The Practice Altering Effects of House Bill 4069 on Mental and Behavioral Health Services in Oregon
A Discussion Paper
I. Introduction to HB 4069
Purpose and Overview of HB 4069:
Legislative Intent: HB 4069, passed in Oregon in 2022, aims to advance the state's healthcare system by promoting value-based payment (VBP) models. The bill specifically targets health plans contracting with public sector entities like the Oregon Education Benefits Board (OEBB), the Public Employee Benefits Board (PEBB), and Oregon Health Science University (OHSU).
Mandate for Health Plans: The bill requires health plans to participate in VBP models as a condition for contracting with these public entities. This participation includes signing the Oregon Value-Based Payment Compact, which aligns payment models with the state’s broader goals of improving care quality, enhancing patient outcomes, and reducing overall healthcare costs.
II. Fee-For-Service (FFS) vs. Value-Based Payments (VBP)
Current Challenges with FFS Models:
Incentivization of Volume Over Value:
FFS Model Dynamics: The traditional fee-for-service model compensates healthcare providers based on the number of services they deliver, regardless of the outcomes. This creates a financial incentive to increase the volume of procedures, tests, and visits, which can lead to overutilization without necessarily improving patient health.
Lack of Care Coordination:
Fragmented Care: FFS models often result in fragmented care delivery, where providers work independently without coordinating with each other. This can lead to duplicative services, inconsistent treatment plans, and gaps in care, particularly for patients with complex or chronic conditions.
Unsustainable Cost Growth:
Escalating Costs: The emphasis on volume rather than value in FFS models contributes to the rising cost of healthcare. As more services are delivered, overall healthcare expenditures increase, which can strain public budgets and make the system financially unsustainable in the long term.
Limited Focus on Patient-Centered Care:
Outcome vs. Service Delivery: FFS models prioritize the delivery of services rather than the achievement of health outcomes. This approach does not adequately incentivize preventive care, chronic disease management, or long-term health improvements, all of which are essential for reducing healthcare costs and improving patient quality of life.
Equity and Access Issues:
Health Disparities: The FFS model can exacerbate health disparities by not addressing the social determinants of health or by failing to tailor care to meet the needs of diverse patient populations. This lack of focus on equity can lead to unequal access to care and poor health outcomes for marginalized communities.
Potential Benefits of VBP Models:
Incentivizing Quality Over Quantity:
Focus on Outcomes: VBP models incentivize providers to focus on the quality of care and the achievement of specific health outcomes rather than the sheer volume of services delivered. Providers are rewarded for delivering effective, coordinated care that improves patient health, rather than for the number of procedures or visits.
Encouraging Care Coordination and Integration:
Holistic Care Delivery: VBP models often include bundled payments or shared savings arrangements, which encourage providers to coordinate care across different services and settings. This integration reduces redundancies, prevents errors, and ensures that patients receive comprehensive, well-coordinated care.
Promoting Sustainability and Efficiency:
Cost Management: By emphasizing cost-effective care that improves patient outcomes, VBP models aim to create a more sustainable healthcare system. These models discourage unnecessary treatments and procedures, helping to control costs while maintaining or improving the quality of care.
Enhancing Patient-Centered Care:
Patient Engagement: VBP models are inherently patient-centered, as they prioritize outcomes that matter most to patients, such as improved health status, reduced hospital readmissions, and better management of chronic conditions. Providers are encouraged to engage patients in their care, focusing on prevention, wellness, and long-term health.
Addressing Equity in Healthcare:
Reducing Disparities: VBP models aim to reduce health disparities by incentivizing equitable care that is responsive to individual patient needs. By focusing on outcomes rather than services, these models seek to ensure that all patients, regardless of their background, receive high-quality care.
III. Challenges and Mixed Evidence of VBP Effectiveness
General Healthcare:
Mixed Results on Cost Savings:
Evidence from Studies: While some studies have shown that VBP models can reduce healthcare costs, particularly through reduced hospital readmissions and more efficient use of resources, others have found that savings are modest or inconsistent. For example, the RAND Corporation found that savings in Medicare ACO programs were modest and often did not cover the costs of establishing and maintaining the ACO.
Variable Impact on Quality:
Inconsistent Outcomes: The impact of VBP on quality metrics varies widely. Some programs have reported improvements in quality metrics, while others have found no significant differences compared to FFS models. The success of VBP models in improving quality often depends on the specific design of the model, the patient population, and the healthcare setting.
Implementation Challenges:
Resource and Administrative Burdens: VBP models require significant changes in care delivery, data reporting, and coordination, which can be burdensome for providers, especially smaller practices. The increased complexity of these models can strain resources and lead to mixed results in terms of cost savings and quality improvements.
