Value-Based Payments: Easy to Envision, Difficult to Realize
Television and film provide a surprising glimpse into the past and future. Consider the much-loved Back to the Future, where Marty McFly travels to October 2015 from his cozy 1985 confines. In an unscientific way, I spent some time looking at the first few scenes in the movie’s fictitious 2015 to compare them with how life actually turned out.
VBPs are payer-provider contracts structured to provide payment and/or incentives for better outcomes. Today, 95 percent or more of our provider contracts are in pay for volume fee-for-service structures (not VBPs).
Our crystal ball writers would probably score 25-30 percent on future predictability, with the huge misses being flying cars; hoverboards (this one is close as there are self-propelled skateboards, they just don’t float); 100-foot 3D holograms; and overly cartoonish wardrobes for teens. Examples of the things they did get right are just as interesting: full-screen video chats (and therefore the internet); hundreds of TV channels; stand-up video games as unpopular; and drones carrying cameras.
In reality, our ability to predict what will happen in the future is incredibly poor. When we look at something that doesn’t exist yet, we are much more likely to think about something totally off base (i.e., flying cars). This struggle to accurately predict the future has applicability for one of the big challenges we are facing today in behavioral health: building and implementing value-based payments (VBPs). VBPs are payer-provider contracts structured to provide payment and/or incentives for better outcomes. Today, 95 percent or more of our provider contracts are in pay for volume fee-for-service structures (not VBPs).
Concept confronts reality
The stark reality is we are at the very beginning of the adoption curve of VBPs. While we have a lot of evidence that VBPs are a good idea – namely research to support structuring payment differently leads to higher value – we don’t yet have a broad experience base to fall back on.
Further, the number of modifications required to set up a single provider in a VBP is significant. For example, Beacon Health Options’ (Beacon) finance, strategy, clinical, contracting, system and operations teams must do things differently to support a VBP. Additionally, providers must change their processes for the same core set of operational and clinical capabilities, as well as think through the complicated calculus of how to pay their staff in a model where weekly fee-for-service billing is not the measure of productivity.
No wonder, then, that providers are reluctant to enter into large-scale VBP models. Consequently, Beacon has started to de-mystify some of these challenges. Today, we have a working payment mechanism that uses our existing systems to pay providers under VBPs and capture and report on the data. We are constructing a playbook on what service centers and engagement centers need to know as VBPs come to their area, and our product innovation team is leading the way on the clinical models needed to support these VBP arrangements.
While we have a lot of evidence that VBPs are a good idea – namely research to support structuring payment differently leads to higher value – we don’t yet have a broad experience base to fall back on.
These changes to support VBPs may be the future’s reflections of the past. Using a TV example closer to today than Back to the Future, episodes of Shark Tank from 2009 show the “sharks” debating with a would-be entrepreneur about bringing stacks of laptops into physician waiting rooms so people can access non-email information while waiting for their appointments. Note that this episode was a few years before the launch of the iPhone.
The lessons from Shark Tank and Back to the Future are critical. As we move farther afield from what we know, we must allow for an increased lack of precision for the first few programs we launch. The inverse is also true, though: Not every 100-foot hologram that we think we see in the future will turn out to be real when we get there.