Employer considerations before adopting a value-based health plan

The promise of value-based care is to deliver the best outcomes at a lower cost. Providers are incentivized to keep members healthy by proactively managing the health needs of the members, delivering high quality care while reducing the use of unnecessary tests and treatment.

Self-funded employers have a lot to gain from this model in higher quality, better experience and outcomes and reduced costs. However, it requires a shift in their thinking from the way benefits are designed and delivered today.

We think the effective implementation of value-based care for self-funded employers would require at least three considerations-

  • Value-Based Plan Design
  • Value-Based Network Design
  • Value-Based Care Delivery

Value-Based Plan Design

Unlike traditional plan design approaches, value-based plan design should be focused creating member experiences which encourage them to utilize high value services that produce better outcomes.

Benefit-AnalysisIt is important to carefully deliberate the implications of such design to ensure you have the systems and resources necessary to fully implement the design and your design fits within the culture of your organization.

Benefit administrators should also be cautious about how they communicate the value proposition of this model, if not done well, it may look like a restrictive narrow network.

They can integrate financial incentives such as lower premiums, lower copay, cash or gift cards, and focus on communicating the value proposition such as unique experience, plan of care, coordinated care etc. to encourage employees to use the system to achieve the desired results.

Value-Based Network Design

Employers can explore value-based care products through a health plan or a direct contract with a health system in an area where they have a large geographic footprint.. Either way, while designing networks, have an open discussion about how the providers can leverage what they’re already doing to deliver an improved experience for the employees.

network designWhile there are several models which they can use for contracting, one possible model is risk adjusted monthly rate per member for primary care, FFS with reference pricing for urgent care and severity adjusted episodic rate for scheduled inpatient care.

Each model should include adjustment for quality. Instead of using all CMS quality measures, the plan administrators can choose to focus on the measures that are important for their organization. For instance, if surgeries make up a big part of your costs,  you may want to pay higher to providers who have lower surgical complication rates because their outcomes are better.

Providers engaged in value-based care are likely to have a lot of data about your employees, you should seek assurance from them about their data security policies, procedures as well as reports on third party audits.

Value-Based Care Design

Value-based care design requires that providers provide both longitudinal, relationship based care management, and short-term, goal-oriented care management. By applying risk stratification, providers should identify members, their concerns and the level of care needed for each cohort.

In value-based care, the providers should be utilizing multiple channels (text, emails, portal, home visits, group visits etc.) and include chronic care management, behavioral health, self-management and medical management.

ACO care delivery model for employersCare coordination services are important components of value-based care delivery.  Providers may want to reduce the cost of care by steering members to their internal network, but it should not be done at the expense of member’s experience. The care coordination design should improve the transitions of care where the physicians are working more closely with hospitals and emergency departments, as well as with high volume specialty service providers.

Employers should ask for better data sharing on clinical, operational, financial data as well as reporting on quality measures such as HEDIS.  Other metrics impacting employee experience such as same-day appointments, doctor follow-ups, plan adherence, care plan per member, health performance against goals etc. should be checked against claim data to get a real-time insight into care delivery.

Value-based care holds a great promise for employers. It is designed around the specific needs of your employees who benefit from a team that coordinates their care, and technology that connects them and their providers with information to help get the right care — it is also going to reduce the costs for you.

Talk to us about how our health insurance solution can reduce costs, improve health outcomes and provide you better visibility &  control over your health benefits.

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Is it time to take a fresh look at direct contracting?

Outside of health benefits, your organization is likely to have direct relationships with hundreds of partners with specific agreements, point of contacts, the price for services, and expected quality of delivery. Why can’t it work for health benefits? It can.

Contrary to popular belief, direct contracting with health systems is not a new idea. It had been tried and tested several times before and has proven to be successful for several employers. Large companies such as Boeing, Walmart, Intel and many others have successfully implemented it to lower costs and improve outcomes.

Can this model work for everyone?  Yes, but the success heavily depends upon the motivation of the employer to make it happen.

Let us start with the reasons why someone should not make a switch. First look at your overall healthcare costs. Are you Ok with the amount you’re spending as well as the inflation rate? If yes, why fix it when it is not broken for you.

But if you are like most businesses, you are not happy with the rate of cost increase. Now try to answer the next business question – What is the value or ROI you are getting in return for your healthcare spend?

The ROI can be determined based on the following formula.

Value = Outcomes/dollars

If you are unclear about the value, then you may not currently have the right metrics to justify increasing the budget this year or next.

What kind of outcomes should you be tracking to determine ROI?  Professor Michael Porter suggests that outcomes can be based on the improvement in the medical conditions of your population. For example, if your employee population is facing serious chronic conditions, is your medical spend improving that condition? If not, your money is not bringing the returns it deserve.

