Why Private Payers Are Slowly Adapting to Value-Based Care Approaches


Journal of Clinical Pathways spoke with Dawn Holcombe, MBA, FACMPE, ACHE, Director, Oncology Council, National Association of Managed Care Physicians (NAMCP) Medical Directors Institute, regarding the reasons private payers are making the transition from traditional reimbursement models to value-based models at a slow pace and how Oncology Care Model (OCM) performance results may impact this transition.

Mr Bessette: While government payers are transitioning from traditional reimbursement models to value-based models for oncology care, why are private payers making this transition at a slower pace?

Mrs Holcombe: Medicare has thrown a bomb in the concept of performance management when they created the oncology care model.  It may or may not be as successful as they want. We could talk for hours about OCM by itself, but what we are learning as we look at the OCM model is that CMS has figured out a way to take all claims data for the attributed beneficiaries and members and simply hand it to the practices. This data includes all costs of care for the attributed cancer beneficiaries, even non-cancer related costs such as cardiology and hypertension. This is a bomb because the OCM program makes the practices accountable for those total costs of care, which has been the missing link in looking at quality and performance. Until now, we have treated patients in isolation by specialties, and those silos have not gotten us anywhere. The OCM program is encouraging practices to consider the treatment of the patient in totality, and to recognize where co-morbidities might affect the total cost of care. There is only one pot of money to cover healthcare, and we are still trying to figure out how to manage that more effectively.

Pharmacy benefit managers are focusing on one small piece of the puzzle. Even the clinical pathways that we have are focusing on one small piece of the puzzle. If you are not looking at your patient as a total entity, that broken leg may or may not be related, but the treatments and the cure for that are going to affect and impact the treatments and cures that that patient may be going through simultaneously for cancer care. We have to switch our focus and our culture towards looking at total cost of care.

Now that does not mean making the doctors fully accountable on a risk basis for that total cost of care, but we have to start to recognize the importance of managing the patient as a whole being and make that part of the dialogue. CMS started the ball rolling by providing the data. Most physicians are still struggling with how to analyze that data and to integrate this new information into practice, but at least it is now part of the equation for Medicare patients in the OCM program. That is why private payers are slower to transition into this value-based discussion with CMS, simply because CMS has figured out how to share total cost of care data with the physicians and the private payers have not. 

In general, there are two easy answers as to why this transition is slower for private payers. The first has to do with technology. Private payers often do not have the ability to slice and dice the data the way they need to in order to be able to make this an active part of an ongoing conversation. We need to assess cancer care in a more detailed manner, to determine the existence and impact of patient acuity and severity, before we can address better patient management. 

The second answer is culture. Private payer culture is not inherently built to share data with the providers. They tend to sit back and evaluate the providers and the providers may see that they get a different fee schedule, but it's not part of a two-way conversation about information.

Benefit design is a challenge for these private payers because they have to report to the state what their benefit design, premiums, and all their financials are going to be, and it has to be done in advance. That is not something you turn on a dime very quickly.

Then the last thing I would say is that so far, the value-based models have not proven that there is sustainability. We all know that when you design a program and you are looking to share savings, that can be a shrinking pot once you take care of the low-hanging fruit. Furthermore, when an infrastructure has been created to change how care is delivered, if there is not a way to continue the support that infrastructure once the low-hanging fruit have taken, it is going to be very difficult to move forward.

This is a very complex question and I am working with payers, employers, and business coalitions to try to figure out how to take the simple steps to start. One of the first steps is an oncology profile that we have developed through the NAMCP Medical Directors’ Institute Oncology Council. In this profile, we are conducting a pilot project that shows payers how we can take three years of their claims data and give it back to them for discussion on the table with providers, not only bucketed by disease and by providers and other key information, but also measuring the acuity of the patients. We will see some interesting information come out of that and plan to change the discussion between payers and providers moving forward.

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