The Illusion of Choice in Health Coverage Negotiations Part 2
| February 27, 2019
In Part 2 of this three-part series, learn how to tell if your benefits are built on a true value-based care model. In Part 1 of this three-part series, we delved into how the major insurance carriers build their broad provider networks, how those agreements mislead buyers, and the impact they have on premiums, quality of care, out-of-pocket costs, and what you can do to protect your bottom line. (Read the whole series, here.)
Is your value-based care model working for you? Here’s how to tell.
The major insurance carriers have more in common than not. This raises the question whether self-insured employers entertaining health plans offered by these major carriers are really choosing between different options. As noted in Part 1, major insurance carriers negotiate (privately!) with broad healthcare provider networks, discounting units but not effecitively managing utilization so that the end costs outweigh any perceived savings to employers and members. The care models that address utilization management and ensure quality patient care differ greatly, affecting whether major health plans offer savings, improved health outcomes, lower utilization rates, and fewer treatment redundancies.
Value-based care models lower the total cost of care through efficient processes and utilization management: they put the patient at the center of the continuum of care, ensuring members get appropriate care, at the appropriate time, in the most appropriate setting. These models require resources designed to support physician practices in the network, care coordinators to communicate with both providers and patients, as well as data and analysis tools to measure treatment effectiveness. A true value-based care model should result in better clinical outcomes for employees and lower costs for employers. Are the major health plans offering it? Yes and no. Conflicts of interest prevent major insurance carriers from creating a value-based care model that consistently provides better health outcomes and lower costs of care.
To stay within a value-based care model, physicians must consistently meet standards and provide key performance indicators linked to clinical outcomes, and practice efficiencies. This should be a critical part of the terms agreed upon before health plans onboard physician groups into their network. There are two reasons why it’s generally not:
- THE COST CONUNDRUM (Miss Part 1? Catch up, here.) in which insurance carriers make a profit at the expense of the member and self-insured employer. Because value-based care models track, monitor, and financially reward physicians for efficient (read: more appropriate) utilization, reducing redundancies in tests and eliminating unnecessary appointments. They also focus on proper utilization, thus decreasing reimbursement for hospitals and health systems.
- VALUE-BASED MODELS TAKE COMMITMENT AND CAPITAL. It’s not easy, especially if the carrier’s network of physicians is broad, i.e., one of the four biggest in America. Only health plans that embrace performance-based networks, those populated with carefully curated, more selective groups of healthcare providers, support and control the many levers a value-based care model requires to be effective. Some major insurance carriers will struggle to develop a presence in the performance-based space; because, they weren’t built to.
Major insurance carriers have grown increasingly large via acquisition, further limiting employer choice. And having gained significant volume they negotiate agreements with large physician networks, who make deals with the major insurance carriers because they want the largest pool of potential patients coming to their health system or hospital. It’s a numbers game. The more you have, the more money you make.
If one of these major carriers creates a new product that sets aside a selective group of physicians and gives that group the tools needs to provide more effective care for its patients and paid them based on those outcomes, the conversations at the negotiations table would shift dramatically. Would the other physicians within the broad network feel threatened? Would the insurance carrier really be incentivized to sell and funnel patients to its smaller network (knowing it could reap more profit on the broad side)? The market has already answered these questions: Major health plans that launched smaller networks to satisfy employer’s demands for more effective plans have done little to promote these options in the market place.
Conflict of interest and product cannibalization prevent the major health plans that exist today from delivering value-based care that consistently improves employee health outcomes while reducing total cost of care. Self-insured employers should be critical of the marketing of value-based care by major insurance carriers. Find where real choice exists in the healthcare industry in Part 3, the final installment of this series.
MARC PINNEY | Chief Operations Officer, Healthcare Highways Mr. Pinney’s extensive career began as a sales representative and later Vice President of Sales for Gallagher Benefit Administrators. A Senior Benefits Consultant at Holmes Murphy & Associates after that, he then brought his deep expertise to Healthcare Highways, now serving as Chief Operating Officer and Executive Vice President of Business Development.