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BRIEF Moving Toward Value-Based Payment in Oral Health CareOverview of Value-Based PaymentWhy VBP?VBP arrangements offer the potential to remedy the misalignment of payment incentives found inthe traditional FFS system. VBP models focused on improving patient care can give providersflexibility to deliver care that patients need and want and avoid volume-driven and oftenunnecessary care. VBP can also provide financial resources to support critical infrastructureimprovements in provider practices, such as electronic health records (EHRs), decision supports,and care management tools. By linking payment to evidence-based care that is supported byquality measures, VBP can help improve patient outcomes. For the larger health care system, VBPcan also improve accountability by rewarding providers for improving quality of care andcontrolling costs.While VBP is a fairly new concept, many VBP initiatives haveVBP can provide financialshown positive results. Over an eight-year period, Blue Cross Blueresources to support criticalShield of Massachusetts’ Alternative Quality Contract, whichinfrastructure improvements inincludes provider financial incentives and penalties,provider practices, such asdemonstrated increased quality and reduced spending forelectronic health records, decisionparticipating patients than a control population.7 The Centers forsupports, and care managementMedicare & Medicaid Services’ (CMS) Medicare Shared SavingsProgram — which includes 561 accountable care organizationstools.(ACOs) serving 10.5 million beneficiaries — generated savings tothe Medicare program and its participating providers, and improved quality for patients. 8Providers who joined CMS’ Next Generation ACO model in 2016 reduced Medicare Parts A and Bspending for their patients by more than 100 million. 9 Results from other VBP initiatives,including CMS’ Medicare Pioneer ACO Model,10 Minnesota’s Integrated Health Partnershipprogram,11 and Tennessee’s Medicaid Episodes of Care program, 12 have also been positive.The Health Care Payment Learning and Action Network FrameworkThe most commonly used VBP framework — the Health Care Payment Learning and ActionNetwork (HCP LAN) Alternative Payment Model (APM) Framework — was created by HHS incollaboration with partners in the public, private, and nonprofit sectors, including state Medicaidagencies. The LAN Framework is used as a tool by CMS, states, and commercial payers, to establishconsistent terminology and define the levels of risk in, or sophistication required for, types of VBPmodels. The LAN Framework can also provide a useful structure for approaching VBP in oral healthcare.13,14 Exhibit 1 (next page) includes a description of the LAN categories.Advancing innovations in health care delivery for low-income Americans www.chcs.org5

BRIEF Moving Toward Value-Based Payment in Oral Health CareExhibit 1. Health Care Payment Learning and Action Network Alternative Payment Model FrameworkCATEGORY 1CATEGORY 2CATEGORY 3CATEGORY 4FEE-FOR-SERVICE –NO LINK TO QUALITYAND VALUEFEE-FOR-SERVICE –LINK TO QUALITYAND VALUEAPMS BUILT NTAAAFoundational Paymentsfor Infrastructure andOperationsAPMs with ment(e.g., care coordination fees andpayments for HIT investments)(e.g., shared savings withupside risk only)(e.g., per member per monthpayments, payments forspecialty services, such asoncology or mental health)BBBPay-for-ReportingAPMs with SharedSavings and e.g., episode-based paymentfor procedures andcomprehensive payment withupside and downside risk)(e.g., global budgets orfull/percent of premiumpayments)(e.g., bonuses for reporting dataor penalties for not reportingdata)CCIntegrated Finance andDelivery SystemPay-for-Performance(e.g., bonuses for qualityperformance)(e.g., global budgets or full/percent of premium paymentsin integrated systems)3N4NRisk-Based PaymentNOT Linked to QualityCapitated PaymentsNOT linked to QualitySource: Health Care Payment Learning and Action Network (HCP-LAN). Alternative Payment Model (APM) Framework: Refresh for 2017.The MITRE Corporation. 2017. Available at: aper-final.pdf.Advancing innovations in health care delivery for low-income Americans www.chcs.org6

