Outcomes-based contracting (OBC) has been developed by the Center for Health Value Innovation as a key methodology to reduce inefficiencies in healthcare delivery and to encourage consumers to manage their own health. It involves aligning incentives for both a defined population—specifically, one that needs to focus on choosing better healthcare—and the care delivery providers that are contracted for this population. It can be best described as the link between value-based benefit design as an engagement tool for patients and value-based purchasing as a decision tool for efficient, effective care.
Value-based benefit design is a four-step process that, one, uses data to define the total health risk for a population; two, prioritizes that risk to identify plan design opportunities that can improve consumer engagement; three, purchases services that improve the engagement and risk profiles of the at-risk population; and four, measures dividends and new opportunities for better outcomes.
OBC was developed to address unmet needs in the market: growing obesity and chronic disease, lack of patient engagement (and, sometimes, delivery system engagement) in the improvement of health and the burgeoning costs associated with poor health. OBC’s requirements include technological tools that link to primary care clinicians and/or medical homes; robust data reporting that tracks process and outcome improvement, practice pattern variance and improvements in competency; and proof of concept and comparisons to existing and/or local services.
Key metrics that identify increased value from expanded health services, as well as the levers used to guide beneficiaries to these services, are hallmarks of an OBC. In some instances, users will immediately see better quality, processes and return to health, and, as one would suspect, for some services, there is an education ramp-up for applicability and appropriate use. But in every case, the components of value-based designs—focusing on outcomes through quality care, engagement of stakeholders and predictable cost trends—are intrinsically wrapped into the system.
The concept of health value has evolved, as have the defining metrics and levers that link better delivery of health services to better performance at the worksite and in the community. The improved health, wealth and performance of all stakeholders is a continual theme that defines the health value of the worksite, the community and the consumer. Developing a broader suite of services, metrics and applications is required in order to maintain a sustainable economy.
Cyndy Nayer is CEO of the Center for Health Value Innovation.
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