The COVID Reset: Reimagining health care delivery and reimbursement

Dr. Summerpal Kahlon

The COVID-19 pandemic significantly altered the way we think about health care and the importance placed on issues that we have long struggled to not just solve, but even build consensus on the root problem. It has challenged the full spectrum of health care stakeholders – consumers, doctors, insurers, public health officials, and others – to think differently about how to keep people healthy, how to treat them when they are unwell, and how to pay for both. As a result, both payers and providers, particularly health care executives in the C-suite, are increasingly interested in value-based healthcare. Health care delivery and payment are undergoing a transformation, and the result points toward a better experience and better outcomes for all.

During summer 2020, 288 healthcare executives ranked their top ten priorities in a survey commissioned by Change Healthcare and the HealthCare Executive Group (HCEG). The Industry Pulse COVID-19 Flash Report found that, as a result of the pandemic, health care stakeholders re-ordered eight of the top ten priorities that executives were asked to rank just eight months prior. Consumer experience ranked as the top priority with accessible points of care (for example, telehealth, wearables, retail clinics), health care policy, and social determinants of health moving up the list. Each priority is intrinsically linked to, and has a distinctive role in, value-based care and payment transformation––models that nearly half of respondents are increasingly interested in adopting.

Breaking Barriers

Prior to COVID-19, there was certainly fatigue surrounding the topic of value-based care. The resurgence of interest can be attributed to how the pandemic highlighted how all parties can benefit from the shift from volume to value with a payment model that locks in revenue and a delivery model that offers greater flexibility, integration, and coordination.

Office closures and delayed procedures continue to cause financial hardship for physicians who operate fee-for-service practices. Without the digital tools that help make health care more accessible, pre-built networks that help physicians know where to send patients for lab work or specialty care, and the actionable data necessary to make informed decisions, the hardship is much greater. Practices with value-based models were better positioned to weather the pandemic’s impact as they were afforded predictable revenue, pre-built networks, care coordination, and integrated care teams. In particular, these models afforded physicians the flexibility required to be more innovative in their care delivery, with less imperative for providing care in a traditional fee-based model.

The pandemic broke down multiple barriers that led to innovations in health care delivery, including mobile monitoring, mobile urgent care, and in-home treatment to replace care that would have typically been provided in an emergency room. It also accelerated digital transformation––particularly increasing access to telemedicine. While telemedicine has been around for more than a decade, friction among stakeholders regarding reimbursement and regulation hindered its adoption. Although telemedicine use has grown exponentially during the pandemic, payers are starting to step back and focus more closely on what they are reimbursing and the rules behind it. Meanwhile, the Centers for Medicare & Medicaid Services clearly stated its support for the growth of telemedicine while carefully considering what regulations should govern its use.

Reconsidering Reimbursements

Regulations aside, providers and payers have multiple reimbursement models to consider when it comes to value-based care. These alterative payment models include capitation, in which a physician or hospital is paid a fixed amount per patient over a fixed timeframe. This is particularly attractive for smaller physician groups and may be the easiest to implement when transitioning from traditional fee-for-service to value-based care.

David Gallegos

This model also affords greater flexibility in health care delivery such as offering telehealth or in-person visits, incorporating services that address social determinants of health, and other opportunities that allow providers to tailor care to the individual as well as the broader population under their care.

With prospective bundled payment models, providers typically receive a fixed amount for an episode of care. The amount covers all services over a defined period of time or to treat a specific condition such as a knee replacement. If treatment costs are less than the set amount, providers can keep a portion of the savings. In this situation, a network of coordinated providers will share both financial risks and benefits from cost savings. The pandemic highlighted that established networks and care coordination are important.

Pay-for-performance models may benefit resource-constrained small or rural practices that require more time to make the transition to value-based care. The adjustments necessary to manage value, including staff training, process development, and data access, can take time to establish. As with all alternative payment models, physicians must monitor and report quality and cost information. A practice taking the long view in transitioning from pay-for-performance to total cost of care models can benefit in adapting to an effective model over time. Ultimately, taking the time to train staff and establish a cost-effective operation can ease a smaller practice into a model that may ultimately be easier to maintain with the major investments required to jump immediately into a more advanced payment model.

Reimagining Healthcare

Regardless of the specific reimbursement model, value-based care requires that all health care stakeholders possess the ability to leverage data. Data-driven action is critical to understanding the needs of individual patients to provide the care they need. While there is not always the opportunity for all members of the care team to know them personally, you can use data to understand and coordinate care for those you serve. This allows you to personalize care engagement, elevating the entire experience. To make this a reality, you must evaluate operations alongside reimbursement models.

Providers must understand the competition in their geographic area. They must also understand the true costs of their services. They must look at their processes and their personnel. Do you have a structure where the doctor is the only care provider? Do you need a nurse practitioner or a nutritionist? Where are you sending patients for labs or specialty care? Are you collecting the right information and how are you sharing that data with other stakeholders? Do you have insights to what happens with your patients when they aren’t in your clinic? These are just some of the considerations facing providers.

Competition and consumerism are key drivers behind value-based care and, more generally, the financial future of both providers and payers. Practices and health plans are all looking for the competitive edge that sets them apart in an increasingly crowded marketplace. To stay competitive – particularly now––it is critical to think differently, to act differently, address needs differently, and finally confront the problems health care has long struggled to solve.

The issues plaguing U.S. health care require an industry-wide approach and a shared idea of what the solutions are going to be. This is why value-based care is so important. Fortunately, the Industry Pulse COVID-19 Flash Report revealed increased alignment between payers and providers regarding interest in value-based care, as well as other issues. But before the pandemic, the 2020 Industry Pulse Report identified record-level polarization. More recent research is signaling a step in the right direction. A global crisis may be the black swan event that will catalyze transformation.

David Gallegos is senior vice president, Change Healthcare. Summerpal Kahlon is a value-based care expert and assistant professor of internal medicine at University of Central Florida.