Private payer AvMed Health Plans, has recently begun working with a health system and an array of physicians in South Florida to develop a payer-provider collaboration based on a patient-centered medical home model.
The creation of the new integrated delivery network will establish AVMed as the exclusive payer for the participating providers and is intended to serve as a proving ground to cut costs, while also strengthening AvMed's presence in its local market.
In the beginning, the organization will offer gain-sharing and incentives to manage costs without risk to draw in physicians, said Allan Boshell, vice president of network services at AvMed.
The collaboration is an example of how payers and providers are breaking down barriers and working with each other to create new healthcare payment and delivery models. The goal is to find ways to lower healthcare costs by and improve patient health by rewarding value instead of volume.
"Each of us, regardless of where are in the financial dynamics of healthcare needs to have a margin if we are going to stay in business and to find ways to at least retain or improve our respective margins," Boshell said in a recent webinar.
From AvMed's perspective, "we've got to reduce the emphasis on discounts to be successful," he said. At some point, payers will need to demonstrate that premiums can be held in check through a different model, such as value-based collaboration, and not just by discounts.
"It's is important to get away from just beating the provider community down one percentage point more than our competitors," Boshell said.
Instead, payers can engage providers as part of the solution for medical cost management. "We think that can be done by working with primary care physicians, by engaging in more aggressive and patient friendly high-cost member management, toward medical homes, and being more cognizant of where the costs are and what's driving them, compared with just chasing the unit cost discounts," Boshell said.
Providers also want to break down the old model and move away from the contentious contract negotiations of the past, but that requires aligned objectives, said Dan Sacco, vice president for strategic affairs and managed care at Boca Raton Regional Hospital in South Florida.
"What works is when both parties at the table each have something to gain," he said.
For providers, a payer may be able to steer business to their network, not just to gain market share but also to better coordinate care. Providers don't have to partner with a major payer, Sacco said. A new player in the market may be more flexible.
Payers can leverage their deep well of data to help providers become better managers of care within accountable care organizations as well as other new delivery models.
"Providers don't have all the skills for management of care," Sacco said.
But providers shouldn't feel compelled to jump feet-first into a payer-provider collaboration and instead should consider easing into these new relationships. For example, providers can innovate around their own employees, who are purchasers of healthcare services, and work with collaborating insurers to promote wellness and manage chronic disease programs. Insurers can steer hospital employees to hospital-affiliated providers. The payers then can roll that program out to area employers.
AvMed believes that engaging in test cases of collaboration to explore different methods of delivering care offers brand differentiation and helps it geographically to expand its market, Boshell said. Collaboration also shortens the time and expense to open a new market and attract new members.
"When we do that, it gives us a hub, a jumping off place, to continue growth for us in surrounding markets," Boshell said. It provides for testing the new healthcare delivery structure, care management and getting away from discount or volume-based contracting.
Those who are participating in AvMed's collaboration are careful not to create a model that is duplicative and not to build infrastructure components that already exist within one of the partner organizations, he said.
With the collaboration, "we're getting away from thinking about my costs, my revenue, my profits and moving toward more clinically coordinated care, best practices, and trying to build a structure and organization where we look and act collectively.
"Since we're all chasing the same dollars, it becomes our costs and our profits and finding a way to address those," Boshell said.