We have been working with Oliver Wyman to articulate the value proposition for ASOs to become financial sponsor of Commercial Advantage benefit plans. This blog post articulates the evolution of our thinking as well as the opportunity to meet the needs of ASO’s wanting to partner with a national value based medical group accountable for specific financial, clinical, and experience outcomes.
To completely understand how things are often requires understanding where things have been. The creation of Crossover Health, interestingly enough, was sparked by trying to understand how health care was paid for. I instinctively knew that paying for bits and parts via CPT codes was problematic and could see how the transactional approach led to so much distortion. As we entered the direct pay world through the employer channel, we immediately enjoyed efficiency gains but over time began to increasingly bump up against the speed and scale issues of getting paid directly by employers. While direct pay overcomes many payment issues, it introduces another. Our services are typically paid out of the “Wellness Budget”, a somewhat fickle line item, subject to both business cycle whims as well as guarded by significant procurement obstacles. This began to prove a natural throttling mechanism to our continued rapid growth and we realized like many other employer-focused health services before us, that in order to accelerate to scale we would have to figure out how to tap into the existing “Health Services” budget and leverage the existing “Fee for Service” rails.
Say what? Crossover will be taking fee for service payment after a decade of disagreement, dissent, and defiance! Well not quite the capitulation you hoped for, but a novel carillon instead.
Some tuning for context
The Health Services budgets of large employers are typically managed through an Administrative Services Only (ASO) arrangement wherein the self insured employer pays fees to an insurance company, a third party administrator, or other entity that creates a network of contracted providers as well as pays those providers agreed upon rates. The self insured employer pays into an account that is then managed by the ASO to then manage the network and pay the bills. Money goes in from the employer, and money goes out at the direction of the ASO to pay the approved bills. The ASOs often bring a bundle of other “value added services” to address a variety of employer issues like engagement members, total cost control, and targeted point solutions. ASOs have been remarkably resilient in maintaining their economic position in the payment stream between the employer who is paying the bills and the provider rendering services largely due to their control of the Health Services budget.
Finding the right melody
Observing this system churning merrily away, you can also hear the melody of employers waking up to realize that like in any supply chain, to manage health care costs you must manage healthcare delivery. Innovative health plans, seeing that the music is slowing, are increasing their tempo to get involved with new care delivery as well as new payment models in their commercial book of business that tangibly create the value based solutions that all the players in the orchestra can rally behind. The song was always there, but it just needed the right elements to bring it all together.
We’ve coined the phrase, the category if you will, Commercial Advantage”— an obvious nod to the rapidly-growing Medicare Advantage market but purpose built for the commercial sector. In a way, Commercial Advantage is the Magnum Opus of care delivery models – its been heavily leveraged in the employer health market, it can become the foundation of a new approach to benefits, and we just introduced this to a national audience of health plans at the annual AHIP Conference last week. We believe that Commercial Advantage is the last best hope for insurers to (finally) get closer to members while providing an engaging and valued service, support the creation of a genuinely accountable Primary Health model delivered by designated care team responsible for defined populations, and deliver on the cost, quality, and experience metrics any sponsor would expect.
As I’ve noted before, the Commercial Advantage plans will be designed for relationship-based care paid for in fixed fee arrangement, with the goals of fundamentally altering how care is provided. They will most likely use proprietary member engagement software, as traditional third-party EHRs have not been effective in either collaboratively or longitudinally managing patients. Risk prediction software is heavily leveraged, in order to proactively engage high-risk members in order to better manage populations. Unique clinical and social programming is offered, and adapted to the most pressing health needs of members (for the commercial business this includes mental health services, group classes, fitness services, condition management, etc.). They also utilize multiple mechanisms to control costly referrals to the secondary care network. And, the outcomes achieved will be clear, compelling, and repeatable—lower costs, higher quality, better member engagement, and truly engaged providers. Quadruple Aim, anyone?
Many of these features characterize the approach to care delivery we’ve been taking at Crossover Health for a very long time. However, what is new in Commercial Advantage is the opportunity for the health plans to be part of paying for this model. This will require some obvious adjustments to current fee for service but it should leverage the known language of CPT codes, bundled in a way to create a fixed fee capitated rate. No need to pay for a visit when that visit can be conducted through multiple channels; no need to log every transactional test when all can be circumscribed in episode fees; and no need to spend a fortune staffing a small army trying to reconcile at the line item level. Much better to set clear expectations on managing to a budget, driving toward performance goals, and ensuring that those goals are balanced by the Quadruple Aim framework.
I’ve been banging the drum for years about the need to reinvent Primary Health at scale. Commercial Advantage represents a new songbook, combining engagement, care delivery and outcomes expertise. ASOs of all stripes and sizes now have the opportunity to lead out by helping to create the aligned payment mechanisms in the commercial sector that will allow innovative next generation primary health models to thrive. Leveraging the old fee for service rails, but bringing in a totally different payload will be the winning composition.
Which should be beautiful music to everyone’s ears.