Here’s How We Get Private Insurers to Buy In on Value-Based Care

By Brian Kathmann, Vice President, Product Management, Healthcare:

Value-based care is seen as healthcare’s next evolution, prioritizing whole-health outcomes over the usual volume of symptom treatments. This approach has profound implications for cost management, patient satisfaction, and overall healthcare quality. However, transitioning from traditional fee-for-service models to value-based care faces challenges, particularly regarding payer motivation and long-term investment. The growing attention around “food as medicine” is part of this, and pharmacists have an opportunity to contribute.

The Unique Position of Medicare

Medicare is a key player in value-based care due to its long-term relationship with beneficiaries. Unlike private insurers, Medicare covers individuals for life, creating a unique incentive structure.

Since it bears the long-term costs of chronic diseases, it invests in preventative care. By focusing on early intervention, Medicare can reduce costly complications and hospital readmissions.

Programs like the Supplemental Nutrition Assistance Program and the Women, Infants, and Children program already contribute to better health. Medicare’s food-as-medicine pilot programs — including safety and cooking education, meal delivery, and nutrition counseling — aim for long-term patient health. This ensures the benefits of these investments are realized within Medicare’s budget, making it a natural proponent of value-based care.

Overcoming Short-Term Thinking Among Private Insurers

Private insurers face different incentives. With policyholders frequently changing plans due to employment shifts and other factors, insurers are less motivated to invest in long-term health outcomes that may not benefit them directly. Data isn’t the problem; it’s the business model. The current fee-for-service model benefits both insurer and provider, but a scalable business model for value-based care doesn’t yet exist. There’s no guaranteed financial payoff.

The short-term costs of implementing value-based care models, such as developing care coordination systems and investing in preventative care, can be substantial. Without assurance of financial benefits, private insurers are hesitant to make these investments.

To address this issue, several strategies can be employed:

1. Risk-Sharing Agreements: Encouraging agreements where insurers, providers, and possibly even patients share in savings achieved through value-based care could align incentives across the board. 
2. Policy Interventions: Government policies that incentivize or mandate value-based care models could help shift the industry toward long-term thinking. 
3. Collaborative Partnerships: Fostering true partnerships between retailers, health systems, and insurers can lead to solutions that benefit all parties, including the patient. 

The Role of Data and Technology

For value-based care to work, robust data sharing between stakeholders — including pharmacies — is essential. Unfortunately, this is becoming difficult as more Americans pay out of pocket because of high deductibles and better access to discounts, leading to lost data on metrics like medication adherence. Integrated health data systems can help combat this by ensuring that care is coordinated across different providers, improving patient outcomes and reducing unnecessary treatments.

Non-traditional entities like pharmacies and insurers can contribute to primary care and fill data gaps. Connecting drug research, clinical trials, and real-world data can lead to more personalized care strategies. This integration creates a feedback loop where treatment is continuously monitored and optimized.

Economic Advantages of Value-Based Care

With American healthcare consumers increasingly divided by means, providing equitable access to affordable care is top of mind for patient and provider alike. Those with money can opt into any treatment, while the less resourced must rely on overburdened public health services. Value-based care has the potential to fill this chasm.

It also offers significant economic advantages for payers. Post-acute care spending is reduced through fewer readmissions and improved chronic disease management, and  preventative care decreases operational costs by minimizing the need for expensive emergency care and hospitalizations. Focusing on patient outcomes enhances care coordination, strengthens patient loyalty, and boosts the insurer’s reputation.

The Potential of Food as Medicine

An emerging aspect of value-based care is the food-as-medicine movement, which advocates for dietary interventions as a critical component of healthcare. By integrating nutrition into patient care plans, healthcare providers can address a root cause of many chronic diseases, leading to better health outcomes and reduced healthcare costs.

Making nutritious food accessible to all income levels is essential for this approach to work. Initiatives like medically tailored meal programs for specific health conditions and subsidies for healthy foods in low-income communities are steps in the right direction.

While the path to widespread adoption of value-based care is steep, it’s essential for creating a more equitable and high-performing healthcare system. Embracing innovative approaches like food-as-medicine furthers the potential for a healthcare system that provides higher quality care at a lower total cost.

Medicare’s long-term outlook serves as a model for how other payers might align their incentives with patient outcomes. This is evident in comparing PDC rates for Medicare vs. commercial beneficiaries. Up to 32% fewer individuals are non-adherent compared to those with retail 90-day prescriptions. By overcoming short-term thinking through strategic partnerships, risk-sharing models, and robust data integration, the healthcare industry can move closer to delivering on the promise of value-based care.