Equity Concerns:
Potential for Exacerbating Disparities: There is concern that VBP models may inadvertently exacerbate health disparities if they do not adequately account for the social determinants of health or the unique needs of disadvantaged populations. Providers serving high-risk populations may be unfairly penalized under VBP models if their patients have worse outcomes due to factors beyond the providers’ control.
Mental and Behavioral Health:
Measurement Challenges:
Subjectivity of Mental Health Outcomes: Mental and behavioral health outcomes are often more difficult to measure than physical health outcomes because they rely heavily on subjective assessments, such as patient-reported outcomes and clinician observations. This makes it challenging to establish standardized metrics for evaluating the effectiveness of care, which is a key component of VBP models.
Integration and Coordination of Care:
Barriers to Integration: VBP models often emphasize integrated care, where mental and behavioral health services are coordinated with physical health services. However, the integration of these services is still in its early stages in many settings, and there can be significant barriers, such as differing treatment approaches, stigma, and inadequate data-sharing systems.
Patient Population Complexity:
High-Needs Patients: Patients with severe and persistent mental health conditions often require more intensive, long-term care, which can be costly and difficult to manage within the constraints of VBP models. This complexity can make it challenging to achieve the cost savings that VBP models aim for, particularly when serving high-needs populations.
Resource and Workforce Limitations:
Under-Resourced Sector: The mental and behavioral health workforce is often under-resourced, with a shortage of providers relative to demand. Implementing VBP models in this context can be challenging, as providers may lack the necessary support, training, and infrastructure to effectively transition from FFS to VBP.
Evidence of VBP in Mental and Behavioral Health:
Limited Evidence of Cost Savings:
Modest Results: Some studies suggest that VBP models, such as the use of accountable care organizations (ACOs) or bundled payments, can lead to modest cost savings in mental and behavioral health care. However, these savings are often smaller and less consistent compared to those seen in physical health care.
Quality Improvement Potential:
Promising Programs: There is some evidence that VBP can improve the quality of mental health care, particularly in areas like patient engagement and care coordination. Programs like the Certified Community Behavioral Health Clinic (CCBHC) model, which integrates VBP principles, have shown promise in improving access to care and patient outcomes.
Mixed Results in Implementation:
Challenges in Meeting Metrics: As with broader healthcare, the implementation of VBP in mental and behavioral health services has produced mixed results. Some providers have reported challenges in meeting performance metrics due to the complex and individualized nature of mental health care. In some cases, VBP models have been criticized for not adequately accounting for the social determinants of health or the unique needs of patients with severe mental illness.
IV. Impact of HB 4069 on Taxpayer Dollars and Payer Profits
Potential for Saving Taxpayer Dollars:
Cost Efficiency Through VBP Models:
Theoretical Savings: HB 4069 aims to shift health plans covering public employees and other state-funded populations from FFS to VBP models. By incentivizing providers to focus on quality and outcomes rather than volume, VBP models could potentially reduce unnecessary procedures, hospital readmissions, and other costly aspects of care, leading to savings for the state and taxpayers.
Improved Care Quality and Health Outcomes:
Long-Term Savings: VBP models could lead to long-term savings if they successfully improve care quality and patient outcomes. Healthier populations generally require less intensive and expensive care, which could reduce overall healthcare expenditures in state-funded programs like Medicaid.
Potential for Reinvestment in Care:
Redirected Savings: If VBP models achieve cost savings, these funds could be reinvested into healthcare programs, improving access to care and addressing public health priorities.
Concerns About Increasing Payer Profits:
Increased Complexity and Administrative Costs:
Administrative Burdens: VBP models often require more complex contracts, reporting requirements, and performance monitoring, which can increase administrative costs. Health plans might pass these costs onto providers or consumers, potentially leading to higher overall healthcare costs and benefiting payers through increased premiums or profits.
Profit Margins and Risk Sharing:
Payer Retention of Savings: Health plans participating in VBP models may retain a significant portion of any savings generated, especially if risk-sharing arrangements are not carefully structured. This could result in increased profits for payers without corresponding benefits to the state or taxpayers.
Unintended Consequences:
Negative Impact on Care Quality: If VBP models do not adequately account for the complexity of patient needs, particularly in mental and behavioral health, they could lead to cost-cutting measures that negatively impact care quality. This might result in higher long-term costs due to unmet health needs and worse health outcomes, potentially offsetting any initial savings.