BRIEF Moving Toward Value-Based Payment in Oral Health CareVBP ModelsVBP is defined as a broad set of performance-based strategies that link financial incentives to aprovider’s performance on a broad set of defined quality measures. VBP arrangements aretypically made between: (1) a federal or state government payer and a health plan; (2) a federaland state government payer and a provider or provider organization, like a dental serviceorganization; or (3) a health plan and a provider or provider organization. This brief focuses on VBParrangements between payers (government or health plan) and providers. In the broader healthcare environment, providers can be any kind of clinician or group of clinicians such as nurses,primary care physicians, specialists, hospitals, community health centers, multi-specialtypractices, behavioral health practitioners, ancillary practitioners, dentists, hygienists, and oralhealth specialists, among others. While VBP models encourage cost savings, to prevent cuttingcorners on care, all arrangements in Category 2C or above must be linked to quality performanceto ensure that cost savings do not come at the expense of quality. It is important to note thatadoption of VBP models does not need to start with Category 2 and move linearly to Category 4,and payment models may advance within categories.The most common models for providers engaged in VBPinclude: (1) pay-for-performance; (2) bundled payments;(3) shared savings; and (4) global or capitated payments.Each of these models is described below: While VBP models encourage costsavings, to prevent cuttingcorners on care, all arrangementsin Category 2C or above must belinked to quality performance toensure that cost savings do notcome at the expense of quality.Pay-for-Performance. In pay-for-performance (P4P)programs (Category 2B of the LAN Framework), providers orprovider organizations are financially rewarded or penalizedbased on certain pre-defined quality measure performancebenchmarks (e.g., as opposed to prior performance, peers, ornational/regional/state standard). Such measures are typically related to patient satisfaction,use of evidence-based processes, resource use, or health outcomes. P4P arrangements thatreward providers in the form of a bonus payment without any financial risk are widespreadand often made in combination with other payment arrangements.Shared Savings. Shared savings programs provide an incentive for providers or providerorganizations to efficiently manage health care spending and coordinate care by offeringproviders a percentage of any realized net savings for a predetermined population of patients.“Savings” are measured in the aggregate as the difference between an expected costbenchmark for a defined set of services and actual cost incurred during a specific time periodfor the population. The set of services could be an episode of care, or a total cost of care(TCOC) benchmark, which typically reflects average spending for care both inside and outsidea practice site. Services included in TCOC may include laboratory, radiology, pharmaceuticals,behavioral health services, and oral health services.15 Shared savings arrangements are mostused in conjunction with ACO or episode of care delivery system reform models.Programs can be structured to include upside-only risk (Category 3A of the LAN Framework)or upside and downside risk (Category 3B of the LAN Framework). For programs with upsideonly risk, if actual spending falls within an agreed-upon range below the benchmark amount,Advancing innovations in health care delivery for low-income Americans www.chcs.org7

BRIEF Moving Toward Value-Based Payment in Oral Health Careparticipating providers can earn a percentage of savings achieved. In programs with downsiderisk, upside savings are also possible, but if actual spending exceeds the target amount,participating providers will also be responsible for a percentage of the losses incurred.Payment adjustments are made to the savings and losses based on measured qualityperformance. For example, a provider that performs well on their quality metrics will receive alarger percentage of savings than if their performance on some quality metrics was poorer.This model incentivizes activities like care coordination and effective care managementacross all services to lower the TCOC. Shared savings models require a sufficient patientpopulation, sufficient and accurate patient attribution (typically at least 5,000 patients), andaccurate cost projections. Because payments are received retrospectively, providers typicallydo not receive upfront resources to invest in staff or IT systems to coordinate care andmanage costs. However, the federal Comprehensive Primary Care initiative and some ACOmodels provide upfront payments. Bundled Payments. This model (Category 4A of the LAN Framework) provides an incentive forproviders or provider organizations to efficiently manage health care spending andcoordinate care for a clinically defined episode of care with a defined start and end point.These episodes generally fall under a specific procedure (such as complete jointreplacement), a time-limited condition (e.g., maternal/perinatal health), or management ofcare specific to a condition (e.g., diabetes). The bundled payment, which can be paidprospectively or retrospectively, is the expected cost of the entire episode of care. If the cost ofcare for the patient during the episode exceeds the cost of the episode, the providers will notreceive additional payment. However, if the providers deliver services valued less than thecost of the episode, they can keep the remaining amount in the bundled payment. Paymentadjustments are made based on quality performance measures, which can lead to additionalbonuses or repayments depending on the design of the bundled payment.Global or Capitated Payments. Under global or capitated models (Category 4B or 4C of theLAN Framework), providers receive a prospective per-member, per-month payment to cover arange of services, with payment contractually linked to quality metrics. If actual spendingexceeds the payment, the provider or provider organization is financially responsible for theportion of expenses not covered by the payment. If actual spending is less than the payment,the provider or provider organization retains the full portion of reimbursement not used tocover expenditures. Payments are based on measured quality performance against a qualitybenchmark (e.g., as opposed to prior performance, peers, or national/regional/statestandard), and typically involve a “withhold” where a percentage of capitation payment iswithheld and paid later if the provider meets or exceeds the performance benchmarks. Thismodel typically applies to large provider organizations with patient panels substantial enoughto bear the downside financial risk.Provider Capabilities for Successful VBP Program ImplementationProvider and payer experiences in VBP have shown that successful implementation of VBP modelsrequires several common ingredients. This section highlights the capabilities that may benecessary at the practice level to have success in VBP arrangements.Advancing innovations in health care delivery for low-income Americans www.chcs.org8

