Private Payers Slow to Partner with Health Systems on Value-Based Arrangements Last Updated: October 13, 2016
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Two-thirds of Premier C-suite survey respondents are exploring provider-based insurance as they perceive limited willingness from private insurers to share risk in the transition to value-based payment

CHARLOTTE, N.C. — While many providers are moving rapidly toward implementing value-based care models and reducing preventable readmissions, admissions, complications and other costly conditions, commercial payers have lagged in terms of value-based agreements, according to a Premier Inc. (NASDAQ:PINC) C-suite survey.

Premier, a leading healthcare improvement company, surveyed health system C-suite leaders to understand the current landscape of value-based partnerships between providers and private payers.

The findings suggest a lack of access to appropriate commercial payer arrangements is causing health systems to explore alternatives.  In many states, this is driven by the slow movement of commercial payers toward new value-based payment arrangements with integrated delivery systems and clinically integrated networks (CINs).

Sixty-six percent of C-suite leaders surveyed 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. Factors influencing this interest include lack of collaboration in terms of shared accountability and transparency, including necessary claims data to manage care and share risk.

However, the survey found that respondents are working together more closely with insurance companies on care coordination (45%) and front-end incremental payments to primary care physicians for care management (42%).

“Without high-level, meaningful value based payment partnerships, providers must make on all the upfront investments in the cost of building CINs, new technology, and performance improvement and care redesign efforts themselves,” said Joe Damore, vice president of population health management at Premier. “Providers are increasingly growing frustrated with some insurers’ limited interest in sharing the savings these care improvements generate. Slow action by some commercial payers to assume accountability and be transparent with providers limits progress in today’s healthcare environment where value is the economy and measurement is key currency.”

Key findings of the survey include:

  • Shared risk in alternative payment models: Only 28 percent of healthcare C-suite leaders reported their health systems participate in shared savings contracts with commercial payers. Conversely, providers are 100 percent accountable for moving the needle on improving quality and reducing costs in order to receive maximum payment through Medicare pay-for-performance plans and the Medicare Access and CHIP Reauthorization Act (MACRA) in 2017.
  • Splitting investment fairly: Only 13 percent of respondents report shared investment in electronic health record infrastructure, even though expanding these systems could help integrate and improve care across the continuum, as well as enhance preventive and chronic care management programs.
  • Focus on increased transparency and accountability: The survey found limited collaboration with commercial payers in terms of regular updates on efficiency and quality performance to increase transparency (30%); sharing claims data to better manage the cost, quality and coordination of care (22%); and joint goals and measures of success (30%) to align the payers and delivery systems.

“Premier has helped us navigate this new terrain, providing strategies to optimize our partnerships with health plans and create shared accountability in the continued shift towards value-based alternative payment models,” said Dr. Shane Peng, president of physician and ambulatory services, SSM Health. “This issue becomes even more critical as alternative payment policies like those incentivized by MACRA begin value-based rewards/penalties based on performance in 2017. These models require ever-increasing scale that can only be achieved if commercial payers are willing to evolve these relationships to provide timely, transparent information on a provider’s value-based performance and share meaningful financial gains produced by improved performance for an attributed population.”

“Premier works closely with providers to cultivate successful relationships and new value-based arrangements with payers, fostering trust and understanding between the two parties to ensure success in today’s era of value-based care and payment. We hope more commercial payers will move forward shared-risk agreements in 2017 to permit providers to scale their efforts and costs on value-based care,” said Damore.

Survey Methodology

The survey was conducted online, with the results based off responses of 60 healthcare C-suite leaders (CEO, COO, CMO, CFO, CIO or CTIO) during June 8 – July 25, 2016. Participants were selected and invited to join the panel by Premier prior to survey administration.

About Premier Inc.

Premier Inc. (NASDAQ: PINC) is a leading healthcare improvement company, uniting an alliance of approximately 3,750 U.S. hospitals and more than 130,000 other provider organizations. With integrated data and analytics, collaboratives, supply chain solutions, and advisory and other services, Premier enables better care and outcomes at a lower cost. Premier, a Malcolm Baldrige National Quality Award recipient, plays a critical role in the rapidly evolving healthcare industry, collaborating with members to co-develop long-term innovations that reinvent and improve the way care is delivered to patients nationwide. Headquartered in Charlotte, N.C., Premier is passionate about transforming American healthcare. Please visit Premier’s news and investor sites on www.premierinc.com; as well as Twitter, Facebook, LinkedIn, YouTube, Instagram and Premier’s blog for more information about the company.

Contacts

Kate Enos,   |   Kate_Enos@premierinc.com   |   202.879.4105