V. Conclusion: Key Considerations for HB 4069 Implementation
Need for Vigilant Oversight:
Ensuring Accountability: The success of HB 4069 in achieving taxpayer savings versus increasing payer profits will depend on vigilant oversight, transparent contracting, and a strong focus on ensuring that savings are passed on to the state and that care quality is maintained or improved.
Balanced Implementation: Effective implementation of VBP models under HB 4069 requires careful balancing of cost containment with the need to maintain or enhance the quality of care provided to patients, particularly those with complex mental and behavioral health needs.
Summary of Mixed Evidence:
Uncertain Outcomes: While VBP models offer promise, their effectiveness in delivering superior value compared to FFS models remains uncertain, particularly in the context of mental and behavioral health. Ongoing evaluation and adjustment of VBP models will be necessary to ensure they achieve their intended goals without unintended negative consequences.
VI. Recommendations for Enhancing HB 4069
Introduction of Essential Definitions:
Clarity in Contracts: HB 4069 should include the introduction of essential definitions in contracts between health plans and providers to ensure clear articulation of problems, complaints, and proposed solutions. This clarity is crucial for holding health plans accountable and for fostering effective communication between all stakeholders.
Provisions for Good Faith and Fair Dealings:
Contractual Safeguards: The bill should include provisions that ensure good faith and fair dealings in contracts, with specific safeguards that hold both health plans and providers accountable for their obligations. These provisions would help prevent unfair practices and ensure that both parties work towards the shared goal of improving patient care.
Independent Audit Oversight and Ethics Point Portals:
Transparency and Accountability: Establishing mechanisms for independent audit oversight and ethics point portals is essential for enhancing transparency and accountability in the implementation of VBP models.
Importance of an Ethics Point Portal:
Whistleblower Protection: An ethics point portal provides a confidential platform for healthcare professionals, employees, and stakeholders to report unethical behavior, fraud, or non-compliance without fear of retaliation. This encourages transparency and accountability within healthcare organizations and ensures that ethical concerns are addressed promptly.
Early Detection and Prevention: By providing a safe avenue for reporting issues, an ethics point portal helps detect problems early, preventing them from escalating into larger issues that could compromise care quality, lead to legal risks, or result in financial losses for the state.
Maintaining Integrity: The inclusion of ethics point portals in HB 4069 would help maintain the integrity of the VBP implementation process by ensuring that health plans and providers adhere to ethical standards and regulatory requirements.
Plain, Understandable Contracts and Policies:
Simplified Contract Language: Contracts and policies under HB 4069 should be written in plain, understandable language to ensure that all stakeholders, including providers, health plans, and regulators, can clearly understand their roles, responsibilities, and the terms of agreements. This clarity would reduce the risk of misinterpretation and disputes, and would help ensure that VBP models are implemented effectively and fairly.
The Essential Role of Health Plans and Providers Working Together:
Creating Transparent Shared Values and Objectives:
Collaborative Approach: For VBP models to be effective, health plans and providers must work together to establish transparent shared values, objectives, controls, and key indicators of success. This collaboration ensures that both parties are aligned in their goals and are working towards improving patient outcomes in a sustainable and ethical manner.
Simplicity for Mental and Behavioral Health Providers:
Tailored Implementation: It is especially important for these shared values and objectives to be simple and clear, particularly in the context of mental and behavioral health services, where the complexity of care and the subjective nature of outcomes can make VBP implementation challenging. Simpler, more tailored approaches can help these providers navigate the transition to VBP models more effectively.
Defining Key Indicators of Success:
Measurable Outcomes: Defining clear and measurable key indicators of success is crucial for evaluating the effectiveness of VBP models. These indicators should be relevant to the specific needs and challenges of mental and behavioral health providers, ensuring that the models promote meaningful improvements in care quality and patient outcomes.
Ensuring Controls and Accountability:
Robust Oversight: Establishing strong controls and accountability mechanisms is essential for ensuring that VBP models are implemented fairly and that health plans and providers are held accountable for their roles in delivering high-quality care. This includes regular audits, clear reporting requirements, and the use of ethics point portals to monitor compliance and address any issues that arise.
Health Plans Will Profit while Mental and Behavioral Health Service Providers Will Not
The likelihood that health plans will profit while mental and behavioral health service providers will not significantly benefit—and may even face increased risks—is a real concern in the context of value-based payment (VBP) models, especially if there is a lack of transparency and asymmetric information between health plans and providers. Here’s a breakdown of why this scenario is plausible:
1. Information Asymmetry:
Health Plans’ Advantage:
Superior Data Access: Health plans often have access to extensive data on patient populations, claims, and utilization patterns, which they use to design VBP contracts. This gives them a significant advantage in understanding the potential risks and rewards associated with these contracts.
