Value-based payment – A place where healthcare needs to go to keep premiums (costs) down

Now that we are entering the home stretch of the year, many health plans are turning their attention to reimbursement innovation, where many, if not most roads lead to value-based contracting. A recent McKinsey article indicated that premium reductions of 18% have been achieved using value networks, compared to standard, broad-based network products. McKinsey says that “…a provider’s level of ‘skin in the game’ is among the most important predictors of the impact of value-based payment. Finding ways to raise the stakes (both positive and negative) for providers to adopt and perform under value-based payment models is therefore likely to be essential to transforming health care delivery.”

IPG is both a pioneer and a leader in working with health plans to use value-based contracting as a means to address escalating device and site-of care (SoC) surgical costs. IPG enables informed device selection, promotes transparency and increases awareness of SoC alternatives which benefit health plans, providers and members. Regardless of current contracting strategies and methodologies, we can help you address current unsustainable utilization trends and create effective provider incentives for selecting more cost-effective devices and SoC alternatives.

Here’s what a forward-thinking Midwest health plan executive said about it: “Inside of a bundled program, IPG becomes a great resource to our provider partners to control implant costs. As those savings are realized by partners, they become more willing to go deeper into the value discussion and shared risk. A place where healthcare needs to go to keep premiums (costs) down.”

Ways IPG helps engage providers to reduce device cost and facilitate SoC shift, regardless of health plan current contracting methodology:

1. Standard device carve-out model, where IPG bills separately for the device portion of the procedure. This model not only lowers price variability and device price trend, but also drives immediate savings for health plans and the member based on optimal device selection and site of care. With no cash outlay in this model for the device, the provider can perform the procedure in the lower cost ASC setting, benefiting the facility, health plans and members. To mitigate having the member receive multiple bills for their procedure under this construct, a co-pay benefit structure can be used at a procedure specific level; the financial entity holding the bundle collects the aggregate procedural copay and IPG is paid first dollar for the device. This option provides the greatest benefit to health plans and providers. 
2. IPG procures the device for the bundled holder. This model is set up where IPG sells the device to the bundle convener and the convener pays IPG, with IPG managing the device utilization requirements to meet health plans’ procedural cost targets. The benefit is that the member receives one claim, but the downside is that unlike the savings created in Option 1, health plans do not participate in device pricing benefits and it creates significant cost pressure on the plan due to the shift of price leverage onto the bundled holder. Additionally, the provider must outlay the cash for the device, which often causes cherry picking of procedures, sending high-cost procedures to the higher cost HOPD, while having health plans pay significantly more facility-based charges on more routine procedures.
3. Rep-Lite model (this model can be integrated with any of the other options). IPG works with Rep-Lite and the targeted facility to integrate clinical specialist resources into the facility’s operational protocol. This resource is manufacturer-agnostic; however, it promotes the use of more cost-effective device options when clinically appropriate, driving lower costs for health plans. The model also scales quickly where additional procedures can be done in the lower-cost setting because a clinical resource is already integrated within the facility and surgeon’s workflow. The agnostic nature of the model allows for continued cost improvement over time because perverse financial incentives are removed.
4. IPG brings in a convener.  Health plans and IPG decide who holds the bundle; the entire care team, or an individual care team member such as facility or physician group. Under the overall care team model, a contractual relationship is established that fairly shares clinical and financial risk across all parties. The benefits are that it lowers surgical costs for health plans and members, and creates competitive pricing from manufacturers who want to participate. It is also easily scaled to lower cost ASCs who want to offer more complex procedures and improves cash flow and case volume for the facility.