Breaking the Pattern: Reimbursement Battles are Challenging the Adoption of Value-Based Maternity Care. Here’s How We Find Balance and Win Together

Value-based care models offer tremendous promise for positively impacting maternal health outcomes in this country. Implementing such a model is very complicated. It’s not as simple as steering patients to lower cost care options. Success requires a commitment to improving outcomes across a lengthy and complex episode with numerous risk factors that can shift over time.  

Not all risk, and not all rewards, are created equally. Even when providers are engaged on both sides of the coin – risk and reward – the details matter. If we want providers to be active, willing and collaborative partners in value-based care models, we have to make certain these models are not being used as yet another blunt instrument in the fight over provider reimbursement.  

Here is a common design we’ve come across in the market recently. A savings threshold is set out of the gate by the payer. For illustration, let’s say this threshold is 5%. Providers who participate in this model must reduce total cost of care by the savings target before they are eligible to share in any financial rewards. Score 1 for the payer. Once providers drive costs below the savings target, they are eligible to share in additional savings generated by the outcomes they deliver. At this stage, the provider receives a smaller share of the additional savings than the payer. Score 2 for the payer.  

A pattern is emerging.

The provider is responsible for investing in the systems, tools and processes to improve outcomes, but the payer benefits more from the value being created. Isn’t this equation a bit lopsided?

To be fair, payers play an important role in this equation, and they clearly need to participate in the value (reduced cost) to meet their customers’ expectations. Payers bear the true risk here. If costs go up, the payer is the party without a chair when the music stops. Additionally, the payer needs to manage potential benefit design changes, claims administration, performance monitoring and payment dispersants to make a VBC model work. 

And yet, it still doesn’t feel like we are arriving at the right balance when it comes to sharing value creation. So what impact is our current state having on the adoption of value-based maternity care?  

Not surprisingly, payers are finding it difficult to engage OB providers and scale value-based maternity programs when value sharing isn’t properly aligned. Where is the incentive for providers to voluntarily abandon the predictable revenue from a traditional fee-for-service arrangement for an unbalanced model? They will have to invest in tools, technology and training to transform the way care is delivered, while only being eligible to share in a portion of the value they create. That’s a tough sell, even if providers believe in the power of value-based care to improve patient outcomes. Which many do believe.

How do we fix this?

1. Models simply can’t cut providers out of the initial value-share opportunity. If providers help drive cost of care down, they should share in the financial benefit, from the very first dollar. If we’re all in this together to lower costs, and more importantly, improve the health of patients, we all need to act like it.
2. The model must be balanced. Providers have to make a serious commitment to participate in value-based care. They are on the hook to improve the outcomes. It’s only fair to give them a more equitable stake in the savings that are generated. Having 70% to 80% of the total savings value flow to other stakeholders while providers are bearing the brunt of the responsibility isn’t a sustainable approach.
3. Finally, we have to work creatively with providers from the very beginning to design models that financially reward improved outcomes. It is also crucial that we provide clinical practices with the tools and technology they need to successfully execute within an outcomes-focused value-based model. Failure to enable providers sets them up for failure in value-based care delivery, and we will continue to fail our mothers in the process. 

In addition to these VBC model recommendations, we have with an actionable Value-Based OB Care Checklist you can access here. This checklist offers a roadmap for exploring what’s required to successfully engage in value-based care within the OB setting. There are key questions that payers, providers and other partners should be asking of one another and themselves as they engage in the design and implementation of value-based care.

• Providers: Make sure you have an equitable share of both risk and reward when it comes to value-based contracts. If you aren’t a partner in the process, that is a red flag.
• Payers: Make sure you engage the providers in your network in true partnership. This is the only way forward.

If designed properly, we can benefit payers, providers, purchasers and patients. Let’s drive a transformation of the U.S. healthcare system that dramatically lowers total cost of care while drastically improving the quality of care, and the experience of receiving care. We can all sign up for that.