Complex Contract Terms: Health plans may use their superior knowledge to craft contracts that are complex and difficult for providers to fully understand, particularly in terms of how rewards are calculated and what constitutes risk. This can lead to providers underestimating the challenges and overestimating the potential rewards.
Providers’ Disadvantage:
Limited Data and Resources: Mental and behavioral health providers, especially smaller practices, may not have access to the same level of data or the resources to analyze it effectively. This can result in providers entering into contracts without a clear understanding of the financial risks involved or the true likelihood of achieving the performance targets required to earn rewards.
Inadequate Negotiating Power: Providers may lack the negotiating power to push back against contract terms that are unfavorable or to demand greater transparency from health plans. As a result, they may be forced to accept contracts that place them at a financial disadvantage.
2. Lack of Transparency:
Opaque Contractual Terms:
Unclear Upside Potential: Health plans might not fully disclose the upside potential or the financial benefits they stand to gain from VBP contracts. Without this transparency, providers may not realize that the financial incentives for them are minimal compared to the potential profits health plans can accrue.
Hidden Risks: Contracts may contain clauses that shift significant financial risk onto providers without adequate compensation or reward. For example, if a contract includes penalties for failing to meet certain metrics, providers may face financial losses even if they deliver high-quality care.
Inadequate Disclosure of Risk Sharing:
Unbalanced Risk Distribution: Health plans may design VBP contracts in a way that maximizes their own financial stability while pushing more risk onto providers. If the terms of risk-sharing arrangements are not fully transparent, providers might unknowingly take on more financial risk than they are prepared to manage.
No Clarity on Metrics: If health plans do not clearly define the metrics for success or how they will be measured, providers may struggle to achieve the required outcomes, leading to financial penalties or missed incentives.
3. Potential Outcomes for Providers:
Financial Strain:
Increased Costs Without Adequate Compensation: Providers may face higher costs due to the administrative burden of meeting VBP reporting requirements and the need for additional resources to coordinate care. If these costs are not offset by financial rewards, providers could experience a decrease in profitability.
Risk of Penalties: If providers are unable to meet the performance targets set by the health plans, they may face penalties or reduced payments, further exacerbating their financial challenges.
Reduced Ability to Invest in Care:
Stifled Innovation and Quality Improvement: If providers are financially strained, they may have less ability to invest in innovative care models, staff training, or quality improvement initiatives. This could lead to a decline in the quality of care, which could, in turn, negatively affect patient outcomes and provider reputations.
Increased Burnout and Workforce Challenges:
Stress and Burnout: The financial pressures and administrative burdens of VBP contracts can contribute to provider burnout, particularly in mental and behavioral health, where providers are already dealing with high caseloads and complex patient needs. Burnout can lead to staff turnover, further straining resources and potentially reducing the quality of care.
4. Potential Benefits for Health Plans:
Profit Maximization:
Risk Shifting: By shifting financial risk to providers while retaining the majority of financial rewards, health plans can enhance their profitability. This is particularly likely if the VBP contracts are structured in a way that disproportionately favors the health plans’ financial interests.
Cost Savings: Health plans may achieve cost savings by reducing the payments made to providers, especially if providers fail to meet the performance metrics. These savings can directly contribute to the health plans’ bottom line.
Increased Control Over Care Delivery:
Standardization and Control: Health plans may use VBP contracts to exert greater control over how care is delivered, which can lead to cost reductions through standardized care protocols. However, this increased control may come at the expense of providers’ clinical autonomy and the ability to tailor care to individual patient needs.
Conclusion:
The scenario where health plans profit while mental and behavioral health providers do not benefit significantly is plausible, especially if there is a lack of transparency and information asymmetry in the negotiation and implementation of VBP contracts. Without clear, fair, and transparent contracts that adequately account for the unique challenges of mental and behavioral health care, providers may find themselves bearing undue financial risk with limited potential for reward. This could lead to increased financial strain, reduced ability to invest in quality care, and greater provider burnout, all of which could ultimately undermine the goals of value-based payment models.
To mitigate these risks, it is essential that VBP contracts are designed with transparency, fairness, and collaboration between health plans and providers, ensuring that both parties share in the risks and rewards equitably and that the primary focus remains on improving patient outcomes and care quality.