BRIEF Moving Toward Value-Based Payment in Oral Health CareFor providers implementing VBP models, the following capabilities are essential: Practice transformation to support VBP goals. To improve on quality and cost metrics,clinical best practices must be incorporated into the practice workflow, if not alreadyimplemented. Roles and processes must be defined and clear to providers and staff to ensurecoordination and team-based care.A robust IT infrastructure and data analytics capacity. Practices need to have an EHR thatallows providers to capture and exchange data, support care coordination inside and outsidethe practice, and monitor and generate reports on targeted metrics. Providers and staff needto have access to training to populate the EHRs, use correct coding, and fully utilize EHRfunctionality. Practices need to be able to analyze the data to determine if they are impactingquality and cost. Successful practices may also have the infrastructure in place to share datawith health plans, state agencies, and external providers.Leadership and provider buy-in. In larger practices, leadership must understand VBP, be ableto articulate a vision for the practice, and support providers and staff in the transition to VBP.Staff may need to be trained to implement new quality-based payment models andunderstand how they are being held accountable. Practices that are successful in VBP effortsoften engage patients and seek feedback on patients’ experience.For more advanced VBP models that hold providers accountable for TCOC, there are additionalingredients for success, including: Designing the model to account for complexity. More advanced models that involve theprovider taking on risk require a sufficient patient population, accurate patient attribution,and attention to risk adjustment. In shared savings models, for example, a sufficient patientpopulation reduces random variation and contributes to more accurate accounting for costsand savings. Also, for shared savings models, there needs to be a clearly defined savingsdistribution methodology for participating providers. VBP arrangements that include multipleprovider organizations, such as ACOs, may also require a governance structure to overseehow components are established and ensure buy-in from payers and providers.Incorporating robust care coordination efforts. While care coordination can be deliveredtelephonically, having a care manager who is embedded on-site in the practice increasesconnections with patients and providers who are involved in their care. Practices need to havethe resources to hire and train staff for these roles. Practices also need to be able to managecare transitions and make linkages between external providers, e.g., specialists, hospitals, andcommunity organizations.Expanding the capabilities of the data infrastructure. Being able to share and act on data inreal-time and across a wider range of providers is critical for effective care coordination, andoften requires more sophisticated IT capacity and data analytic tools, as well as staff who aretrained in these areas. Having the capability to conduct predictive modeling can also helpmanage cost and quality.Advancing innovations in health care delivery for low-income Americans www.chcs.org9

