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Blue Cross and Blue Shield of North Carolina is helping make healthcare more affordable with value-based care
To listen to all PwC Next in Health podcasts, click here. Subscribe and listen to all episodes at your convenience via any device at Apple Podcasts and Spotify.
Overview
Tune in to PwC’s Next in Health to hear Troy Smith, Blue Cross and Blue Shield of North Carolina's Cost of Care VP, discuss the importance of making healthcare more affordable through a variety of value-based care models. Topics include:
- The state of value-based care models and how they are evolving, implemented, and measured
- Shifts from incentive to downside risk models and how healthcare is being delivered to diverse populations
- Managing challenges and risks of these models such as creating contracts and standardizing quality
Topics: value-based care models, healthcare, health, health services, innovation, consumers, primary care, strategy, transformation, insurers, providers, commercial, affordability, health equity, risk and management, metrics, technology
Episode transcript
Find episode transcript below.
Igor Belokrinitsky (00:00:04:11):
Welcome to the Next in Health Podcast. I'm Igor Belokrinitsky, I'm a Principal with PwC Strategy&, where I'm lucky enough to help the leading health organizations with their strategies and operating models. We have a fascinating conversation for you today. On the podcast, we continue talking about the importance of making health care more affordable through a variety of value-based care models. We have seen a proliferation of these models over the past two decades or so, and a lot of experimentation trying to figure out what works. And a lot of this experimentation has been driven by the public sector, by CMS, with the commercial sector following generally. But it does not have to be that way. And there's a lot of room for commercial players to experiment and innovate and create new value based models that ultimately make healthcare more affordable for consumers. We have three folks with us today who are very knowledgeable in their space. First of all, we are very happy to welcome Troy Smith to the podcast. He's a vice president of Cost of Care and Value Programs at Blue Cross and Blue Shield of North Carolina. He brings a lot of experience delivering value-based care models in the North Carolina markets, everything from the traditional cost of care, primary care models to the specialty cost of care models and bundled arrangements. We also have with us our colleague John Andrewes, he is a Principal with PwC Strategy&, he is a leader in our Clinical Transformation Practice, and he spends a lot of his time working with both government sponsored as well as commercially funded health insurers on driving affordability. And last but certainly not least, Tori Fancher is a PwC director in our Clinical Transformation Practice, and she has spent the last several years in the industry as well as at PwC building and operating value-based care programs. So here you have three people who are on the front lines of helping to make healthcare more affordable and very excited to have them, very excited to hear from them. Welcome to the podcast.
Tori Fancher (00:02:10:19):
Thank you for having us, Igor.
Jonh Andrewes (00:02:12:09):
Thanks Igor.
Troy Smith (00:02:13:09):
Thank you.
Igor Belokrinitsky (00:02:13:08):
Excellent. So let's maybe set the table first and then we'll dive in. I'm wondering if you could sketch out for me and for our listeners, sort of the state of value-based care today. Where has the model or models been on their journey? Where are they at today? What's kind of the state of the industry?
Jonh Andrewes (00:02:34:08):
Yeah. Today, value-based care continues to be in the front of the affordability discussion for us. It's hard for me to think of a client that we're not discussing affordability in some way, shape or form with the topic of a path to value maturing that path to value. And what are the things that they can do to help better manage their misuse, overuse, underuse of care that we all talk about in our healthcare system, and value-based care is a key weapon in that story.
Troy Smith (00:02:59:10):
Yeah, I'd echo that. I think we're seeing a range still of value-based care. I think when the ACA came out, we saw a lot of plans starting to use value-based care, perhaps as a sweetener. How do we get to a lower price point? How do we offer you shared savings in a way to perhaps reward you for taking on additional risk or an additional discount? And then we saw a lot of venture capital based startups come in and say, well, we're ready for full downside risk. We're ready for full cap. We saw a lot of companies try to negotiate favorable terms in the MA space on that. When we see the normal everyday provider though or the normal everyday system, they are taking probably a more cautious approach. How do we start off with like an upside only model? How do we ease into this? How do we ourselves get our own financial and clinical processes in order before we go and take on full downside risk? These are the elements that we need to get to for downside risk, for example. So it's still a pretty wide range but I would say that the trend is moving more towards downside risk, increasing accountability as we look at value based contracts.
