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Payers and providers have struggled to draw out a roadmap for value-based care in addiction treatment. As a result, the adoption of value-based contracting in substance use care remains low.
Still, some payers and providers blazed the trail over the past several years, highlighting some core do’s and don’ts for value-based care contracting.
“I’ve been hearing for 10 years that we’re on the edge of this,” Dr. Tom Britton, CEO of American Addiction Centers, told Behavioral Health Business. “Maybe we are? It’s happening in other disciplines for chronic disease … and I think many of them are working.”
Brentwood, Tennessee-based American Addiction Centers operates 10 treatment centers and corresponding outpatient and telehealth services.
The medical community broadly agrees there is a connection between patients getting treatment for addiction and overall savings to other parts of health care in the first place. One study found that medication-assisted treatment (MAT) for opioid use disorder (OUD) alone could lead to $15,000 to $90,000 in lifetime savings per person.
“As a first principle, SUD patient interventions reduce costs — I don’t think that’s a given in all areas of health care,” Cooper Zelnick, chief revenue officer for Groups Recover Together, told BHB.
Groups Recover Together was founded in 2014 and offers MAT via in-person and telehealth group therapy sessions. Last year, it rolled out a new technology element to its value-based care-focused model.
Still, there is a delicate balance where providers want to get paid the premium for improving health outcomes and payers want to reduce the overall spend. One key reality is that, on the whole, most providers and payers are not ready for value-based care.
The biggest reasons are well known. A leading hurdle for both payers and providers is the lack of industry-level consensus on what measures best reflect the value of care. There is a hesitance or inability to make the technology changes needed to track care and outcomes. And many payers cite the difficulty of developing a widely applicable reimbursement strategy. Further, value-based care strategies may not translate to benefits for the payer, given the churn of patients in and out of health plans. About 60% of plan members leave a health plan within two years.
Payers and providers (especially) look at the fee-for-service status quo and often wonder about a better way of doing things, making the question this: How do we get there?
“The process starts with the party that delivers service; that’s the operator on the ground,” Nate Pelletier, operator in residence for Liberty Search Ventures, told BHB. “[Payers] are not the ones running the P&L. They’re not the ones seeing the patient. They’re not the ones managing the teams that provide the care.
“And they’re not the ones that have the investors breathe down their necks to deliver.”
Liberty Search Ventures is a New York City-based investment firm focused on partnering with entrepreneurs and small businesses with very specific industry focuses.
What works in value-based care
Managing patient engagement and provider capacity are key operational considerations.
On the patient side, assessing and improving the time a patient spends in care — retention, in short — has a strong connection to good patient outcomes in the industry’s common knowledge and research.
For Groups Recover Together, retention is a crucial aspect of their value-based care contracts; the company places downside risk on this measure. About 93% of the company’s revenue is tied to these types of payer contracts, Zelnick said.
In some instances, retention is defined in the contract in terms common to the industry and is measured at 180 days. If Groups Recover Together misses its target, it pays back 75% of its reimbursements. In other instances, Groups will foot the bill for a patient who is readmitted within 18 months of getting care.
“That ain’t complicated,” Zelnick said. “If you can clearly articulate the outcomes your organization drives, the way in which outcomes impact costs, and you’re prepared to take meaningful financial risks on it — the payers that are there. … It’s how we built our business.”
Continued engagement after admission and discharge is a key element of retention. It takes investment to do well.
In his previous role as the CEO of the Gateway Foundation, Britton established contracts that he called a “12-month risk-stratified model.” In brief, the organization was responsible for providing any treatment for readmission at no cost if it was done within a year of initiation. The keys to the program were care plans that met the severity of each patient’s conditions for the first few months of care and a care coordination team that guided the patient through the next eight to 10 months as they continued to need care.
Providers’ time also must be considered in value-based care. More often than not, addiction treatment providers have too few staff for too many patients, leading to burnout and clinician turnover. This drives up expenses and drives down revenue for providers. And patients don’t get the benefit of a strong therapeutic alliance, a foundational element to good care outcomes, Pelletier said.
“Having too many patients doesn’t work,” Pelletier said. “If you manage your clinics at the right threshold and bill appropriately, you’re going to see significant [progress].”
Building in new learnings
The fee-for-service reimbursement status quo has opportunities for innovation that inch payers and providers toward value-based care adoption. This involves paying for meeting performance metrics or rejigging the fee schedule to incentivize clinically impactful efforts. Another approach calls for behavioral health providers to invest in assessing the actual cost of doing business.
Building incentives that benefit patients into fee schedules often locks providers into doing good business based on what the fee schedule incentivizes providers to do. However, the opposite is true as well.
“We would argue that the experience of Groups is that if you are incentivized to do one thing, it is very hard to do another thing,” Zelnick said. “You accept fee-for-service reimbursement, and you’re suddenly incentivized to deliver the services that are lucrative off the fee schedule and ignore the services that are not lucrative.”
He gave the example of tweaking bundled payments to increase reimbursements the further along a provider progressively is on the maintenance phase of treatment rather than shrinking.
It could be even simpler than that. Britton said his organizations have participated in payer arrangements where they get a certain percentage increase in rates based on annual performance based on previously established metrics.
But even more important is making the right investment in business intelligence to appropriately assess what care will cost in a year. Britton said the Gateway Foundation eventually learned that it has to build on the assumption that certain types of patients will need to be admitted twice rather than just once.
What doesn’t work
Pelletier is skeptical that value-based care arrangements require fundamental system changes. While he acknowledged that investments may be required, value-based care infrastructure is more about sharing what payers and providers already have and then reconciling it.
Payers and providers often work together with their own “black box,” where each develops systems that don’t account for the other.
“This requires really strong fundamentals from good operations — good processes, good control measures, good data sharing and the right data,” Pelletier said.
Pelletier maintains that value-based care arrangements can be done at low levels of risk. Similarly, Britton questions whether the opportunity for providers to take on escalated risk is limited, each offering a contrasting opinion to Zelnick and Groups Recover Together.
It can often be a sticking point in negotiations with payers in the contracting process, preempting the possibility of innovative care in the first place.
“What doesn’t work today in value-based care is starting with the contract,” Pelletier said. “If you think the contract is the driver of the process and not what you’re delivering, what happens is that you’ll sign a contract based on the number that you want to hit. But, the attribution is that the current patient population is what the payer already has.
“The way that works today, you have to go get them. A lot of companies are finding that it’s not as easy as getting a list and email and calling these people.”
Zelnick points out that Groups Recover Together completely focuses on value-based care, allowing it to commit to these types of agreements. This is by far the exception in behavioral health, not the rule.
Negotiating a value-based care deal in the first place is clearly the hardest aspect of the practice. This has been the case since the value-based care discourse bled into addiction treatment. The lack of such arrangements leave tried and true examples of essential do’s and don’ts.
At least conceptually, it’s important that the performance metrics established by payers and providers don’t only focus on reducing costs. Often, this translates to care limitations that often lead to patient outcomes that increase cost, such as readmissions or emergency care.
“The biggest issue is just getting these over the line,” Britton said. “I don’t have experience or knowledge of any of these failings and I have personal experience trying to get these kinds of contracts and not being able to get them.”
Still, some companies that have focused on value-based care have struggled. In late 2022, Eleanor Health, another addiction treatment provider focused on value-based care, cut its staff by 20%. Also, its CEO stepped down in August, and a successor has yet to be named.
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