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What Medicare Advantage Can Teach Us About Value-Based Care

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It goes without saying that Medicare can be one of the most innovative forces for value-based care. The program, which serves 22 million beneficiaries who are 65 or older and patients with chronic illnesses, has led to a series of voluntary programs meant to achieve better patient outcomes at lower costs:

  • Medicare Shared Savings Program (MSSP) — The Centers for Medicare and Medicaid Services (CMS) launched the MSSP program in 2012 to incentivize healthcare providers to reduce unnecessary, expensive treatment options by giving them a share of the savings they generate.
  • Pathways to Success — Also known as the Medicare Pathways to Success Program, CMS finalized this program in 2018 to replace the MSSP program and incentivize ACOs to move from fee-for-service to accepting full financial risk.
  • The Center for Medicare and Medicaid Innovation (CMMI) — The Center, which is part of the Department of Health and Human Services (HHS) and is managed by CMS, tests new payment models to “improve care, lower costs, and better align payment systems to support patient-centered practices.”
  • Medicare Advantage — As opposed to the original Medicare plan, which is administered directly by the federal government, private companies approved by Medicare can offer Medicare Advantage. This program permits private companies to offer beneficiaries more flexibility in their Medicare coverage.

Where Medicare has been a force of change in the healthcare system generally, Medicare Advantage (MA) programs have the potential to be a force of change for payers, who can use its “flexibility, community-orientation, provider resources, and quality measures” to connect patients with better outcomes while reducing their costs.

Lesson 1: Flexible Programs Can Address the Social Determinants of Health

Access to high-quality medical care alone will not reduce costs and improve patient outcomes. The social determinants of health, which have physical, social, behavioral, and environmental components, are highly influential and have a tremendous influence on costs. Accounting for them can significantly reduce costs.

CMS’s original Medicare program has a rigid structure. It provides limited prescription drug coverage and does not cover many out-of-pocket costs (including in the case of severe illness or injury) or essential services, such as routine hearing and dental services. In addition, confusing technicalities and regulatory burdens regulate payment for services and can obstruct the speed and delivery of high-quality care. However, MA programs are permitted greater flexibility, they can address these shortcomings.

In addition to covering certain services Medicare does not, the structure of MA is flexible enough to permit payers to accommodate patient needs that can drive up healthcare expenditures. CMS further relaxed MA regulations during the COVID-19 pandemic and will likely continue to add additional benefits so payers can connect beneficiaries with accessible services in their communities to address the social determinants of health.

Lesson 2: Healthcare Is Local

Not only is Medicare limited in how it addresses social determinants of health, but it also does not address the specific needs of local communities. MA plans can recognize local needs and reward providers who have a deep understanding of patient populations. MA payers can gain insight from their local independent providers and invest in the care of that community by providing more covered benefits.

A high-level example of this is Humana’s “Bold Goal” initiative. In its San Antonio, Texas, market, Humana successfully leveraged its patient data to stratify patient populations based on the most destructive diseases, which were obesity and diabetes. Humana then determined their own benchmarks for success and assessed the community’s resources in order to meet those goals.

Based on the patient data, Humana found that several existing clinical programs in San Antonio could help these patients, but they needed a stronger network. Humana therefore partnered directly with local primary care providers, associations, and food banks to make the programs more accessible.

Lesso ambitious partnerships may involve payers partnering with organizations that help providers and payers align with strategies to reduce healthcare costs while serving the unique needs of a particular community.

Lesson 3: Robust Resources Can Make an Incredible Difference

MA payers have access to substantial amounts of patient data. In addition to identifying social determinants and local needs, MA data can be used to increase care coordination, MA data can help payers and primary care providers identify gaps in care and help make efficient, high-quality referrals.

The vast amounts of patient data can be too complex and expensive for providers to analyze. Primary care providers can try to leverage this data on their own, but partnering with a management services organization (MSO) that has expertise in data analytics can make a significant difference. Providers can partner with MSOs in both traditional Medicare and MA. A good MSO partner has the tools, technology, networks, and talent to help providers leverage their patient data and excel in value-based care contracts. Additionally, MSOs can help align primary care providers and payers on cost-saving measures that improve patient outcomes and population health.

MA teaches us that while value-based care embodies certain general principles, what it actually means is unique to each community. With its flexible structure, additional social benefits, and vast amounts of patient data, programs like MA can help value-based care be more accessible and successful. In addition to identifying care gaps and patient needs, the program is designed in such a way that it can be customized and leveraged to create better patient outcomes while reducing healthcare expenditures.

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