A Q&A with value-based care expert, Jeremiah Reuter
Almost 10 years into the Affordable Care Act (ACA), value-based care has undoubtedly hit its stride. From commercial to federal payers, nearly every organization and provider has started engaging in risk-based contracts. And while some have embraced the change, many still have more work to do before they are in a full risk-based arrangement.
We recently sat down with Jeremiah Reuter, a value-based care expert at Optum, to discuss why organizations should be taking on more risk, and covered what best practice moves he recommends organizations take to simultaneously protect their margins.
Why is risk so important right now in health care?
From the passage of the ACA in 2010, to the Medicare Access and CHIP Reauthorization Act (MACRA) in 2015, the government has been encouraging the practice of risk-based health care for almost a decade now. And commercial payers have been following CMS’ lead, with many offering a plethora of payment arrangements like pay-for-performance and total cost of care. With all this, we’ve finally reached a point where providers are expected to share the risk in managing their patients’ health through value-based contracts — or chance being left out of networks altogether.
Perhaps one of the biggest reasons value-based care has become so popular, though, is that the entire industry is seeing the benefits first-hand. Aside from better care for patients, which is an obvious one, the Medicare ACO and BPCI programs have generated huge savings. In fact, CIGNA estimated1 more than $600M was saved between 2013 and 2017, and Anthem has reported2 $1.8 billion in gross savings since 2014.
Obviously value-based care is a complicated process with lots to consider. Where do you recommend organizations start if they haven’t entered into much, if any, risk?
Hands down, the most important step for organizations is to fully understand the risk contract they are about to engage in so they can identify the right drivers for success — whether that’s through population health interventions, risk adjustment, quality initiatives or something else entirely.
Next, organizations need to learn the ‘what’ and ‘how’ factors of the market. That is, what value is the organization creating? This will guide how you contract with payers to capture and share in that value. Likewise, how are the dynamics of your market? Elements like payer strategy, competitor strategy and changing patient populations will all impact how you should approach risk.
Once you discover all these factors, you’ll better understand which you can control, and which you cannot. For those factors you cannot control, consider enlisting the help of an actuary. They will help you model how certain factors will impact the risk to your organization, and predict how you will perform over time. And similarly, if you have any trouble identifying any of these factors, an actuary can help you gather that information.
What about organizations or leaders that are hesitant to take on more risk — how do you reassure them?
In my experience, the biggest concern of risk-averse organizations is fear of the unknown. Some of our greatest successes have come from helping risk-averse organizations identify risk, understand the drivers of that risk and give them the confidence that they are able to manage that risk. And when necessary, we give these organizations risk mitigation strategies to identify areas of opportunity to manage the risk or cede risk through reinsurance or provider partners.
Because so many of these organizations have been operating in fee-for-service for a while, it’s also important to level-set the expectations — taking into account the time for return, magnitude of the return and level of effort to achieve the return. Not all initiatives are created equal. Some are quick, like coding accuracy efforts, management of hidden-risk patients and post-acute care, to name a few. Others, like preventive care, can be very long-term and are frequently not a focus when initially taking on risk.
Last but not least, let’s talk about tangible next steps for organizations entering into risk. Are there any best practice moves that you see organizations tend to skip over, that could make or break their success in taking on risk?
Absolutely. When I work with organizations, there are a couple best practice moves I almost always suggest regardless of their path to risk because they have practically no downside and only serve to further support an organizations’ risk-based efforts.
I mentioned this before, but when presented with a contract, enlist the support of an actuary to do a review of your contract, your market, your organization and your predicted financial outcomes. This helps you not only get comfortable with the risk presented, but it also confirms if the contract is fair and equitable from a financial and operational perspective.
The second one is simple — when presented with a contract, ensure all the necessary data and information to manage the risk is explicitly written into the contract. This avoids any miscommunication or misdirection down the line and provides the provider organization access to the information necessary to manage the risk.
Lastly, I find the organizations that are most successful in value-based care are those delivering high-quality care, while simultaneously using that as a strategy to retain, or grow, volumes. It’s a win-win for the managed care division, like accountable care organizations, as well as the delivery system.
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About the author:
Jeremiah D. Reuter, ASA, MAAA, MS
Optum Advisory Services
Jeremiah is a Vice President in the Denver office of Optum. He has eighteen years of experience in the health care actuarial field. His primary career focus has been in the area of U.S. health care consulting for providers. He has worked with health insurance plans, health care providers, Accountable Care Organizations (ACOs), Clinically Integrated Networks (CINs), Medicare Advantage Organizations, Centers for Medicare & Medicaid Services (CMS), and state and national regulatory agencies.
Jeremiah currently serves provider organizations in identifying and managing risk, often in the Chief Actuary role for ACOs and CINs. Jeremiah is also currently consulting with health plans and health care providers on the impact value based arrangements as they continue to expand their risk portfolios started by the Affordable Care Act (ACA) legislation and Medicare Access & CHIP Reauthorization Act (MACRA) legislation.