Will Value-Based Payments Harm Public Health and Provider Practices? Case Example

A Discussion Paper

An audit process, routinely used in Healthcare to guide leadership and joint ventures intending mutual success, was used to evaluate an Oregon Healthplan’s recent value-based payment (VBP) contract proposal. The process and steps are a tool set employed by Independent certified Internal Auditors. The evaluation used that framework to assess the feasibility and risk of the contract proposal.

The following10 processes are used as steps in business operations an contracting to ensure collaborations, joint ventures and group contracts are successful for all parties and stakeholders.

1. Definition of values

2. Statement of objectives

3. Risk-impacting objectives (RIO)

4. Controls

5. Risk control matrix (RCM)

6. Residual risk analysis

7. Test-scripts

8. Test of design (TOD)

9. Test of effectiveness (TOE)

10. Key performance indicators

The Healthplan’s representative and behavioral health manager presented the contract. The Healthplan was interviewed as part of a contract negotiation. The contract’s master service agreement and sub-agreement were examined by an attorney. The provider association’s attorney initiated a contract negotiation. Several meetings were held. There was a great deal of correspondence. What was learned was compared to standard business practices in Healthcare system, including frameworks and models recommended by the HHS Health Payer Center Learning Action Network (LAN), the Oregon Health Authority (OHA), healthcare industry experts, and other published resources, more…

During contract negotiations Mentor Research Institute (MRI) presented the results of their investigation and analysis to four representatives of the Healthplan. This included concerns based on 6 of the concepts described above. In summary, there was a probable to almost certain moderate to catastrophic impact on public health if the contact is not changed. In short, the cost-benefit of the contract systematically benefited the Healthplan and omitted fundamental controls that were to the detriment of providers. It was clear that should Providers “dip so much as a toe” in the contract they could be dragged into a relationship that would benefit the Healthplan in ways the Healthplan did not reveal during the contract negotiations. The Healthplan is apparently “gaming” Providers.

Here are just few examples of bad faith and unfair contract and policy revealed in the contract.

1. The value proposed to provider practices were not aligned with State, Federal and industry expert guidelines. They would have to be changed. The Healthplan stated we are “making it up as they go”.

2. There are no shared values, objectives, controls or key performance indicators that make sense. The Healthplan had hidden objectives they refused to share. The Healthplan almost certainly had a hidden high upset risk. Providers would be required to support those after they signed the contract. Contacting organization which offered the contract described the contract as a “Fruitcake contract” and “Window dressing for something else, not measurement-based car”.

3. Since the contact is so misaligned with industry guidelines it can be inferred that the purpose of the contract might be to retain existing contracts and create profits for the Healthplan. There was no profit sharing. No risk adjustments. There is no risk sharing. No analytics. The incentive payment proportional to the regulatory and financial benefit to the Healthplan.

4. There were no controls. Providers were denied information to contact other providers groups so as to align their values, objectives, controls.

5. The Healthplan turned a blind eye to evidence and reason that the contract would harm public health and provider practices.

6. The contract was not negotiable. The contract offered a false profit leader to entice Providers practices to sign the contact.

In this case example, the expectations and requirements will certainly increase and the benefits will not be equitably shared with providers. For example, when asked, providers (1) were not told the value of their services are to the public, employers and Healthplan. (2) were not given critical information for successful Value-Based Payment contracting . (3) Providers were consequently confused and misled by the Healthplan’s contract language and in ways that had material consequences. As such, the contract was not fair and not negotiated in good faith.

The Healthplan’s disinterest in discussing 9 factors and 42 concerns/risks that would ensure success was unyielding, i.e., “take it or leave it”. The Healthplan subsequently recommended that further conversation was not necessary because the Healthplan and the provider group were not aligned. The challenge facing providers was not a matter of alignment. The problem was simple. The contract was deceptive, faulty, ill-defined and misleading. The Healthplan refused to provide important information. Most important, the Healthplan did not negotiate the contract in good faith; they withheld important information about declining reimbursements over time. Providing the information that was withheld and requested could expose a hidden agenda and the material benefit to the Healthplan. It would reveal the risk and detriment to providers practices and public health. Full disclosure might cause provider practices to reject or void the contract they already signed.

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https://www.mentorresearch.org/value-based-payment-contracting

Based on 20 years of training mental health professionals and on working with Healthplans since 2015, MRI concludes that Healthplan interactions with provider practices are often intimidating, alienating, often covertly or overtly deceptive. The impact on providers over time is punishing. Some providers respond by limiting the number of patients they will agree to treat based on risk-impacting objectives. Here are 11 factors:

1. risk of audit

2. case mix severity

3. interactive complexity

4. authorized CPT codes

5. availability of consultation

6. physician support

7. social detriments of health

8. family dysfunction

9. patient age

10. culture

11. health problems

The factors listed above are all risks which require effort beyond treatment as usual. They require interactive complexity, coordination of care, screening, and progress measures. Providers must guard against “burnout” by limiting their practices case mix severity. High-risk, high-severity patients have access problems. They are not over-served. Those patients are underserved. In VBP contracts these challenges are referred to as risks that are shared among providers and the Healthplan. Subpopulations of patient require adjustments in reimbursements and payments.

Without risk adjustment for identified subpopulations, providers find complex cases disruptive to their practice. Complex cases can be disruptive to the treatment of other patients. In these cases, access for patients can diminish. When access and risk adjustment issues were raised during a presentation about the contract, the Healthplan representative did not know anything about risk sharing or risk adjustments. Ignorance on the part of a Healthplan representative does not bode well for value-based payment contracts when providers contract as group. Provider practices are asked to share the risk of treating what can be very difficult cases and, in this example, the Healthplan will not reimburse for the additional efforts providers must expend for interactive complexity and coordination of care.

The risk is almost certain that providers will fail to meet contract expectations when a contract is not transparent, not negotiable, nor agreed upon. Signing a contract does not mean you agree. It does not mean you can’t raise issues that are material to the agreement. One should not sign a master service agreement if the signer believes the attached sub-agreement option is deceptive, faulty and unfair. It would lend credibility and could perpetuate fraud and could be construed as conspiracy to commit fraud. MRI concludes that there is probable to almost certain risk that the Healthplan’s contract is pushing the line close to defrauding employers and the public who purchase their plans.

MRI and the provider group continue to talk to the Healthplan, hoping to get answers to their questions. What they have been told is that they have not reached an agreement and that perhaps the Provider group should not participate in the contract. The Provider group’s response was that fee-for-service is coming an end and is being replaced by value-based contracts. The Provider group insisted that they must sign the contract but cannot sign the contract for legal, ethical and moral reasons. They asserted that value-based contracting require transparent shared value, objectives and controls. Fee for service contracts can be offered as a contract of adhesion (i.e., take it or leave it), incentive, measurement and value-based contract cannot, especially when the market is

Value-based contracting for mental and behavioral health services will not be successful until Healthplans and provider practices co-create shared values, objectives, controls, test scripts, and agree on leading indicators of success. In order for value-based contracts to be feasible there must be a test of design and test of effectiveness.

Based on case examples and experience, MRI suggests that Healthplans’ behavioral health managers have little or no authority to co-create shared values and objectives that might go against Healthplans’ profit agendas. As a consequence, Healthplans cannot be trusted to create and offer contacts to provider practices without independent audit oversight. Misalignment between Healthplans and providers practices will result in an erosion of trust, quality and harm to purchasers, patients and public health. 

DISCLAIMER and PURPOSE: This discussion document is intended for training, educational, 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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