Tori Fancher (00:04:09:21):
Yeah, it's a good point, Troy. I think too, the shift that you see from more of these incentive-based models to downside risk is not only fueled from sort of familiarity with the market, familiarity with the types of models out there and getting more comfortable with delivering on them. But you're also seeing the demographic shifts, right in the 65 and older age group having an older population that's fueling chronic and complex care management needs. So how do you think about affordability through the lens of managing diabetes, congestive heart disease, things like that? And so we're really starting to see value based-care take an uptick because of the comfortness that health plans and providers are now having with value-based care, but also the need to think about how we're delivering care to these aging populations.
Igor Belokrinitsky (00:04:59:11):
Very helpful and appreciate you giving us sort of a point in time lens on where value-based care is today and now maybe let's look to the future a bit. Every health organization is trying to figure out what model they're going to participate in or models and how quickly they should move. And so maybe if you would, tell us a bit about what are some of the forces that are going to accelerate value-based care, evolution and adoption? What are some of the things that might slow it down kind of headwinds and tailwinds? Tori, maybe let's stay with you and hear your thoughts first?
Tori Fancher (00:05:33:25):
Yeah, thanks, Igor. So there's a push and pull with value-based care and kind of who owns the risk, right, in the traditional fee for service model. You have the health plan really driving a number of the capabilities, provider delivering that care, that per unit basis. But as you move into more of these shared risk models and global risk and capitation, there's really the push to get the provider to a state that they know how to take on risk and what patients that they're responsible for and kind of how to manage that risk. So there's a bit of that push and that pull, encouraging delivery systems to get ready and feel comfortable and understand what that level means, whether that's through enabling technology solutions, thinking about their care delivery model, thinking about the types of team and staff and talent that they have. And providers are wanting to own more of that, more of that risk, more of that savings opportunity. We heard from some of our ACO partners that they're hungry for risk under the right model. So they really want to understand what their goals are, how they're going to achieve them, and get the data in their hands to do that. I think another way that we're seeing the market shift to support providers that are not the traditional large delivery systems or academic medical centers as you're seeing these larger aggregators or IPA’s, Independent physician associations that are bringing together groups of providers, whether they're mid-tier multi-specialty practices or primary care providers, and kind of grabbing these individual providers, putting them into a singular contracting entity to pull that risk, but also builds up their capabilities around taking on more risk. So just a couple of the trends that we're seeing around that push and that pull to kind of push more risk downwards, but also to incentivize that provider and allow them to achieve those additional savings opportunities.
Troy Smith (00:07:21:00):
I think we're seeing also employer needs shift on this as well as our customers are asking more about where they can see value, where can they look at health care programs beyond perhaps wellness programs let say. There's an acute focus on what the health plan is doing to bring value to customers and we've seen some employer groups, we've seen also affiliation groups of employers start to propose their own ideas around how value-based care should work. In addition, you could also look at what we're doing with health equity, drivers of health, a lot of the things that we're looking at as far as trying to look at food security, housing security. Those are all things that are precursors to overall cost of care, stability, let's say. So as we expand the levers that we're looking at as far as trying to impact patients/ member wellness or health, value-based contracts are a great construct to be able to fold in those elements. And then some of the other things kind of top of mind. We're also seeing this interest in standardization, and this can come through in a couple of different ways. One way might be how are we looking at quality measures? Anecdotally, when I've talked to some of our provider partners, every time a payer comes up with a new quality metric, that could end up being a half or a full FTE just to keep up with the reporting on that quality metric. And so the more that we can align cross payers within a state with CMS, with perhaps the Medicaid program in the state or with other national payers being able to pare that down into a standardized set of quality measures, I think is important and helps improve administrative burden for everyone. Another way to look at the standardization might be attribution. So if we're looking at how do we align members to providers, how do we use claims, how do we use PCP selection, many other tools or algorithms, let's say, all of those things fit in to say, how do we make this more predictable and easier for providers to access from a contracting perspective? These are sort of things I think will be precursors to seeing an expansion of value-based care in the near future.
