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Building the Business Case for Value-Based Care

John Commins, for HealthLeaders Media, February 26, 2014

On the other hand, if you focus on people going unnecessarily to the emergency room and getting unnecessary tests and [you] figure out how to redesign that care, you save money immediately because you are avoiding the unnecessary care. Thirty day re-admissions are a perfect example.

HLM: Who do providers speak with on the payer side?

Miller: The focus will differ. Medicare doesn't have a whole lot of interest in maternity care, whereas for businesses and Medicaid maternity care is in many cases their biggest expenditures. Everyone is interested in chronic disease. The distinction I make is between the purchaser and the payer. The purchaser in commercial insurance is the employer.

In fact, 60% of commercially insured employees in the country are in self-insured employer plans. The deal you are working out is actually with the employer and not the health plan. All the health plan is doing is processing claims. One of the challenges for commercial health plans is that value-based isn't necessarily a good business proposition for them. They may have to incur costs to change the payment system, but the savings don't go to them, they go back to their self-insured accounts.

HLM: What influences will insurance exchanges and consumer-driven healthcare play in the business case for value-based care?

Miller: It could be a potential advantage if different provider organizations get beyond this fairly narrow shared-savings model to the point where they are actually able to take accountability for populations of patients and can price that.

They could go on the exchange and allow people to sign up for this ACO and pick a primary care physician there and work with the coordinated set of docs at a lower cost and higher quality than simply picking a generic health plan. It's kind of halfway between the traditional HMO/PPO models. You are picking who you want to lead your care. You don't necessarily have to be limited to once set of docs or have a gatekeeper for everything.


John Commins is a senior editor with HealthLeaders Media.

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