One size does not fit all in value-based reimbursement

With so much emphasis on value-based reimbursement, healthcare professionals may wonder what all the fuss is about. It's natural for them to ask: "What will this really do for us-now and in the future?"

To answer that question, Medical Economics recently spoke with Daniel K. Zismer, Ph.D., co-founder and managing director of Castling Partners, a Minneapolis-based healthcare management advisory firm, and co-founder of the new Keystone Culture Group.

Zismer discussed current value-based care and what's to come for practices of all sizes. With 30 years in the field, he is also a professor emeritus at the University of Minnesota School of Public Health, and an adjunct faculty member at the university's medical school.

Medical Economics: Value-based reimbursement is an umbrella term that can sometimes feel rather unwieldy. How can physicians of all practice sizes put it into perspective?

Daniel K. Zismer: Value-based reimbursement is a concept and a construct. It's not so much about price as the total cost of care and the value proposition for patients over time.

Physicians bring remarkable value to the patient experience. Still, they are confronted with a process they can't totally control, especially when it comes to managing the total cost of that care over time. That's more difficult when patients access multiple small practices that aren't connected by common methods of communication and of coordinating care together.

ME: There's so much emphasis on "value." What does that ultimately mean to providers?

Zismer: Healthcare professionals ponder how to play a meaningful role in the entire construct of what is required to create value-and how to be reimbursed for that. Remember, more than 70% of the healthcare dollar goes toward people with chronic conditions. 

Consider how your contribution to the care of a particular patient with a chronic condition affects the overall cost and effectiveness of that care. If you're in a small practice, how do you do that? Truthfully, you don't when you're in a system that cannot control or manage processes of care once the patient leaves the office. 

ME: What should physicians in these practices do?

Zismer: I believe physicians in smaller practices will see value-based marketing going on around them in an attempt to take patients into participating insurance plans and on to participating providers that have established capacity and infrastructure. For example, if a patient works for a mega-corporation and needs back surgery, they need to go to the large regional or national integrated health system in-network or incur a huge co-pay.

Providers must position themselves in the type of organization that's able to access and manage these kinds of contracts from insurance companies and the government. Or they should position themselves in a market where patients that the practice attracts don't have to worry about issues like being “in-network.”

Next: The big question

ME: The big question: How can a smaller practice compete with larger practices under value-based reimbursement?

Zismer: To play to win in this environment, practices may have to do something many don't want to do-be part of that larger, more integrated, sophisticated health system that can go upstream while contracting with both insurance and the government.

The average health system has fewer than five payers that matter to the whole revenue stream in a major way. With such a consolidated payer marketplace, there really isn't a payer interested in trying to aggregate and contract separately with hundreds of small medical practices.

Payers are more attracted to larger, more integrated sophisticated systems of care delivery that have a more resilient economic model. Smaller practices should get organized and positioned to play in this era of experimentation, understanding that health insurance providers are interested in creating value-based programs. They may not, however, be interested in creating models and methods so that any provider of any size and scale can participate with them.

ME: With no "givens" yet with value-based reimbursement, can we "assume" anything now?

Zismer: To many professionals, this all feels like an experiment. They wonder, “How big do I have to be to be in the game and play at all?” and “Will any of these future experiments really help small practices?”

Truthfully, the governmental reimbursement system will be an experimental science for years to come. None of that is designed to help [small practice physicians, which] is really more of a partisan political issue.

The program will most assuredly not exclude practices, but it may get more expensive to participate, with more paperwork, more demonstrations and more data collection. This will continue to drive provider-side consolidation at an accelerated rate.