Jonh Andrewes (00:09:34:11):
Yeah, I think it's well said. Also just in telling that sort of value story, especially to the larger ASO customers there really is this marriage of value-based care meets cost of care or affordability. I think the more plans can do and I’m saying plans, but it's not just plans and providers anymore. I mean, we're talking about nontraditional entrants, larger tech companies that five years ago weren't in the space, they're in the conversation now. But I think regardless of who's owning the risk, the more we can do as an industry to marry cost of care, the quality that Troy just talked about into these models and start to understand which of these metrics correlate most with affordability, with bringing costs down, not just necessarily old trend metrics like admits per 1000, but looking at things like biosimilar use of generic. These things have to start more and more be embedded in the foundation of the contract and essentially incenting the entities to use these tools more effectively. And I think we're starting to see that the stories getting better. I think the more we can do, the more our clients and the industry is going to be able to tell a better story to those that they're trying to sell these products to.
Igor Belokrinitsky (00:10:37:11):
Very helpful. And you're laying out some very important elements of adoption around making the measurements more sophisticated as well as more standard helping the physicians come up to speed and be ready to participate in these models. And then there are all of the employers and I'm very curious and Troy, you brought up the employers and it's very interesting to consider. You know, employers have been providing health coverage since World War II. Why haven't they been pushing more value-based care models or maybe wages haven't seen it, but your thoughts on the employer's role in all of this?
Troy Smith (00:11:13:08):
Part of the challenges with employer groups moving into value-based care that they're looking for, how does it relate to the other value elements they are receiving from a health plan? When employer groups come in and perhaps they're working with an employee benefit consultant, they're looking at things like discounts on claims, they're looking at wellness programs. They're looking at overall quality and with value-based programs being able to articulate the value that the reimbursement approach that a health plan is taking within that construct requires a little bit of nuance, and it requires perhaps standardization, as you're trying to say, with this population and this program this is what you can expect for savings. And so I think the lack of standardization or tools across different stakeholders here when we're looking at benefit consultants, employers plans, other purchasing entities involved that can help slow down the uptick that we're seeing in employer groups. And for us, our goal is to provide as much information as we can to say this is how well the ACO is performing, this is what we're seeing and gross savings. This is how we are seeing the end result impact your particular employer group in combination with all of the other things that we're doing on your behalf.
Jonh Andrewes (00:12:37:25):
Yeah, I agree, Troy, and I think Derek couldn't be on the call, but in the commercial segment it is a slightly harder story to tell. And I do think the more specific we can get to that. Like I said before, that marriage of cost of care and value-based care is going to get easier to sell. When you look at the government models, the Medicare Advantage models, they've shown to be attractive models, and there's a lot of reasons for that from the way it seems to reimburse the revenue quality incentives that up that piece of it. And then broadly, the care management that goes along with that, that extended path to value I think makes that segment a little easier to tell the value story. And certainly from an economic perspective to understand it, the industry has a ways to go to continue to refine that value story in the commercial segment. But I think the alternative is going back to where no one wants to go to, which is fee for service. So I think everyone's on board looking at moving this forward.
Tori Fancher (00:13:26:10):
Yeah. John, I would kind of echo that point that I think the reason why we've sort of seen slower adoption in the commercial market is because of how kind of the traditional CMS driven models have funded these programs traditionally, right? You have revenue and premium adjustments based on quality scores and that's funded these programs today. And so for the commercial market, it's really around creating a funding mechanism that encourages adoption and encourages and rewards performance. So it's exciting to start to see that shift a little bit more in the market today.
Igor Belokrinitsky (00:13:59:14):
So let's make this real and let's talk about the great state of North Carolina. Troy, you have been on the journey with Blue Cross and Blue Shield of North Carolina trying to create greater affordability through these commercial value-based care models. So, would you share with us what that's been like and what you've seen, what you've learned?
Troy Smith (00:14:19:05):
Just starting off how we looked at value-based care and this was like eight or nine years ago, is that we saw it as an extension of the Affordable Care Act. We saw it limited to a few segments. Let's just look at it for ACA, maybe a fully insured group. How do we fold that into just kind of standard fare as an incentive program today? The advent of what we did with Blue Premier back in 2018 was a game changer on the commercial side because we said value-based care needs to be the core of reimbursement, not an add on. It's not necessarily an incentive. We view it as critical, let's say, to say if you want to participate in the network, we need to have mutual accountability. We want to have this to be the new framework of reimbursement with our providers as we talk about quality goals, financial goals, experience goals, etc. And how we'd contracted Blue Premier is that every segment that we have ACA, local group, national group, self-insured, Medicare Advantage, every segment that we have, FEP, we want to make sure that we have the appropriate mechanisms in place to talk about. These are your patients, here's what we're seeing for their financial costs, here's their trends, here's where you have the opportunity to improve their quality. I think the broad based nature that we've done in Blue Premier has given us a great base to build off of, not just cherry picking one or two segments per se. But saying that every member needs to be aligned with a value-based contract where we can and working with our ACO partners on driving those results has really come out in the gross savings that we've seen in the program over time.
