The payer-provider relationship is historically adversarial, but tough times may be changing the dynamic. While they’ve always shared responsibility for guarding patient health and keeping costs down, dramatic differences regarding what was best — or necessary — for patient care frequently caused conflict. Now, a new paradigm is combining the core strengths of each side to form a new healthcare delivery model. It’s known as the “payvider” model, and it’s gaining popularity and producing benefits for payers, providers, and patients.

What’s a payvider?

A payvider is a mutually beneficial partnership between a healthcare provider and a payer. Although typically an adversarial relationship, the payvider model is a natural progression for the two sides — one providing patient care and the other coordinating payment for said care — to merge their services.

The payvider model grew out of the recent movement toward value-based care. In value-based care, providers are paid for the quality of care (i.e., patient outcomes) instead of the more traditional fee-for-service model — which bills based on quantity, rather than quality — of care. A value-based system is riskier for providers, but payers also have a stake in the form of premium costs. So, in a payvider partnership, payer and provider interests align. But not all payvider relationships are equal. There are three primary models, including:

• Joint ventures. Payers and providers partner to design healthcare plans with the shared goals of improving patient care and bringing in additional insured individuals.

• Provider plans. Providers create their own insurance plans, so they control premium dollars and don’t need to share any savings they create — from improving the quality and operational efficiency of their health services — with insurance companies.

• Insurance companies become providers. Payers transition to providing healthcare and offering insurance. So, instead of an insurance company with healthcare elements, it becomes a healthcare company with insurance elements.

Payvider pros

Providers with a fee-for-service financial model have difficulty keeping health costs in check without increasing the number of patient visits. The payvider model is more value, or quality, based. It rewards outcomes — which is better for payers, providers, and patients. Value-based models lower the costs of healthcare while improving the quality.

The payvider model, with its focus on healthcare outcomes, encourages and improves patient engagement. It also enhances the provider-payer relationship — by aligning their end goals—and refines care coordination between provider networks and payer organizations.

Payvider cons

The payvider model is gaining in popularity, and it provides numerous benefits, but it’s not without its challenges. For the model to succeed, providers and payers must collaborate in a vertical structure—which frequently leads to each side blaming the other for the rising costs of care. Some challenges of the payvider model include:

• Economic responsibility for the high cost of health care. Providers blame payers and payers blame providers.

• Lack of provider infrastructure for leveraging digital technologies, such as electronic health records (EHR), which impedes payers from quick access to required records.

• Low visibility beyond hospital and clinical environments. The payvider model could potentially improve the quality of care — and ease the financial burden — from home health agencies, assisted-living facilities, and nursing homes.

The payvider model is likely to continue growing in popularity. It has its challenges, but like any innovation, it will continue to evolve, and for healthcare systems ready to make a change, it’s just might be the best model for the best care and the best financial margins.

To learn more about new healthcare delivery models, and the billing changes that accompany them, contact HRG.