A former Centene executive is warning that value-based care organizations are collapsing because the industry expanded too quickly without adequate care management infrastructure to support the financial risk they assumed.
Dr. Darren Schulte, now CEO of health tech company Vynca and formerly chief innovation officer at Centene, told Newsweek that value-based care arrangements have become unsustainable. According to Schulte, “there’s been too much expansion too quickly in these value-based arrangements [that include] taking total cost of care and total financial risk, and there’s not been enough in the way of managing that care.” He noted that increased health care utilization following COVID has caused many of these models to fail, with organizations spending more on care than they receive in reimbursement. “You’re seeing a lot of these value-based care organizations going out of business because their MLR [medical loss ratio] is over 100 percent,” Schulte said.
Root Causes of VBC Instability
Schulte identified several structural problems. Risk adjustment models have changed frequently, altering how sick individual patients are coded and therefore changing the benchmarks health plans use to measure savings. Additionally, many value-based care organizations have focused primarily on intensive coding and hitting revenue benchmarks rather than actually managing utilization and costs. “So far, it’s been about doing more intensive coding, ‘What can I do to hit my benchmarks correctly and get as much revenue [as possible] per individual?’” Schulte explained. “Now we’re just going to have to really address…the actual utilization of care, cost of care and management of these populations.”
Federal policy instability compounds these challenges. Changes in Medicare reimbursement and risk adjustment models directly impact health plan revenue and therefore the viability of value-based contracts, Schulte noted.
Path Forward
To make VBC programs sustainable, Schulte emphasized that organizations must shift from a fee-for-service mindset to holistic population health management. “Value-based care is still on a fee-for-service chassis, so physicians are thinking about doing the work they do in a fee-for-service model,” he said. “They’re not thinking about a holistic approach to caring for individuals, anticipating what their needs are.”
This article is an AI-assisted summary. All facts and figures are drawn from the original report: https://www.newsweek.com/former-centene-cio-on-why-vbc-companies-are-cracking-too-much-too-fast-access-health-11552323