Assessing a Market for Readiness

Relationship-building to develop consensus among stakeholders is critical to furthering efforts in a market. Reaching consensus among multiple stakeholders on the type of payment is paramount for success. A lack of consensus or collaborative effort can lead to challenges and barriers, especially as planning ends and implementation begins. Existing relationships with a history of collaboration and trust can accelerate payment reform efforts. This dynamic cannot be created in the short term; there must be a history of such collaborative effort that has been built over the years.

Providers may be resistant to change or fearful of lost revenue or autonomy at a time of rapid change in the health care system. Educating providers and engaging them when developing payment reform efforts may be a key step in ensuring successful implementation. Providers may prefer to be involved in developing payment reform efforts as opposed to having payment reform occur without their input. Providers want to understand how the payment reform effort could affect their practice and what type of data would be available to them as they seek to improve care.

Employers can provide needed leverage to engage those stakeholders comprising their supply chains. Supply chains could include health systems, large provider groups, prescription benefit managers, or health plans that employers contract with for services. In many markets, commercial employers, especially larger employers, are anxious to move rapidly toward value and have been seeking individual strategies to enact payment reform locally, rather than working collaboratively to make community-wide changes. This occurs not necessarily because of an aversion to collaboration, but rather because larger employers have the buying power to curtail costs and often feel the need to move as quickly as possible.

Federal and state governments are the largest purchasers of health care, and their involvement can greatly impact the success of payment efforts.[1] Strong support from a governor or legislature can positively influence payment reform efforts in a marketplace.

The type of payment reform model chosen has ramifications for reform implementation given the varying levels of change required. Selecting the right model of payment reform (e.g., bundled payment, shared savings, reference pricing, or patient-centered medical home) requires considering both the necessary business infrastructure or alterations required to execute changes in provider payments and the approach that will be taken in making those changes. Infrastructure is crucial, as payment reform efforts necessitate different levels of changes in technical configurations and processes for health plans and providers. For example, health plans engaged in bundled payment projects must change existing payment methods to process either a retrospective reconciliation of claims or a prospective payment for specific treatments. The health plans’ ability either to hand process or overhaul their payment systems can impact the willingness of those stakeholders to tackle a bundled payment approach.

Stakeholder willingness to take on risk can drive the selection of payment reform efforts. The fact that many of the AF4Q markets choose to begin their payment reform efforts with a patient-centered medical home (PCMH) initiative could be an indication of a low tolerance for risk. Of the numerous payment reform models available to markets, PCMH programs typically include an additional per-member per-month fee, with little or no risk to stakeholders and many of the Alliances built very successful programs using the PCMH model.

[1] The Robert Wood Johnson Foundation. 2013. “Facilitators and Barriers to Payment Reform.”