We have all heard about the proposed benefits of value-based care models. In theory, they should be easy to embrace, but in practice, it’s clear these models are difficult to operationalize despite the attached financial incentives. The result is a mountain of missed opportunities. The good news is that there are new, innovative ways to surmount this with financial micro-incentive programs for providers.

How micro-incentives can accelerate higher-value care

Let’s say you’re trying to lose some weight, but the target weight is not set for you. It is set for the aggregate of all the people in your county. Then, on top of that, you wouldn’t start losing weight for a year. You’re driven to keep dieting and exercising without knowing whether the effort will pay off. Plus, you have to wait a year to know the results.

I’ve just described the worst weight loss plan ever.

I’ve also just described what value-based care models can feel like to individual providers. The financial rewards and goalposts that are set in the future have little relevance to what they need to do daily to make the best decisions for their patients.

This is where the micro-incentive model comes in – a relatively new concept that is a critical pillar of Clarify Health’s Value Solution. A micro-incentive is a financial reward given to providers frequently and in a timely manner to motivate them to make discrete high-value decisions, like where to send their patients or what types of procedures they deliver.

Sounds good, right? Let’s look at a concrete example.

Let’s say you’re an orthopedic surgeon who practices across multiple sites of service. You may perform total knee arthroscopies in a hospital inpatient setting, a hospital outpatient setting, and an ambulatory surgery center. Each of these settings has a different cost profile for payer and patient.

If there’s a micro-incentive model that will motivate you to shift more of your procedures to a lower acuity site of care, like an ambulatory surgery center, everybody saves. In this example, for every “good” high-value decision that’s made, you earn a reasonably large amount of the savings that your decision helped generate.

That reward is meaningful as long as you’re meeting the thresholds around quality outcomes and shifting patients toward the best site of care to deliver those outcomes. It’s valuable for the provider, payer, and patient.

Even better, micro-incentives are payment model-agnostic

As you know, our healthcare system is built around two models:

  • Fee-for-service model: A provider does a medical service, sends a claim, and gets paid for it.
  • Value-based care model: Value-based models reward providers with incentive payments for the cost and quality of care they deliver. However, value-based contracts don’t pay out for 18 to 24 months after the service has been rendered. Not only that but there are large lump sums that get distributed in ways that are not targeted to individual providers.

What’s great about micro-incentives is that providers can be in either model. There are a lot of doctors — especially independent doctors — that don’t have the capabilities to take on substantial risk and can be heavily punished when accountable for the total cost of care. This gets tricky because it’s hard to determine what factors are controllable and which factors are not.

With so many payers looking to drive adoption of their value-based programs, micro-incentives create an environment where payers can say to providers: “Let’s not put you at risk for a lot of uncontrollable activities. Let’s not put you at risk at all. Let’s engage you with an additional upside model, one that’s based on very specific changes and savings that you’re creating for the system and your patients.”

Not only does a micro-incentive program financially reward the provider and payer, it also reduces friction between the two groups and puts dollars back in the patient’s pocket. Here’s why: Historically, those partnerships have been built upon prior authorization and payment denials, generating substantial extraneous effort and a massive level of mistrust.

A partnership based on denials and mistrust is weak. At the heart of it, having strong networks that can manage higher-value care is essential for the payer. Why? Because when payers are selling a health plan to an employer, the HR department is looking for the best plan for their employees. The best plans have the most robust networks.

How can a health plan start a micro-incentive program?

If your health plan is looking to start a micro-incentive program, ask yourself these three questions first:

  1. Do I have the markets where shifting behavior is going to be valuable? You have to understand the number of switchable procedures within your market. Just because a provider does all their TKA’s in the inpatient setting doesn’t necessarily mean that those are switchable procedures. That doctor may see elderly, complex comorbid patients who need to have those procedures done in a full-feature facility.
  1. What are the rewards? You need to design a program that will produce considerable ROI in a certain timeframe. They must be meaningful rewards that motivate the provider. They must be frequent and timely. The provider needs to understand what the program means and what it takes to earn the incentive. You want your providers to say: “This is something I see attached to each one of my better decisions, and it’s coming each month — not 18 or 24 months from now.”
  1. Does the program deliver the right information? Providers want the best choice for their patients, but most lack visibility on how to act on those recommendations. You want data delivered to providers in a personal and transparent way that captures the value of what they’re doing.

Clarify Health’s Value Solution

Clarify Health’s award-winning Value Solution is the only end-to-end software that digitizes contracting and connects the dots between clinical performance, financial impact, and incentives to boost payer-provider collaboration and transparency, changing the way that providers make decisions. We are proud of winning the 2022 MedTech Breakthrough Award for “Best Overall Healthcare Data Analytics Platform.”

GM, SVP, Payer Solutions
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