Igor Belokrinitsky (00:16:02:25):
That's a fantastic story and thanks for sharing it with us. As you all know, one of the biggest challenges in health care, scalability, taking something that works and doing it on a grander scale. So, Troy, your thoughts on how your experience in North Carolina could be applicable in other geographies that have different provider dynamic and different demographics and other differences.
Troy Smith (00:16:26:29):
Right. I think part of the challenge when trying to apply our Blue Premier standard to other markets might be negotiation power of a smaller plan. We are the largest plan in North Carolina and we're able to have meaningful conversations with our ACO partners more straightforwardly perhaps than in a smaller plan. However, I think that's only part of the story. I think the part where I highlighted that it needs to be thought of as core to reimbursement rather than an add on or an incentive program is probably key. If our government entities are looking for more value-based care, if our employer groups are looking for more value-based care, what the market is signaling to all of us is that we need to have more forms of accountability contract changes to say this is how we need to pay differently. So I think the scale that we're looking at here when we're saying how do we get this applied to other markets or expanding into other segments for other plans. It's really coming down to how do you change your philosophy around value-based care? Are you aligned as a reimbursement program first? Then how do you align your infrastructure behind that to achieve?
Igor Belokrinitsky (00:17:41:13):
That's great. Very helpful perspective and we started talking earlier about the importance of bringing the providers along and the difficulty of bringing the providers along, in particular the independent providers that have very different levels of technology and sophistication to be able to support these programs. Tori talked about the push and pull, and I was kind of picturing these providers being pushed and pulled in different directions. So, Troy, what has been your experience in helping providers participate in these models, take advantage of these models, come along and be a part of this solution?
Troy Smith (00:18:18:05):
I think part of it is just trying to be very consistent with messaging, trying to be very consistent with the program. You know, fee for service is still a pretty big part of overall ACO reimbursement even for us. I mean, we're nowhere near like a fully capitated state, let's say. So when you start talking about these are the elements that are at risk, this is how it could impact your overall revenue. This is what we're looking for on performance. It's important to be able to talk to the ACO partners on a regular basis to share with them how they are doing, meet them where they need to be as far as like data sharing and meet them where they need to be and saying these are some opportunities you want to look at. One of the examples that we have at our plan is that we do have a provider engagement team, multiple teams that go out and say, here's your cost of care opportunity or your improvement potential, here's what you can do in the quality or risk revenue space, here's what you could do in the pharmacy space. And I think the combination of data sharing, engagement, trying to be consistent with how you are approaching your program, all of these factors create a base for a plan to build off of and say this is how we want to increase accountability over time at this trust. Really, at the end of the day, it's to create a higher level of trust to say that I will be successful in this new model.
Jonh Andrewes (00:19:38:27):
And I would add, regardless if we're talking about health plans or private equity, any entity that's sort of dipping their toe into health care today is going to evolve. The math is going to lead you to taking on risk. And that's going to mean you're going to have to understand how does value-based care work? How do these incentive models work? I think with us, we've done a pretty good job of designing an architecture that really checks readiness along that path to value. So if you start in the fee for service world, like Troy said, you kind of graduate to incentive-based programs into shared risk, downside risk, and all the way to cap that evolution requires provider’s capabilities, there is math back behind it. Certainly there's a lot of cost of care. There's looking at the specific tangible quality measures but it's also, are they investing in the capabilities to manage that risk? And I think we all saw the market last year where essentially the S&P is down 15% and any value based company, they were down like 38%. So we're talking about significant opportunities to improve the way a lot of these entities that have taken on significant risk do that. It's going to require capabilities and I think we put together a nice infrastructure to kind of test that readiness along the path and make sure before you say give it to me that you're ready and you have the tools to do it and do it well.
