Priority Health Exec: Pandemic Is Opportunity for Payers, Providers to Advance VBC

Payers and providers participating in value-based agreements are managing costs and addressing the larger issue of rising healthcare costs, which was occurring even prior to the pandemic.

Editor's note: This conversation is a transcript from an episode of the HealthLeaders Finance Podcast. Audio of the interview can be found here.

Welcome to 2021, a year that will largely be defined by how healthcare organizations emerge from the COVID-19 pandemic, which dominated the prior year.

While hospitals and health systems continue to face acute challenges related to the coronavirus outbreak, insurance companies are also addressing the impact of the pandemic on their respective business lines as well. 

Payers' forward-looking operations are still tied to how providers fare during a moment of crisis.

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Mike Jasperson, senior vice president of provider network strategy at Priority Health, talks about how the insurer community has responded to the changing dynamics related to the pandemic and how COVID-19 will affect payer-provider relations in the future. 

This transcript has been edited for clarity and brevity.

HealthLeaders: Speaking to our audience of hospital and health system executives, what's one thing you'd like them to know about how insurers are faring during the pandemic? Additionally, do you expect payer-provider relations to improve in a post-pandemic world? Why or why not?

Mike Jasperson: The COVID-19 pandemic clearly had a considerable impact on the entire healthcare system across the country, including health insurers here in Michigan. In the spring of 2020, we saw dramatic changes in healthcare delivery overnight. Testing capabilities ramped up and providers scrambled to ensure that there would be adequate acute bed and ICU capacity to manage the anticipated surge. We saw elective surgeries and routine procedures being delayed or canceled because of concerns around capacity and reluctance from patients to seek care.

Pragmatically, this produced a cash crunch for nearly all providers in the state, all at once. Insurers like us were being asked what they could do to help. We were also inundated with requests to reduce the administrative burden for providers struggling to keep up during the pandemic, so our reaction was to do our absolute best to ensure that we were being as responsive as possible to our key constituents.

Some of the things that we did in our response during the pandemic were a reduction in administrative burden by offering less stringent utilization management requirements for providers. Given cash crunch concerns, we advanced dollars reserved for physician incentive programs and other risk-based programs, which normally would have been paid later in 2021. We implemented higher levels of reimbursement for telehealth services, Medicare Advantage COVID inpatient cases, suspended sequestration, and covered testing and COVID treatments at no cost-share for members.

Finally, we gave premium credits back to employers and members at a time when extra money would be most helpful to most people. It ties to how we fared together in response, as a system of healthcare delivery in this country in a time of crisis.

Regarding relationships and the go forward, I do think those relationships will evolve and improve between providers and payers in a post-pandemic world. We hope that the marketplace recognizes that our organization and others acted quickly with integrity and honesty as we proceeded through the crisis together, and we hope that relationships and trust improved in terms of our specific response during the pandemic. 

HL: How do you expect the transition to value-based care to be impacted by the COVID-19 outbreak? What do the various stakeholders—namely payers, providers, and the federal government— need to do to hasten the move away from fee-for-service?

Jasperson: The pandemic highlighted the pitfalls of paying for healthcare based on the number of patients seen and services rendered. This situation reinforces the benefit of financing healthcare in a way that is not tied to volume but instead to value. Through the COVID lens, value-based agreements can support providers in times of uncertainty. During the pandemic, we saw interest in these agreements increase.

Once providers were able to get their legs under them, there was a clear realization that fee-for-service models in a time of unprecedented disruption weren't sustainable. Immediately, discussions proceeded on creating a model that can move dollars from coverage to care if this were to ever happen again. Population health models included everything from traditional capitation models to medical loss ratio-based full-risk to total cost of care arrangements.

We're hoping that the pandemic has a lasting impact on the potential of moving to value. Payers and providers who are in value-based agreements are managing costs in an effective way that helps address the larger issue of rising healthcare costs in our country that were even occurring prior to the pandemic.

[However], the healthcare industry is still heavily reliant on fee-for-service reimbursement, and changing something that is so ingrained within an industry can take a lot of time. Wholesale changes from fee-for-service to value for major payers like traditional Medicare or Medicare is one step in moving the market forward.

Obviously, private health plans like Priority Health serve a key role in this as well. In order to move from fee-for-service, there needs to be a willingness from both payers and providers to put in the time needed to make this transition. There has to be flexibility and modeling designed to meet the provider organization where they're at in terms of their risk tolerance; [hospitals] continue to be in various states of being able to manage meaningful risks, and clear economic alignment can be transformational in healthcare. 

HL: How has the pandemic changed the healthcare industry in Michigan, and which dynamics do you expect to carry on for years to come?

Jasperson: The pandemic has been a defining moment for the entire world. I think that this has been a turning point in the industry in Michigan and elsewhere.

We had yet another eye-opening experience when we saw startling and disproportionate COVID-19 death rates within African American communities. This was happening in different areas throughout the country but, in Michigan, in the spring, we saw that over 40% of COVID deaths were African Americans, while only 14% of our state population is African American. 

This again revealed the need for more solutions to address inequities within healthcare. Our team continues to focus on creating and driving innovative programs that work to address critical social determinants of health issues.

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I think another thing that is here to stay, for sure, both nationally and in Michigan, is the widespread adoption of telehealth. 

COVID-19 caused a dramatic shift in the way our members were seeking care. We took notice that more and more consumers are comfortable with and prefer the convenience of telehealth services. This was most pronounced and sustained within paid behavioral health, but we're hoping that the use of telehealth has a lasting effect across the board. We launched a new virtual-first telehealth PCP plan for 2021 and are incorporating telehealth benefits within many of our plans. I think a lot of insurers are doing the same or at least exploring those options as well.

Finally, something else I don't see going away is a renewed focus on mental health resources. This pandemic was extremely challenging for many people, not just physically but mentally and emotionally due to people being isolated from friends and family, perhaps laid off from work, struggling with finances, living in fear that they or a loved one may get the virus; it's been a rough year. One response that we [did] ... as a carrier, [was we] provided all our members with free access to an online mental wellness tool. We saw a lot of industries, not just healthcare, step forward and provide resources for people who were struggling with mental health.

HL: Looking ahead to 2021, what do you expect to happen as it relates to the healthcare industry, and what advice would you share with fellow executives heading into further uncertainty?

Jasperson: Moving into 2021, I think it'll be important to determine what changes were temporary and what things are here to stay. I believe in the next couple of years we'll see a renewed energy towards healthcare preparedness. I think we're all in agreement now on the phrase, 'Plan for the worst but hope for the best.'

As far as advice, I'd remind everyone to stay nimble and be ready to innovate. We've seen so many examples of companies and entrepreneurs learning and adapting in real-time to survive and that'll be necessary as we move forward. This pandemic has caused a massive shift in consumer behavior, and I think it's going to take time to catch up to that, so innovation in this industry is going to be key.

Be ready to make changes but understand that you won't always get it right. We moved quickly during the pandemic, so we as an industry did what felt like decades of learning in a year's time. There are bound to be mistakes that occurred along the way, and there were, but there was incredible learning that occurred. This has been an extremely challenging experience for everyone in the industry, but it also has been inspiring to see how our company and communities have responded to the crisis.