Of course you can measure other metrics such as average number of days taken by employees with a specific condition to come back to work.  Beyond the health outcomes, you can also set metrics based on member experience; such as how long it takes for your members to get appointments, how engaged are your providers in getting your employees go through annual wellness checks? How satisfied are they with the service they receive from your provider network.

If the answers to these questions is “not sure”, you may want to explore direct contracting, which will help you take direct control over the cost of care, define and measure the metrics and align the payments to your provider partners.

Obviously, this is not going to be easy. You must have serious purchasing leverage as well as support from an intensely focused administrative intermediary to make a move toward direct purchasing.

We are happy to help.

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10 tips for designing a better vision plan

Vision plan receive limited attention from employers and are typically offered as voluntary product. Because of relatively low premiums, little effort goes into planning, designing, communicating and managing the plan.

Given the proliferation of digital devices, employees from most professions are at risk for developing vision problems that may impact their work performance. Further, there is significant evidence now that employees place a lot of value in vision plans and a well executed plan can make a big impact on their health and productivity.

Here are top 10 tips for designing, communicating and managing your vision plan effectively.

1) Define Goals

Your vision plan should appeal to all members irrespective of their demographics and past conditions.  Before starting the plan, it is always good to segment your population based on systematic assessment. This will help you customize services, materials, care and experience for each category.

For each category, define your goals. For example, goals for members with healthy vision could be to prevent an onset of an ailment and the goal for members with chronic diseases could be to avoid serious complications.

2) Services

Post segmentation, define the services and products that meet the goals for each segment. For example, preventive care including comprehensive eye exams can be provided to all segments, whereas additional services like office visits,  ducation and engagement, monitoring and diagnostic for diabetics can be included for a specific segment.

The eye exam should be comprehensive and include a review of your history of eye problems, distant and near vision evaluation, checks for astigmatism, presbyopia, glaucoma, cataracts, macular degeneration etc.

3) Cost sharing

Try to use VBID guidelines to reduce barriers for members to use high value services that are important for them. This means designing cost sharing, where copays and deductions (if apply) are reduced or removed for member segments with chronic conditions such as diabetes.

The copays for eye exams and materials are fairly low, but by preventing ailments, it can have a significant impact on reducing the use of expensive medical services down the road.

4) Premiums and Discounts

Direct contracting with local providers or health systems can provide a significant discount on both eye wear and eye care (including LASIK and digital eye imaging).  If your vision plan is part of a bigger relationship with the provider, it can reduce annual premiums, deductible as well as copays.

Typical alternative payment arrangements for preventive care can be risk-adjusted PMPM or VBID based plan. For speciality care like LASIK, reference based or severity-adjusted bundled pricing can be more cost effective.

5) Communication

Communication plays a big role in helping employees see the value in vision plans.

Many employees still believe that vision plan covers the medical aspects (diagnosis and treatment) of the eyes and don’t know that they should look at their medical plan for eye ailments and treatments and vision plan for routine vision wellness exams, along with eyeglasses and  contact lenses.

Have a clear and separate communication plan for vision.

6) Plan Administration Services

You should demand your plan administrator to send text messages to members, reminding them about their eye exams based on the recommendation of American Optometric Association.

Why is it important? Research shows that even though 2/3rd of employees in large companies buy voluntary vision coverage, only 1/3rd of them actually use it.  Most of them forget about it after enrollment.

7) Technology Access

Ask your broker or plan administrator to provide a mobile and web app to members so they can view the plan details, deductibles, co-pays in one glance.

The members should be able to compare prices (based on their coverage) and book appointments easily. If required, they should be able to compare costs for lenses and frames and pay their share from HSA accounts.

8) Network

Most vision plans have created a network which encourages members to buy sunglasses and cosmetic vision wear, rather than focusing on the exam, personalized service or the quality of care.

Adapting to member’s changing needs means working with a network that provides a stronger offering and choices in eye wear, more transparent pricing, online scheduling for exams, availability of glasses and/or lenses to buy or pick up easily in store or delivered at home or office. In other words, the network that delivers on the promise of member centric care.

9) Service Setting

There are several settings for eye exams including optical retailer, a group eye practice, or an eye department of a general medical clinic, the price and quality of services may vary from one setting to another. Encourage members to take an eye exam from ophthalmologists and optometrists and not opticians who are not eye doctors.

Historically employees were getting services and order lenses/glasses from the same place. However this is not always cost effective. The plan should make it easy for members to get services from the right providers and order materials via alternative better and cheaper methods.

10) Metrics

Ask your plan administrator to provide metrics on what services were used by members, who provided those services, how long did the member wait to be seen, how far were these facilities from office locations and how well did it help in getting the employee back to work.

Ideally the vision plan should be designed around comprehensive preventive health for eyes and make is easier for members to access the services. Unfortunately, most vision plans offered currently are centered around lenses and frames and cover only basic services for eye care. Employers can change with a good understanding of the employee’s needs and expectations  and developing the right plan that address the desired simplicity, choice, transparency, costs and care.