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Healthcare Reform Driving Value Based Provider Contracting

Vik Anantha, for HealthLeaders Media, September 28, 2009

While much of the recent media attention on healthcare reform is focused on making changes at the point of care, the changes being discussed by the administration and large employer groups will also have an impact on how health plans operate. For example, they will affect how health plans construct their provider networks, contract with providers and reimburse providers.

There is mounting pressure from the government and employers to fundamentally change our healthcare system to focus on improving outcomes, lowering healthcare costs, and increasing overall access to medical care, while moving away from a pay-for-service model. Central to these changes is the request by the government and employers for a healthcare system that aligns incentives with behaviors from health plans, providers, and patients that focus on improving the continuum of care.

Definition of Value is Changing
Important to payment reform are the methods by which the meaning of value has changed in terms of the healthcare environment. There is movement toward payment models for episode-based care and population-based care, both of which focus on the longitudinal performance of the care plan delivered to the patient. The performance of these new models focuses on quality, which is based on improved outcomes and prevention. This is a shift away from the traditional payment model, which rewarded the volume of services provided rather than quality and outcomes provided.

Additionally, there is more emphasis on incentives for the proper collaboration, coordination, and patient satisfaction of the care delivery experience. As many of us know, the management and prevention of disease does not take place in just one office visit or with just one provider. The care experience should be a coordinated effort between primary-care and specialty providers to achieve the best results for the patient. In conjunction with the coordinated experience, there is emphasis on enabling patients to take an active role within their care plan and to be more satisfied with the care they are receiving.

This is a big change in the way that the traditional provider to patient to health plan relationship has been established. In the past, payments and incentives would be rewarded based on individual performance. The change in the reimbursement models will now reflect the quality within the continuity of the care program received by the patient.

Care Model is Evolving
We are moving away from a silo-based care experience system to a system that will use a form of team-based care, where each action of that team will be measured. Initiatives such as Patient Centered Medical Homes are good examples of this team-based model.

The PCMH model changes the role of the primary care provider to be more of an overall healthcare services coordinator and disease prevention entity, which helps the patient utilize other healthcare services more effectively. The PCMH model also provides additional incentives for actions once thought to be outside of the point care experience, such as secure provider-to-patient electronic communication, e-Visits and proactive patient involvement. While the PCMH model is not new, it is clear why it is gaining attention with the healthcare market; as we move away from a service-based care model, the PCMH has the right foundation in a team approach to the measurement of utilization, performance and quality of care.

Pressure to Transform the Contracting Process
All of these changes will have an impact on how insurers, either public or private, contract with their provider networks. The provider contract is the document that governs the relationship between a health plan, the provider, the services rendered and the fees agreed to for service. The contract is also the place where incentive measures for quality outcomes and medical best practice adherence will be recorded and operationalized.

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