Electronic Health Reporter

Guest post by Steve Tutewohl, strategic accounts officer, Valence Health.

Payers and providers have always had inherent tension. Their business models never provided a true incentive to work together.

However, as the industry moves toward value-based care, providers and payers are now incentivized to focus on improving quality while lowering costs.

When I got into the healthcare business 20 years ago, as an actuary working on the provider side, my clients were taking bold risks with limited information, little analytical support and hardly any data. Today, providers often have more access to data than payers.

Healthcare is at a critical juncture, which creates a great opportunity for different types of professionals, including actuaries. We will continue to find new purposes, new roles and new responsibilities in healthcare, because the need for sophisticated analytics is growing exponentially every year.

One of the first Affordable Care Act challenges actuaries were uniquely prepared to address was the financial impact of risk adjustment transfers when the healthcare exchange opened.

The insurance industry had never seen anything of this magnitude before. It could either be catastrophic or a huge boon for healthcare insurers depending on how it paid out. Insurers are used to dealing with a certain level of uncertainty, but no company is comfortable operating blindly indefinitely. Based on our understanding of the business and our technical know-how, actuaries were able to offer providers and payers:

• Risk score projections to estimate year-end metrics
• Risk score opportunity models that identify likely missing HCC coding
• Risk transfer year-end projections based upon a series of complex assumptions
• Allocations of risk transfers back to individual members to see which segments of the block of business are profitable and which are loss leaders

Effective payer-provider partnerships are formed when both align on a value proposition. They have to see and understand what value the other one brings to the equation.

On the provider side, it’s pretty simple: They are looking to secure their patient base and increase their market share. On the payer side, there are slightly different objectives. If they are going to move towards assigning risk to providers, they need assurances the provider network can bend the cost curve so they, as payers, can focus on selling product.

There is no better place to be than healthcare. It is a $3 trillion to $4 trillion industry that is in an environment of constant change. It’s recession proof. There is an infinite amount of data out there, which makes it even more appealing. We’re still scratching the surface of how we use that data to improve patient outcomes.