Payer Priorities for 2022: Accelerating Value-Based Payments and Care

Prepare for another bumpy year.

With the rise of the omicron variant and a sizable minority of Americans who remain unvaccinated, COVID-19’s grip on the U.S. health system, economy and society is not loosening any time soon. For health plans, the impact will be far, wide and deep, underscoring the need for recalibrating operations and strategies to address the pressures and opportunities in 2022.

Fortunately, the pandemic has clarified the way forward, showcasing the advantages of value-based care and payments for navigating health care’s ups and downs. As a result, payers need to anchor their responses to the challenges and opportunities in the new year and beyond to approaches that advance value-based contracting.


1. Macroeconomic forces demand action.

Health plans can’t escape the economic trends unleashed by the ongoing pandemic and its wide-ranging effects. Both rising inflation and supply chain disruptions are expected to persist well into 2022, if not 2023. As a result, payers need to assess and adapt everything from pricing to purchasing. There’s also the fierce competition for talent amid the Great Resignation and return to office vs. remote work debate. Attracting and retaining people with the skills, knowledge and expertise needed, especially as health care transitions more fully to risk arrangements and population health management, will require new recruitment, retention, training and career development strategies and programs.


2. Payers will face intensifying profit and margin pressure.

In addition to surging COVID patients, emergency departments, hospitals and medical offices around the country are becoming inundated with seriously ill non-COVID patients. That means payers are facing a reimbursement reckoning: After a drop in spending that accompanied the drop in non-COVID patient volume in 2020, members who postponed treatment for fear of COVID-19 are now seeking care and often needing more costly treatments. Demand also is increasing for previously delayed preventative procedures including colonoscopies and mammograms.


3. Federal investments open door to improved health care access and innovation.

The $1 trillion Infrastructure Investment and Jobs Law is good news for health care, including plans to extend broadband in rural areas that would support expanded telehealth. The larger and still pending Build Back Better Act contains many more important health, social and climate change provisions that could help remake the U.S. health system. They include extending Medicaid coverage to millions more, permanently extending the Children’s Health Insurance Program (CHIP) and replacing lead pipes for drinking water to support improved health.

They set the stage for adding member benefits, attracting new members, expanding care access, reducing health care inequities and improving affordability of care. To take advantage of these investments and care coverage expansions, payers will need to work with providers and employers to develop contracts, provider networks, and technology-enabled tools, training, infrastructure and data sharing.


4. Payers need to accelerate value-based payments.

Both traditional payments and provider arrangements are reaching their end date. The Centers for Medicare & Medicaid Services (CMS) has set a countdown to eliminate fee-for-service. By 2030, CMS wants all Medicare beneficiaries and most Medicaid beneficiaries in programs accountable for quality and total cost of care.

The changing Medicare marketplace is one payers cannot afford to ignore. Not only will one in five Americans be 65 or older by 2030, the fast growth of Medicare Advantage plans is attracting startup players as well as providers with their own MA plans.

As Medicare goes, so goes the rest of the health insurance market. Commercial plans will have little choice but to follow CMS’ lead. Given the predestined outcome, it behooves payer sot move faster rather than later so they can gain expertise, experience and market advantage by being an early mover


5. Effective physician alignment calls for reimagining health plan types.

The current approaches to payer-physician alignment have failed to sufficiently incentivize physicians and other providers to change behaviors and move at scale to full risk, total cost of care and population health management. In the coming year, payers will need to make risk arrangements more attractive to providers, especially hospitals.

A more provider-friendly approach is essential to securing top performers for provider networks which, in turn, draws in members. Key ingredients include compiling and sharing timely data that is actionable and creating contractual relationships that align substantial financial incentives to significant outcomes. For more specifics on the new elements for successful value-based arrangements, see Lessons for Adding or Building New Health Plans That Can Successfully Compete for Providers and Patients.


6. Payers will move further into the provider space–and vice versa.

The blurring of the lines will continue in 2022 as payers and providers weigh how much of the care continuum they want to directly control. UnitedHealthcare already is the largest employer of physicians while HCA Healthcare operates one of the top 5 largest ambulatory surgery center networks. At the same time, numerous health systems from Kaiser Permanente to Healthfirst  are adding and expnading MA and other insurance plans to better control the alignment of member benefits, care and payments. Providing and paying for care helps providers better manage risk.


7. Payers need to expand SDOH coverage and mental health benefits.

In the march toward whole-person care and population health management, both CMS and influential employers are setting expectations that payers and providers will offer better benefits for social determinants of health and mental health. A full 91% of large employers are concerned about long-term mental health issues due to the pandemic, according to Business Group on Health’s 2022 Large Employers’ Health Care Strategy and Plan Design Survey. They see addressing SDOH as the gateway to increasing health equity and promoting systemic change. For payers, it means broadening coverage for alternative care, including hospital at home and telehealth, and adding partners such as community-based organizations.

Many pressures and challenges facing payers in 2022 can be solved by focusing on expanding value-based care and payments. Doing so sets up health plans for greater success in the new year as well as in the years ahead.


To help you assess and pursue any or all of these opportunities in 2022, please contact us at