Making the transition to value-based specialist care

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If there is one hot theme to emerge from the 2024 conferences, it is the evolution of value-based care (VBC) in the specialty care space. Physician leaders at virtual specialty care companies have taken the stage to discuss how new alternative payment models are expanding into more medical and traditional surgical subspecialties, accelerating the move toward value.

My previous experiences within a national health plan and my conversations with other commercial payers reinforce the urgency of this topic. We’re in for a bumpy ride in the near term, but value-based specialty care (VBSC) is coming and – if done right – has the potential to transform the way we care for millions of patients to deliver the results that we all expect from our healthcare system.

Early signs of life for VBSC

VBC has taken root in primary care and has shown that it can deliver better outcomes and savings over time. But the reality is that 60% of low-quality care is provided outside primary care.

The key to VBSC is correctly assigning responsibility, results and risks. We are seeing early examples of VBSC acting in kidney disease and oncology treatments, respectively. This is largely because there is a clear sense of patient attribution, or risk and outcomes, to a lead physician or care team for those conditions.

In more complex areas such as gastroenterology (GI), musculoskeletal (MSK) and cardiometabolic care – where risks, outcomes and even symptoms can overlap between specialties and primary care physicians – VBSC models continue to converge. But there is a real and growing push to make these models happen so that we can enable scalable access to outcomes-based care that will reduce the total cost of that care across the health ecosystem.

This push for VBSC will be amplified by employers and health plans seeking accountability in the commercial insurance market. Employers are increasingly under economic pressure and will in turn place that pressure on traditional networks to find and affordably access effective primary and specialty care providers for common and costly conditions such as GI, MSK, etc. .

Challenges for VBSC

The application of VBC in specialist care has been slow so far, but the desire is there.

Any move to expand VBC into specialty care – whether by employers, commercial payers or Medicare – comes with unique challenges not faced by primary care. At some level these all come back to the underlying reality that every specialty is different, but the impact of one specialist’s care will often be linked to other conditions and specialties.

Specialties exist because it takes unique training, experience, and expertise to treat the nuances of each condition category. For payment, however, it is extremely difficult to properly allocate responsibility, and credit, when improving a patient’s diet and weight for his diabetes, also helps his heart disease (and vice versa). Because of this difficulty, it is often easier for a payer to pay FFS than to untangle who deserves the credit.

GI is particularly notable for the complexity of diagnosis and treatment. Today, most practices and physicians are reimbursed for FFS based on the time and intensity of a service. This often means paying more for procedures versus lower intensity, but proven interventions that require more 1:1 patient time to develop iterative treatment plans. For example, access to a multidisciplinary care team to guide dietary changes and teach gut-brain techniques has been proven to alleviate symptoms. Unfortunately, the existing system of incentives is crippling many traditional brick-and-mortar clinics, with outdated coding systems hiding valuable data and insights that could otherwise lead to faster, better results. When you consider that two-thirds of Americans suffer from some form of gastrointestinal symptoms, the costs and complexity caused by these gaps in care are overwhelming.

As a result, most traditional brick-and-mortar GI clinics have neither the bandwidth nor the incentive to try new value-based approaches because they are often overwhelmed by managing existing caseloads with limited staff and resources. This means that few groups, even larger ones, with sufficient resources, are focusing on VBSC approaches.

A foundation for VBSC

So how can we properly align the incentives so that VBC can take root and flourish within specialized care? Care cannot be delivered effectively through point solutions; it must be done by a healthcare provider who is accountable for the results so that a patient ultimately receives the right medications, treatments, and navigation to care for him or her holistically. In the early versions of VBSC, we should prioritize simplicity, focusing on proven models and value leavers and using commonly tracked metrics. If we can get these little things right, we can create a highly motivated population of providers and practices willing to embrace VBSC.

Here are three strategies for fellow specialty care providers who value value over volume:

  1. Ensure alignment with data for credibility and trust – The payer and provider must be on the same page on the data and parameters for measuring value. We all know FFS is broken, but it is so ingrained in our system and therefore difficult to identify the possibility of a VBSC. In GI, this could be applied by examining costs within a specific disease-related index event, such as a GI visit, and the surrounding episode of care (i.e., ER visits, procedures, imaging, prescriptions, etc.). This can lead to a more representative estimate of healthcare costs and a baseline for episode costs that both payer and provider agree on.
  2. Payment should be meaningful but simple – By structuring payment around accountability to the patient and surrounding them with all meaningful interventions (diet, behavior, procedures, and medications) patients can take control of their condition. On the payer’s side, monitoring and managing a VBC scheme requires resources. It is critical that payment structures are simple and easy to monitor or automate. One way to do this is by aligning payments with care milestones using a combination of utilization KPIs, patient-reported outcomes (i.e. symptom management), and validated claims accrual compared to baseline. If data is shared properly and value is demonstrated, the provider and payer can move to a shared savings model.
  3. Improve claim analysis support – Claims are not a monolithic endeavor, and there exist both misunderstandings that result in miscoding and perverse incentives for miscoding. Specialty healthcare providers must invest in claims analysis and guidance to provide a more complete picture of their specialty to their paying partners. It is also valuable to bring clinical and actuarial teams together to examine the underlying assumptions in claims data.

The key goal of early value-based specialty contracts is to build trust through aligned data, reporting and performance measurements that provide guidance for organizations transitioning to VBSC. By leveraging best practices from early VBC models alongside creative, common-sense approaches that take into account the unique challenges of these specialty conditions, we can ultimately create beachheads and incentives for VBSC that will lead to a more sustainable patient attribution framework.

If done well, it will help achieve better patient outcomes, better population health, and lower healthcare costs for the 60% of low-value care currently provided outside primary care.

Photo: Nuthawut Somsuk, Getty Images


Before joining virtual GI clinic Oshi Health as Vice President of Payer Strategy and Growth, Nathan Paulsen led the virtual specialty network strategy for a large national healthcare plan.

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