owned health plan rather than continuing to wait for commercial payers to develop and implement value-based arrangements.

Shared-savings is slow to gain traction. Less than 1/3 of respondents (28%) said payers are offering alternative payment model contracts that share savings.

Payers aren’t partnering up on technology. Only 14% of respondents said payers are providing upfront payments to them to build infrastructure, including EHRs.   

To be successful in the transformation to value-based care and risk-based payment, commercial payers must be willing to shift their payment models to align with current landscape and collaborate with health systems and Clinically Integrated Networks (CINS), says Damore. An EHR and an operational interface can permit improved coordination of care across the continuum and care sites, which has been shown to improve quality and reduce redundant costs.

Payers aren’t sharing data that would help providers move toward value.

  • Only 29% of respondents said they receive transparent, quarterly updates on efficiency and quality performance from payers;

  • Only 22% said payers are sharing claims data to better manage the cost and quality of care;

  • Only 25% said payers are offering education on emerging alternative payment models, and/or MACRA; and

  • Only 42% said payers are providing incremental payments to primary care physicians for care management.


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