BRIEF Moving Toward Value-Based Payment in Oral Health CareOpportunities for Implementing VBP Programs inOral Health CareBased on findings from interviews noted above, combined with experience in designing VBPmodels to date, CHCS has identified the following promising opportunities for oral health care.Category 2. Pay-for-PerformanceVBP models in Category 2 likely offer the most promising approach for oralhealth care and are a common first step to ease into VBP. P4P can be addedto existing FFS or capitation payment arrangements, particularly withsalaried providers. Health plans and practices can partner on choosing anarrow set of measures and build incrementally as they gain experiencewith VBP. For example, incentives could be used for conducting riskassessments, delivering preventive care, or moving patients from high- to low-risk for additionalcare.To participate in such models, practices would need to ensure that their EHRs can capturerelevant data, embed clinical guidelines, and train staff to meet program goals. However, P4Pprograms are typically more manageable than other VBP models because they can limit theirfocus to care delivered at the practice site, which does not require as much data sharing withexternal partners, sophisticated care management programs, nor extensive partnerships withexternal providers as other VBP approaches.Category 3. Shared SavingsShared savings models in Category 3 may be appealing for oral health carepractices that are already integrated with physical health care, such asfederally qualified health centers (FQHCs) and some multi-specialty grouppractices, which are more likely to have an infrastructure that lends itself tothis model. Working with these larger and more integrated practices couldbenefit oral health care providers, as such practices often have establishedcare coordination programs between physical and oral health care andsupports to address HRSNs. These practices are more likely to have the staff and resources todesign successful shared savings models, which require attention to risk adjustment, accuratepatient attribution, and a clearly defined savings distribution methodology. Shared savingsmodels also require a sufficient attributed patient population, generally a minimum of 5,000patients, which may be challenging to achieve for oral health care providers.Successful shared savings models built around reducing TCOC, for oral health, physical health,and potentially other forms of care require leadership and staff that have the time to identify,build, and maintain relationships with primary care providers, specialists, and communityorganizations.Advancing innovations in health care delivery for low-income Americans www.chcs.org10

BRIEF Moving Toward Value-Based Payment in Oral Health CareBecause savings are realized retrospectively, providers may need to allocate upfront resources toinvest in staff or IT systems to coordinate care and manage costs. While there are significantchallenges to implementing this model, if shared savings are achieved, oral health care practicescould benefit from financial resources to invest in quality improvement, managing chronicconditions, and addressing HRSNs.Category 4. Bundled Payments and CapitationTwo types of Category 4 models are promising for oral health care: bundledpayments and capitation. Payers could work with oral health care providersto define a bundled payment for a specific episode of care, such as for eitherpreventive or urgent care. For a preventive bundle, providers could use anindividualized risk assessment to define clinical care that could include, forexample, nutrition counseling and/or fluoride and remineralizationtherapies delivered by one oral health care provider.As another example, a more advanced bundled payment could be designed around treatment andrestoration for a damaged tooth and periodontium that involves a root canal, crown placement,and periodontal treatment. The care-plan for the bundle could involve multiple providersincluding a general dentist, endodontist, and periodontist. Such episodes may be easier toimplement than TCOC-based models as they would generally be geared toward improving careand cost for discrete activities that are already being performed rather than creating newprocesses and workflows. However, such models may be challenging from a financial perspective,as not all practices may have the ability to absorb the financial risk associated with these models,and may require entering into new business relationships with external providers.Meanwhile, population-based payments, or capitation, provide greater flexibility to care forpatients holistically, while tying those models to quality metrics to ensure value. However, mostoral health care providers are unfamiliar with managing a population of patients over time, giventhe prevalence of FFS in oral health care. These models also require providers to have a robust ITinfrastructure to share data and manage costs. That said, for those providers who can managethese challenges, prospective payment arrangements do offer greater flexibility for delivering careas well as a predictable funding stream.Summary of Opportunities and Challenges by HCP LAN CategoryExhibit 2 (next page) summarizes the opportunities and challenges of implementing VBP models inoral health care, and provides examples of models. It details issues for providers in general, as wellas issues specific to oral health care providers.Advancing innovations in health care delivery for low-income Americans www.chcs.org11

BRIEF Moving Toward Value-Based Payment in Oral Health CareExhibit 2. Opportunities, Challenges, and Examples of VBP Models by HCP LAN CategoryOpportunitiesChallengesExamplesCategory 2 A, B, and C Because there is no risk to the providers, payfor-reporting and P4P models are a commonfirst step to ease into VBP. P4P works well to incentivize salariedproviders. New programs can begin with a narrow set ofmeasures. Incentives could be used for conducting riskassessments, delivering preventive care, ormoving patients from high-risk to low-risk. IT infrastructure varies by practice and willimpact how and what data can bemeasured and collected. This is especiallytrue in oral health care practices. Providers and staff may need training incoding and using EHRs. Examples of provider P4P initiativesinclude: (a) payer incentives for pr

Texas Health and Human Services Commission . the DentaQuest Partnership for Oral Health Advancement, summarizes VBP models, examines challenges and opportunities for VBP in the oral health environment, and provides considerations for the expansion of VBP focused on oral health. To info