Risk Adjustment
The Good, the Bad, & the Unknown: What the Pandemic Means for Value-Based Care
Written By
Sishir Reddy
Co-CEO

In this article:

  • What shifts in value-based care mean for health plans.
  • How to understand program performance and the pandemic’s impact on risk score.
  • Navigating analytics to improve program success and patient care.

 

COVID-19 continues to create uncertainty for healthcare organizations, particularly as the new Delta variant moves across the globe. But one possible glimpse of hope that has arisen during the pandemic is the promise of value-based care. The model, also known as pay-for-performance, has been around for years as part of a broader shift that incentivizes quality of care, rather than quantity, as typically seen in fee-for-service models. It’s not all rosy, but with the new, unique demands COVID-19 puts on organizations, value-based care might just be built to last.

 

The Good

 

Beginning in March 2020, healthcare utilization fell drastically as people elected to delay elective care and practice social distancing. Organizations using a fee-for-service model were particularly impacted by this trend, as declines in revenue forced many to furlough staff or shut their doors for good. But those participating in value-based arrangements have shown more resiliency, in part due to their ability to conserve resources while leveraging virtual tools.

Organizations that use value-based care are also able to adapt to new capabilities by using prospective payments, which are typically not covered under fee-for-service arrangements. These include data infrastructures to monitor and manage patients, the rapid creation of telehealth platforms, and the ability to bring on staff to support care coordination and information sharing. One example is Providence St. Joseph Health, which created a tool that uses predictive analytics to determine COVID-related interventions.

This type of data use might point to something even larger: That interoperability not only works but is here to stay. During the onset of the pandemic, face-to-face interventions plummeted, yet the need to understand, track, and document patients’ health status only rose. This accelerated the need to share patient data, and providers that had some level of interoperability in place were able to report COVID-19 cases directly to the federal government, which in the past would have needed to be faxed or mailed.

And given the Department of Health and Human Services (HHS) finalized its interoperability rules last year – which aimed to get patients better access to their health data via digital tools – we can expect this to only increase between payers, providers, and developers. However, payers will need to ensure they have the technology to both process adjudicated claims and foresee additional incoming claims as payers shift toward capitation models.

Given value-based care’s demonstrated resilience and warm welcome of technology, it makes sense that it’s growing—the global market is expected to increase from $1.5 billion in 2020 to $4 billion in 2025. It also makes sense that more organizations are looking to join it, with 81 percent of health systems reporting they are likely to increase their adoption of value-based models this year.

 

The Bad

 

Value-based care faces its own set of challenges in a world forever changed by COVID-19. For example, although organizations that use pay-for-performance were less affected by decreases in utilization, Accountable Care Organizations (ACOs) could be at risk of missing quality targets and data reporting deadlines due to providers focusing more on treating and preventing COVID-19. This could have a knock-on effect of ACOs not meeting their quality metrics, which could impact ACO growth. Given that ACO membership has plateaued already, this is likely to cause it to slow even more.

We’ll also likely see risk scores fall in the coming years. This is primarily due to fewer elective procedures and office visits, resulting in fewer diagnosis codes and claims being captured. The pandemic has also had the effect of accelerating the need for care, resulting in providers having less time to look at claims and diagnosis codes, which could negatively impact risk payments. There are some indications that scores could fall from three to seven percent this year, which will only increase if the pandemic continues. This could have a compounding effect if more variants spread.

COVID has also shown just how dramatic economic and social disparities are in the United States: African Americans are almost three times more likely than whites to get COVID-19, and almost 35 percent of the disease’s deaths were staff or occupants of nursing homes. This all points to the need of prioritizing care of the most vulnerable populations, including minorities, the elderly, and non-English speakers. This requires strategies that incorporate social determinants of health, such as access to transportation, healthy food, and social services.

 

The Unknown

 

For as much as we’ve already seen and can expect, there is still a lot we’re unsure of. The economy is a good example. Continued unemployment is likely to drive up enrollment in Affordable Care Act (ACA) plans and Medicaid. These are member populations not seen before, so their utilization will be different. Their coverage could also fluctuate, and they might not stay for long. This financial uncertainty is also likely to cause an increase in Medicare Advantage (MA) members.

There are also legislative questions. The recently introduced Value in Health Care Act looks to increase shared savings that ACOs get from the federal government in an attempt to stop the slide in participation seen over the past two years. The bill will increase the amount of shared savings ACOs can get, as well as modify the risk adjustment process that determines if they hit spending thresholds that better reflect factors that providers see, such as community risk variables. This could have a net effect of shifting risk adjustment level cap from three to five percent.

 

The Takeaway

 

For any organization to succeed in this post-COVID world it’s evident that having a full understanding of your organization is the only way to prepare for an uncertain future. This means having clear and deep insights into spending trends, utilization, and operational and financial strengths and weaknesses. And there’s one way to get all of that: Analytics.

Analytics hold the potential to drive value and improve program success. To unlock these opportunities, organizations need to aggregate data from multiple sources, analyze it to determine the interventions that best serve their overall and individual segment needs, and execute them.

We’re in uncharted territory, but it’s likely that value-based care, with the help of analytics, will bring positive change that builds a more sustainable healthcare system for the future.

 

Episource arms clients with simple data, tools, and insights that empower them to navigate the chaos of the healthcare system. Learn more about our analytic tools and other offerings at Episource.com

Sishir Reddy
Co-CEO

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