Igor Belokrinitsky (00:20:51:03):
Excellent. And, John, you mentioned tools. And just as we're having this conversation about reams of data and metrics that need to be measured and all of these providers that need to be engaged, it seems like this doesn't work without technology. Otherwise it's Troy driving around the state and visiting every physician and having this conversation was a three ring binder. So I would love to hear your thoughts on the role that technology is playing and will play in helping to accelerate the adoption of value-based care and making our care more affordable.
Troy Smith (00:21:25:25):
Yeah, you're absolutely right. There's not enough time in the day to drive through all 100 counties we have, Igor, to be able to have all these conversations. So we do rely on technology in a couple of different ways. The base level is how do you do attribution and how do you do it on a regular basis and how do you align it with your plan processes. If you are waiting for claims based attribution to occur, you have to wait for the run out to occur. So maybe the run out finishes on the fifth of the month. Does the attribution on the sixth of the month, all of this sequencing or this delicate dance of trying to get reports, attribution information to providers has to align with how a plan actually operates behind the scenes from a financial and IT perspective. Once you have that base, then how are you able to communicate performance? How are you able to communicate new opportunities? This is where reporting is essential. So if you're saying that this is what my PMPM trend looks like or how am I doing at my point in time, financial performance, maybe this is where I'm at with my care gaps or what I need to improve on with quality or risk coding. All of these things require great reporting, transparency and access by the ACO partners to be able to grow into a value-based care state. So the technology investments that we're making and expanding every year, they are part and parcel to their strategy to find ways to actually make our ACO partners successful. We want them to hit their shared savings targets because that means our members went. And the more that we can deliver via technology and enable ACO partners to actually achieve their goals, we're fulfilling the mission of what we want to do at our plan, making healthcare better for all.
Tori Fancher (00:23:12:13):
Troy to echo your point about timely, accurate, reliable data and getting that into your partner's hand. It's about that fundamental information that's needed to drive performance. Some of the trends that we see in the market today, not only in the health plan and provider relationship side, but also in vendor technology solutions that we're seeing are really around thinking about how do you get that information into the hands of the provider or that sort of entity taking on risk in a way that meets them where they need to be? So, kind of thinking about the user interface, the user experience, creating a more seamless approach to delivering that information and existing workflows where they see that at the point of service when they're sort of seeing a patient or a member and their information being delivered for that particular individual. So those are some of the trends that we're seeing right now in investments around connecting information needed around value-based care. But all the other pieces of information that are adjacent to and relate to improvements around quality and cost performance, like gaps in care and just access things and self-service information, really kind of creating more of a self-service model for the providers that can get the information where they want, when they want it. In a way that drills down on the information that's most critical, those kinds of next best action intelligence type insights.
Igor Belokrinitsky (00:24:34:19):
Really helpful and appreciate all three of you sharing with us both the strategic outlook on value-based care and how it's evolving, as well as some very practical thoughts on implementing it and scaling it. And I'm very excited to hear that there's still seems to be room for a lot of innovation in value-based care, a lot of new models and things to try out as long as you're sort of bringing everyone along with you, the employers, the various providers and ultimately the consumers as while and that you're able to share high quality information with them to drive better decision making. So very excited to hear about it. And Troy in particular, thanks to you for all the great work you're doing to make healthcare more affordable. So thanks Tori. Thanks, John. And thanks Troy.
Troy Smith (00:25:22:17):
Thank you.
Jonh Andrewes (00:25:23:05):
Thanks Igor.
Tori Fancher (00:25:23:22):
Thanks Igor.
Igor Belokrinitsky (00:25:24:24):
For more on these topics and other health industry insights driven by policy, innovation and care delivery changes, please subscribe to our podcast and visit at pwc.com/us/nextinhealthpodcast, all one word, to listen to our previous episodes. And also stay tuned because we will soon be releasing some results of our value-based care survey showing the variety of different providers and how they're adopting value-based care or not until next time. Until next time, this has been Next in Health.
Announcer (00:26:02:22):
This podcast is brought to you by PwC, all rights reserved. PwC refers to the U.S. member firm or one of its subsidiaries or affiliates and may sometimes refer to the PwC Network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details. This podcast is for general information purposes only and should not be used as a substitute for consultation with professional advisors.
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