Meet the Board: François de Brantes of Signify Health Talks the Direct Contracting Model, Value Based Care and Toxicity of Fee for Service

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Here are some excerpts from the transcript of our interview with François de Brantes. They have edited for clarity and length.

How did your career in healthcare get started?

I started working in healthcare really almost by accident on the employer side. I got hired by GE, to work in corporate healthcare, focusing on a whole set of initiatives to try to drive better engagement of employees and family members in their decision-making process when they access care. That really created an acute awareness of the disconnect between the expectations of individuals when they access care and the expectations of providers when they're delivering care. All of that really broadened degrees of conflict by the incentives that individuals have based on their benefit design, the incentives that providers have based on the way they're paid. That solidified really my trajectory in the industry trying to focus on how do you untangle some of this mess by focusing on making these incentives, less conflicting, more converging, and driving both sides, the demand side and the supply side towards reasonable decisions and good outcomes?

Could you just tell us a little bit about what you do there and a little bit about Signify Health?

Well, I'm actually continuing that trajectory in a uninterrupted fashion. And, and I can do that because Signify is focused on both sides of the healthcare equation, the demand side and the supply side and probably a little bit more on the supply side, where I think all of us believe that's truly where a tremendous amount of work needs to be done.

Signify is, you know, one of the leading healthcare platforms for value-based payments and value- based care in the United States. And we focus on driving payment reform, working collaboratively with providers, and implementing these programs on behalf of employers and payers. We are using decades of lessons learned to try to bring the right information at the right time for providers to help them in their decision-making process and and insulating them from the more toxic incentives that are embedded in fee for service.

Toxic incentives in healthcare?

I've been convinced of this for several years, and continue to be convinced with every encounter I have with clinicians, and not just clinicians, but leaders in industry, in hospitals and health systems, the provider organizations and those who work in them, that they are primarily motivated by the desire to care for the patients that that come to see them and that they manage. It's a difficult job, because you're dealing with a myriad of health issues and co-occurring health issues. For a lot of these clinicians and healthcare leaders, when they get up in the morning, they get ready to go to work, the moment they step out of bed, they're faced with this tug of war, these conflicts between what feels right to do for the patient, and what feels what feels good, financially, and rewarding financially, and they're not always the same. And that's the struggle, right.

So the toxicity in fee for service is pulling you in a direction that that can be different than the direction that you would take based on your inherent professionalism and the motivation to care for the patients. So, for example, you'll recommend doing tests, even though that you know, perfectly well that there's very little evidence of their efficacy, or in some instances, at the margin, you'll recommend that a patient get a procedure done, because you justify, in your own mind, better safe than sorry. But at the end of the day, you know that there's no strong evidence, it's probably not going to harm the patient. And oh, by the way, it's also going to bring revenue into the organization. So that's the issue, right, which is, what should be done for the betterment of the outcomes of the patient isn't necessarily tied to the betterment financially of the organization that delivers the care. That tension, that toxicity, that friction is really what value-based payment reform is all about.

Can you give us your take on the Direct Contracting Model? Is just another creature in the menagerie of value-based models or a real departure?

I think the Health Care Payment and Learning Action Network that was set up as part of the ACA to categorize alternative payment models has done a good job in creating some consistency in how you want to think about alternative payment models. At the far edge of those models are the population-based models. They're expressed in payment as combinations of different kinds of global payments. The Direct Contracting Model is one of the penultimate expressions of global payment because it truly does involve a per beneficiary, per month payment to a healthcare organization. And that payment should cover the majority — not the totality, but close to it — of the care for an individual plan member.

This is actually a relatively big departure from all of the other models that the Center for Medicare and Medicaid Innovation — CMMI — has released to date, because all of the prior models, including the Next Generation ACOs and the Medicare Shared Savings Program ACOs, and even the Medicare bundled payment program — they all still rely on underlying fee-for-service payments.

This is the first time when CMS has said, "yes, we're still going to require provider organization to submit claims, because asking them to stop a known process for a segment of their patients doesn't make sense." So we're still going to rely on that stream of data for information purposes, but not for payment purposes.

Instead, we are going to give a direct contracting entity a monthly, per beneficiary payment that will cover an estimated portion of the costs for that beneficiary. It is up to that direct contracting entity to contract directly, hence the term, with physicians, typically starting with a primary care group — there’s recognition that at the core, you need primary care — and extending out to specialty care groups and others.

Those direct contracts between the DCEs — that's the acronym for the direct contracting entity — and the providers in that mini-network can take any shape or form that the two organizations agree to and what the form of payment ought to be. So, for example, you can create a fixed, per member, per month fee for the primary care group. You can create fixed price episode contracts with specialty practices to manage, for example, the cardiac care of beneficiaries. So there's lots of innovation that you can do within the Direct Contracting Model, much like in Medicare Advantage.

Medicare Advantage plans have the freedom to do lots of payment innovation with the providers in their network. So this is taking Medicare Advantage, for all intents and purposes, into Medicare fee for service and not requiring health plans to be the manager of those funds but allowing for provider organizations to take on that responsibility.

However, with that responsibility comes significant risk. And to a certain extent, it is more risk than what happens in the Medicare Shared Savings Program because you are paid upfront a per beneficiary, per month payment. And if during the course of the month, as a direct contracting entity, you end up by spending a lot more on beneficiaries than what you have been given, you need to float that difference. It's not as if you're going to make it up in fee for service payments, because you're not going to get any fee for service payments. So it's a different ballgame.

Is the Direct Contracting Model similar to Medicare Advantage?

The mechanics are similar. The difference is that in Medicare Advantage, Medicare contracts with a Medicare managed care organization, and that Medicare managed care organization can continue to pay 100% of the care for the beneficiaries that enroll in the MA plan fee for service. And, you know, the chassis of Medicare Advantage plans are a fee-for-service adjudication process.

Now, some of them are fairly innovative in the way that they create the reimbursements with the providers in their network. But a lot of them simply continue to pay a fee for service. So yes, it's like Medicare Advantage in the sense that you're pre-paying an entity a fixed amount for a beneficiary. The difference is that you're now relying on a provider organization or, you know, some affiliate of a provider organization, to contract with providers, hopefully in a different way.

What is going on in the private sector as far as value-based payment is concerned?

I'd say that the single biggest continuous thrust that we're seeing in the private sector, and it harkens back to my early days in the industry is encouraging, on demand side, plan members to seek out the best care that they can get in their local, local community, at the most reasonable price, what we call, you know, value. That can happen in the private sector, because private sector employers have the ability to do steerage. And steerage can take multiple forms. And what's really exciting is that this combination of member incentives to encourage employees to go seek care from the higher value providers with payment reform that binds those providers in risk contracts.

We do this with a number of payers across the country and directly with one large employer, the state of Connecticut employee plan. And what we're finally seeing I think a lot of us knew could happen if you brought these elements together, which is actual competition for value in health care by providers who are willing to take on accountability for the management of patients, and willing to compete based on the combination of the quality of the care that they deliver, and the price that they're willing to charge for that care.

So I think if you had asked me a few years ago, I would have said, yes, theoretically, we are pretty sure this can happen at scale, because there's enough micro-experiments that have been done that show that it can And today, I can see it absolutely does work. There's no question or doubt it can work because we were seeing it work every day. And now, the task is how do you scale this? How do you bring it to 20 markets across the country so that people start believing, because they're seeing it in action, as opposed to conceptualizing it and hoping for the best.