Employers call this factor “employee churn”. Provider organizations call this factor “patient churn”. And health plans call this factor “member churn”. But they all mean the same thing in this context: Commercially insured populations are highly prone to changing health plans, often as a result of new employers.

Ultimately, only 60% of beneficiaries keep their health plan coverage for over 12 months, according to our recent analysis of a commercial claims data set. This makes it challenging for employers, providers, or plans to manage a population’s health and reduce total cost of care. High rates of commercial population churn also limit longitudinal data tracking which means it takes time to assess the overall quality or financial impact of a VBC arrangement.

Recommended action steps for partners:

• Acknowledge churn in initial planning and make the business case for a meaningful number of lives under risk-based contracts. Larger populations are better for data collection and analysis.
• Consider targeting labor markets and employers in industries with less employee turnover than others. For example, industries with recent low turnover rates include construction, real estate, transportation, and manufacturing.
• Focus on high-spend outpatient and ambulatory sub-service lines with a short-term ROI (e.g., pregnancy care).

Market dynamics play a large role in the success of a commercial risk partnership; they can slow down or speed up a partnership’s success. For example, if partners are creating a new employer product, employers will need to choose if it’s the right product for their employees. But employers typically buy insurance products through brokers, who may not switch or want to sell a new product right away—especially if the insurance product is a narrow network of provider organizations.

“The broker lag” can last up to three or four years—and it can become a choke hold for new VBC initiatives. Brokers prioritize products based on network, benefit design, and experience. During the first three years of a new insurance product, brokers prefer to wait and validate the product due to fears of it being removed suddenly by the health plan (i.e., product churn) or hesitation on narrow provider networks.

Recommended action steps for partners:

• Choose a partner with preexisting relationships with brokers and employers.
• Target employers who have an active interest in value-based care.
• Develop an effective marketing and relationship-building strategy for brokers. Co-create educational sessions with your partner which help brokers understand your product’s value proposition.
• Be transparent and communicate how your future product compares to competitors in terms of network, member experience, and cost.

Product churn exacerbates the rapidly moving commercial market even further. Payers own the licensing capital behind commercial insurance products, which means they can remove insurance products if they’re underperforming. This type of product churn can be disruptive for providers’ patients and employees. And providers rarely have much say when this happens, since payers don’t need the providers to agree before taking action. Thus, product churn may increase hostility and distrust between partners.

Employers also have the power to remove insurance products from their employee offerings. Many employers look for new products if their existing product is failing on provider choice, benefit design, member experience, and/or costs. According to a recent survey by the Kaiser Family Foundation, over half of all U.S. firms shopped for a new plan or health insurance carrier in 2021—but only 24% of those employers changed insurance carriers. However, future churn may increase, given The Consolidated Appropriations Act of 2021. Beginning in 2023, employers must ensure their health plans are cost-effective, provide quality care, and meet new mental health parity and pharmacy benefits.

Recommended action steps for partners:

• Choose a partner with an established track record working with your organization, similar goals, and sizable market share. Look for partners with 5-15% of market share—this demonstrates they have a sizable footprint in the market.
• Build a culture of transparency and patience between your organization and your partner. Communicate frequently to address issues early before they balloon into larger issues.
• Discuss metrics of success and failure with your partner. Make sure you’re both on the same page for how and why your organizations may need to get rid of a new product offering.
• Discuss expectations and timelines of success with employers as well. Make sure employers understand what to expect each year and how your health plan meets new federal standards.

Most organizations know that building out population health infrastructure takes significant time and resources. At a minimum, transforming care delivery requires upfront investments in staff, technology, and changes in workflow.

But managing a commercial population—rather than senior populations where partners are more familiar—requires a different population health approach and an iterative mindset. Health plans and providers must allow themselves time to figure out the implementation process.

Clinical models for the commercial population focus on preventing patients from developing conditions in the first place. To achieve cost savings, both health plans and providers need to focus on steering commercial populations to the most cost-effective treatment options, provider organizations, and sites of care. Health plans also need to be cognizant of building payer-agnostic processes within their partnership programs. Too much complexity or uniqueness, in things like quality measurements, places an undue burden on providers.

Recommended action steps for partners:

• Pick a starting point and build out capabilities slowly. Explore population health infrastructure enhancements such as investments in staff, technology, and changes in workflow.
• Openly discuss with your partner how the commercial population compares to senior populations and how the clinical model may change as result. Pay special attention to prevention, site of service steerage, ED utilization management, and consumerism.
• Solicit early feedback from your partner on efforts to design new quality metrics. Be conscientious about the overall number of metrics.

Health plans in the commercial space are typically hesitant about over-sharing their proprietary datasets—they worry providers will uncover strategic advantages, like their fee schedules. But as providers take on risk, they require 1) claims data to better understand their patient population under risk and 2) targeted cost data to help them identify opportunities to improve efficiency. This tension differs from Medicare since CMS annually publishes its fee schedule rates.

Simultaneously, provider organizations are often skeptical about having their information more accessible to health plans.  For example, some progressive health plans use direct EMR access to help their provider partners with care gap closure and risk revenue opportunities—but many provider organizations may deny EMR access out of fear of health plans using access to deny claims.

Recommended action steps for partners:

• Establish a long-term relationship with the intent of sharing more data as the health plan delegates more risk to the provider organization.
• Discuss what data will be shared upfront with your partner and how data sharing may evolve over time.
• Design service level agreements around data and define accountability for delays in data exchange.

As both providers and plans adjust to new workflows, they must also navigate new roles, goals, and identities within their broader relationship. While providers and plans have historically had a relationship that’s mostly contractual and negotiation heavy, successful value-based partnerships require a new element of collaboration.

Clinicians set in their ways may find it difficult to change their protocols, especially without incentives. And similarly, health plans may be hesitant to give up some of their traditional plan-centered functions, like utilization management or network design. One large health system and health plan took several years to figure out how to divvy up utilization management tasks, but today over half utilization management decisions are made by the health system’s physicians.

Recommended action steps for partners:

• Start any partnership with discussing main strategic goals and how those may evolve over time. Define accountability and ensure transparency throughout the partnership process.
• Involve staff as early as possible in decisions to receive less pushback down the line. This doesn’t have to be every s staff member – appointing a physician champion will allow for more effective and clear communication.
• Regularly seek feedback on how the rollout is going—and make it easy to share feedback. Frontline leaders closest to changes are best equipped to identify the workflow barriers standing in the way of implementation.