As the healthcare industry evolves, employers continue to search for ways to curb spending while ensuring that their employees and patients receive the care and services they need to stay healthy and happy. Out of this desire has come the start of value-based care, or value-based healthcare.
Through financial incentives and other methods, value-based care programs aim to hold providers more accountable for improving their patient outcomes while also giving them greater flexibility to deliver the right care at the right time.
This healthcare delivery framework incentivizes providers to focus on the quality of services as opposed to the quantity. Under this model, healthcare providers (which includes hospitals and physicians) are compensated based on their patient’s health outcomes. Doctors who use this framework are rewarded for promoting healthy patient outcomes, reducing the chronic disease burden, and helping their patients live healthier lives through evidence-based medicine.
Value-based healthcare programs are vital in the larger strategy to reform how healthcare is delivered and paid for. According to the Centers for Medicare and Medicaid Services (CMS), value-based care supports the goals of providing better care for individuals across the United States, better health for the population, and all at a lower cost.
The United States spends a large portion of its GDP on healthcare when compared to other countries, but that does not mean it is getting the best results. Compared with other high-income countries, a larger portion of the population suffers from poor health outcomes in the US.
Many experts believe this is due to misaligned incentives built into the traditional, fee-for-service payment and reimbursement model. Under this style of reimbursement, healthcare providers were paid for each service they provided, regardless of whether they delivered the desired results. This emphasized quantity over quality and led to a number of health crises across the nation.
Though there are several different types of value-based care models, we will use Accountable Care organizations as an example to show how value-based models work.
Healthcare practitioners often become a part of an Accountable Care Organization. These are networks of doctors and hospitals who share financial and medical responsibility for providing coordinated care to their patients and were developed to support the healthcare industry’s transition away from fee-for-service and toward value-based models.
Under this model, a patient’s care team works hard to treat them efficiently without driving up any unnecessary costs, all while focusing on improving and maintaining the patient’s wellbeing. In many cases, this form of care helps patients avoid the hospital and any invasive, costly surgeries to treat their medical problems.
In a traditional fee-for-service model, providers were paid for the number of services they performed. This often incentivized providers to order more tests and procedures and manage more patients at a time in order to get paid more. Costs were determined by what commercial payers would pay on the private market and a percentage of what Medicare would have paid for similar services. Rates for these services were also unbundled, meaning each was paid for separately.
Under this model, cost variations increased for procedures and tests, and the healthcare industry began spending more to treat patients without it necessarily improving patient outcomes. Physicians saw more patients and claims had to be processed through a fragmented network.
Value-based reimbursements, on the other hand, are calculated by using numerous quality measures and determining the overall health of the population. Unlike the traditional fee-for-service model, this type of care is driven by data from providers about patient outcomes, including their improvement in health. Factors such as hospital readmissions, adverse events, local population health, and patient engagement may all be a part of any medical organization’s tracking system.
Evidence-based medicine is also encouraged, along with better patient engagement, better health IT systems, and improved data analytics. This all helps a provider get paid for their services. When patients receive well-coordinated, appropriate, and effective care, their clinicians are rewarded.
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Currently, in the United States, CMS has developed several models for medical practitioners to implement going forward. These included accountable care organizations (ACOs), bundled payments, and patient-centered medical homes. These care models generally differ in relation to the risks assumed by the providers and the sharing of savings or losses.
An accountable care organization is a network of physicians, hospitals, and other providers that give patients coordinated, high-quality care. CMS specifically designed the program to help doctors ensure that patients receive the most appropriate care in a timely manner. ACOs also aim to prevent unnecessary and redundant services while reducing the potential for medical errors.
Healthcare providers volunteer to participate in an ACO. Under this payment model, the network of these clinicians shares the savings if the ACO is able to deliver high-quality care and reduce the overall cost.
On the other hand, most joining ACOs must assume some financial risk. Though the potential for savings could be significant when outlined in the agreement, there is always the risk of potential shared losses. Providers may have to repay Medicare for failing to provide care that meets the criteria for value-based models.
Bundled, or episode-based, payments are a single payment for services provided during an entire episode of care. In this model, providers are collectively reimbursed for the expected costs to treat a specific condition that may include several physicians, specialists, settings of care, and procedures.
As an example, CMS would combine the payment to the hospital, surgeon, and anesthesiologist if a patient undergoes surgery, rather than paying each separately. Historical prices are used to determine the bundled payment.
The bundled payment model relies on a certain level of risk. If providers can decrease the cost of services below the price of the bundled payment, they pocket the savings. If the costs are higher, however, these same providers bear a financial loss.
The patient-centered medical home (PCMH) is a care delivery method that coordinates patient care through a primary physician. PCMHs are designed to provide patients with a centralized care setting that manages the different needs of a patient.
Earning a PCMH certification indicates that clinicians deliver patient-centered care, team-based methods, population health management, personal care management, care coordination, and consistent quality care. Patients in a PCMH can expect one-on-one relationships with their care providers, who determine their healthcare needs based on medical and environmental factors.
Because value-based healthcare models incentivize healthcare organizations to meet interrelated goals that improve patient outcomes, it is important to discuss how these outcomes are evaluated.
There are many dimensions of quality and many ways to measure it, but how and how often it should be measured is still an ongoing discussion. The National Academy of Medicine has created their own useful framework for quality that can be used to hold providers accountable. Its components include:
Clinicians may earn more or avoid penalties if they reduce or maintain their costs. If providers are able to reduce the unnecessary use of high-cost forms of care, they may share some of the savings they produce.
Efforts are being made to improve health equity and reverse practices and policies that have made it difficult for historically marginalized groups, such as people of color, to access and receive high-quality care. Until recently, many value-based programs did not necessarily prioritize outcomes related to equity, but it is becoming more common for providers to receive financial incentives to ensure high-quality care is accessible to marginalized communities.
Under this method of reimbursement, the benefits extend beyond providers to reach patients, payers, suppliers, and the rest of the population. Patients tend to spend less money to achieve better health outcomes, while providers achieve efficiencies and greater patient satisfaction. Meanwhile, payers control costs and reduce the risk of inflating costs for a larger portion of the population, while suppliers align their prices with desired patient outcomes. Overall, this leads to a healthier society that does not take a financial toll on the healthcare system.
Though many medical practices see the value in this type of healthcare service, the transition can be difficult. For those offices or healthcare organizations looking to make the change, Good Stewart can help.
Our services include streamlining planning and the execution of many value-based care programs, especially those meant to serve underprivileged communities. We have years of experience in public health frameworks, regulations, and best practices to facilitate efficient and effective project execution. Alongside this service, we can also assess resource needs to maximize the impact of limited resources and design robust monitoring and evaluation frameworks to assess the impact and effectiveness of these programs.
Transitioning to value-based healthcare does not have to be difficult. It also should not take you away from your practice. When you hire our experts, you can rest assured your practice and its processes will be ready to meet this new challenge in the healthcare industry head on.