Value-Based Insurance Design (VBID), the concept seems rather quaint – doesn't it? After all, shouldn't insurance provide some intrinsic value - even if nothing more than peace of mind? The answer, of course, is that it does. While that may seem obvious in the life insurance industry, the view is less clear in healthcare and health insurance.
For Payers (and Providers), VBID represents an emerging frontier. Although it has been around for a while now, it wasn't until quite recently that it picked up some real momentum. That happened in mid-November 2017 when the Center for Medicare and Medicaid Services (CMS) announced several updates to the Medicare Advantage 2019 VBID model. In the updates, CMS expanded the model to a total of 25 states while also further allowing customized benefit designs and other flexibilities. This is particularly important not only because it obviously increases scale, but also because it allows representation from different states and their respectively different (but local) healthcare challenges. Further, as this relative creativity gets rolling, it will also provide valuable information on costs and savings in addition to better informing future years and their outcomes.
For Plans and Providers, VBID is all about assuming and sharing risk, structuring it correctly, and then proactively managing it. Although one could argue that VBID models are definitely here to stay (at least for the foreseeable future), there may be particular challenges for smaller Plans and Providers in doing all this. Among others, these include:
The ability – and capabilities – to properly assess all aspects of risk before making an informed decision to participate or share in it;
Finding and addressing any/all vulnerabilities;
Answering this question: can you (or are you willing to) provide meaningfully better comprehensive care, within your respective personal, financial, operational or other constraints?
Somehow covering all up-front costs in infrastructure, technology etc;
Riding out a period of potentially bad decisions without sinking the entire ship;
Operational and financial scalability.
Importantly, although Medicare Advantage Organizations (MAO's) began the heavy lifting of value-based care quite a while ago, it seems fair to say that it has been a tough road to hoe thus far – certainly tougher than many had initially expected. There have been challenges with lower-than-expected enrollment levels, massive levels of needed interdepartmental cooperation, immense planning efforts, provider/member engagement challenges, implementation costs, governmental leadership changes etc. Nevertheless, the industry has continued to persevere and it should be the collective hope that this increased scale and flexibility (recently reignited by CMS) helps to further deliver on the promises of better health and financial outcomes for everyone.
To this end, many payers and providers are relying (and have historically relied) on relationships up and down the clinical, network, technology and other spectrums. However, in focusing predominantly on these areas, many have missed the critical relationship and expertise that people who understand risk actually possess. It seems both ironic and nonsensical that the industry is looking at providing comprehensive value-based insurance designs – and care – but has not looked thoroughly at partnering with other entities (both traditional and non-traditional) who offer a remedy by not only understanding risk, but also have the financial wherewithal to help holistically (and prudently) manage it. Perhaps this will change in 2018. Who are you looking to partner with in order to develop, promote and manage value-based insurance products?