The Likelihood that Health Plans and Mental and Behavioral Health Providers Will End Up "Gaming" Each Other
The likelihood that health plans and mental and behavioral health providers might end up "gaming" each other under value-based payment (VBP) models is significant, especially in environments where there is a lack of transparency, unclear contract terms, and misaligned incentives. "Gaming" in this context refers to strategies used by either party to exploit loopholes, ambiguities, or inefficiencies in the system to maximize their financial or operational advantages, often at the expense of the intended goals of the VBP model.
While the risk of health plans and mental and behavioral health providers "gaming" each other in a VBP environment is real, the recommendations outlined in the discussion are likely to reduce this risk. By promoting transparency, clarity, and collaboration, these recommendations help align the incentives of both parties with the overarching goals of VBP models—improving patient outcomes and ensuring cost-effective care. In an environment where contracts are clear, accountability is enforced, and both parties share a commitment to ethical practices, the likelihood of gaming behaviors diminishes, leading to a more effective and equitable healthcare system.
Factors Contributing to the Likelihood of Gaming
Complex and Ambiguous Contracts
Health Plans Gaming Providers
Health plans might design contracts with complex or ambiguous terms that make it difficult for providers to fully understand the metrics for success or the financial risks involved. This could lead to situations where health plans retain more savings or profits, while providers struggle to meet performance targets.
Providers Gaming Health Plans
Providers, on the other hand, might focus on meeting the letter of the performance metrics without necessarily improving the quality of care. For example, providers might prioritize patients who are more likely to achieve positive outcomes, thereby maximizing their performance metrics and financial incentives, while neglecting more complex or high-risk patients.
Information Asymmetry
Health Plans’ Advantage
With access to more comprehensive data and analytics, health plans might structure VBP contracts in ways that favor their financial outcomes, potentially at the expense of providers. They might use their information advantage to set performance targets that are difficult for providers to achieve, or to design risk-sharing arrangements that disproportionately benefit the health plan.
Providers’ Response
Providers might respond by "gaming" the system to protect their financial interests, such as by upcoding (reporting higher-severity conditions than actually exist), cherry-picking patients, or avoiding high-risk patients who could negatively impact their performance metrics.
Misaligned Incentives
Focus on Metrics Over Patient Care
Both health plans and providers might prioritize achieving specific metrics over actual improvements in patient care. For instance, a provider might increase the number of follow-up visits to meet a care coordination metric, even if those visits do not necessarily improve patient outcomes.
Financial Pressures
Pressure to Meet Financial Goals
Financial pressures on both sides can lead to gaming behaviors. Health plans might seek to reduce their payout by setting strict performance criteria, while providers might look for ways to maximize revenue or minimize penalties under VBP contracts, sometimes at the cost of patient care quality.
Impact of Recommendations from the Discussion Outline on the Risk of Gaming
The recommendations presented in the discussion outline are designed to reduce the risk of gaming by promoting transparency, accountability, and collaboration between health plans and providers. Here’s how they might influence the likelihood of gaming:
Introduction of Essential Definitions and Clear Contract Terms
Reduction in Gaming Risk
Clear, well-defined contracts with essential terms, including specific definitions of performance metrics and risk-sharing arrangements, can reduce the ambiguity that often leads to gaming. When both parties fully understand the expectations and risks involved, they are less likely to exploit loopholes or engage in behaviors that undermine the intent of the VBP model.
Provisions for Good Faith and Fair Dealings
Promotion of Trust and Collaboration
By including provisions that ensure good faith and fair dealings, the recommendation fosters a more collaborative relationship between health plans and providers. When both parties are committed to fairness and mutual benefit, the likelihood of adversarial gaming behaviors decreases.
Independent Audit Oversight and Ethics Point Portals
Enhanced Accountability
The establishment of independent audit oversight and ethics point portals increases accountability and provides mechanisms for reporting and addressing unethical behavior or non-compliance. These safeguards can deter gaming by making it more likely that any attempts to exploit the system will be detected and addressed.
Simplified and Understandable Contracts
Clarity Reduces Exploitation
Simplifying contract language and ensuring that all parties clearly understand their roles and responsibilities can reduce the risk of gaming. When contracts are straightforward and transparent, there is less opportunity for either party to exploit ambiguities.
Collaboration on Shared Values and Objectives
Alignment of Incentives
Encouraging health plans and providers to work together to create shared values, objectives, and key indicators of success helps align incentives. When both parties are focused on achieving common goals, such as improving patient outcomes, they are less likely to engage in behaviors that prioritize financial gain over quality care.
DISCLAIMER and PURPOSE: This discussion document is intended for training, education, and or research purposes only. The information contained herein is based on the data and perspectives available at the time of writing. It is subject to revision as new information and viewpoints emerge.
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