Cigna report outlines the benefits, challenges of value-based care

Employers can be a driving force in the adoption of value-based care (VBC), the model that emphasizes coordinated care and is a departure from the traditional fee-for-service model, according to a new white paper from Cigna.

Supporters of the VBC approach have long argued that the model delivers better health and lower costs, but the massive, complex health care system in the U.S. is resistant to change. Although government markets such as Medicare are making progress on adopting the model, employer-based insurance plans and the providers they work with have been slower to embrace VBC models.

David Brailer, EVP and chief health officer of The Cigna Group, said his organization is committed to advancing the new concept. “Doctors love value-based care, and patients love it. Their health outcomes are better, hospitalizations are lower, all the metrics are better,” he said. “The quality of life for the patients is so much higher because they’re not as sick. What we’re betting on here is that the next big area for this is going to be commercial health care.”

Cigna is not the only insurer touting the benefits of VBC models. A recent report from Humana, which offers plans in the Medicare and Medicaid market, found 30% fewer patient readmissions with its VBC programs. The Humana report also said that in 2022, Humana Medicare Advantage Value-Based contractual arrangements saved 23.2% in medical costs when compared to traditional Medicare.

The evolution of VBC

The white paper identifies the passage of the Affordable Care Act (ACA) in 2010 as an early step toward replacing fee-for-service with a value-based model of health care. “The ACA introduced comprehensive reforms aiming to improve access to VBC, establishing accountable care organizations, bundled payments, the Hospital Readmissions Reduction Program, and health insurance exchanges,” the report said.

The model has had its biggest impact on Medicare, the white paper said, with federal agencies identifying more than $1.8 billion in savings in 2022 for Medicare due to VBC programs.

In the private sector, VBC adoption will require change—some in areas employers are already addressing. The Cigna analysis suggests that plans will need to design their benefits to emphasize health and wellness behaviors; guide employees to quality providers and high-value services; and promote keeping workers healthy through its benefits-related communications and programming.

Turning the ship—the challenges of implementing a new model

The Cigna paper suggests that physicians, patients, and health plans tend to recognize the good aspects of VBC, but that change has been slow nonetheless in the private sector. It quoted data showing that nearly 54% of private sector commercial health care spend continues to use the fee-for-service model.

“Despite the numerous benefits when employers approach health care differently, the status quo largely persists,” the report said. “This is due to many reasons, including the complexities of the health care ecosystem, employer and operational resistance, and employee turnover.”

The paper noted that even though the better outcomes will likely result in long-term savings, there can be short-term costs and it may take time to realize the VBC savings. Employers who employ the new model will probably see improved experiences and outcomes before they see lower premiums. And changing provider systems is also complicated. “It takes a lot of time, effort and resources to succeed in VBC,” the report said. “Without providers who are ready and able to practice within VBC model, it will be challenging to take hold.”

VBC approaches also require providers to share risks in health care delivery, and the paper suggests that employer-based plans will also need to share that risk. “Employers that take on fully financial risk for their employee’s health insurance can engage more holistically in VBC by purchasing innovative solutions to drive market changes, offer incentives to members for health behaviors, and impact provider behavior,” the paper said.

Related: 17 health care groups urge Congress to pass value-based care bill, extend 5% incentive

In the end, change may be unavoidable because the status quo is unsustainable, the white paper said. “The cost of health care is increasingly untenable for consumers, employers, and others in the ecosystem—and there is no indication of abatement,” the report said. “Annual U.S. health expenditures now exceed $4 trillion, of which 90% can be attributed to people with chronic and mental health conditions. The prevalence of chronic conditions, including diabetes, heart disease, and obesity, continues to increase and will drive significant health and economic costs for the foreseeable future.”