From Fee-for-Service to Fee-for-Value
When we get sick, or when something is bothering us enough to warrant medical attention, we head to a healthcare provider. In a fee-for-service environment, that provider might be our primary care doctor, but, depending on the situation, it might also be a specialist, an urgent care clinician or other non-MD provider. In some cases, the medical professional you see has had no prior experience with you and has no information about you. This compartmentalized approach leads to less personalized and inefficient care, with higher costs and lower quality. The goal is to treat the current ailment — and for you to feel better fast.
In a value-based care (VBC) system, the experience is much more holistic. VBC is an integrated healthcare model in which provider reimbursement depends on positive patient outcomes rather than the number of services rendered. To be successful, it requires that providers employ a team-based approach that is focused on the whole person rather than just the condition at hand, taking into account the varying physical, social and economic conditions that may be affecting health.
VBC addresses many inefficiencies inherent to the traditional fee-for-service (FFS) model, wherein provider reimbursement is dependent on the number and type of tests or services performed rather than the measurable positive impact of their efforts. As adoption of value-based models increases, we’re highlighting what this shift means for the healthcare community as a whole — and what payers, providers and patients can expect amid this changing landscape.
Optimizing the Healthcare Value Chain
Fundamental to VBC is the alignment of systems, data and people to bridge gaps in care. With every stakeholder focused on delivering the most effective treatment possible, the patient becomes the center of the conversation — and the conversation becomes one about living healthier overall. With VBC, theoretically, everyone benefits:
- Patients, as consumers of healthcare, are empowered with the information, resources and support they need to take control of their health by adopting more healthy behaviors, while receiving higher quality, more personalized care at a lower cost.
- Payers have lower administrative costs and are incentivized to devote more resources to help members and providers achieve quality health outcomes. Using technology, analytics and engagement tools, they can provide accurate information that helps to connect high-risk members with critical resources and support to facilitate greater access to care, as well as identify rising risk members and intervene to help them stay healthy.
- Providers are equipped with the actionable information they need to deliver high-quality, comprehensive care. All providers within the system have incentives to use technology and process improvement to deliver an interdisciplinary care team approach to the care of their patients. In the long-term, providers should be able to focus less on managing chronic disease and more on partnering with patients to prevent them from occurring.
VBC: Not Without Growing Pains
With the healthcare industry united in the goal of improving health outcomes, VBC has the potential to be an important step in achieving large-scale reform. However, among providers in particular, the shift toward value-based payment (VBP) has been met with some skepticism. At least in its early applications, the notion that the model places the highest percentage of risk and burden on providers has been well documented, with limited funding, already-thin margins, and patient and data overload cited as common concerns. There has been recognition that defining quality outcomes is sometimes harder than it seems. Equitable sharing of VBC reimbursement among various team members and preserving patient choice are also issues of concern.
Recent research suggests, however, that these concerns may be subsiding as VBC gains traction as a viable platform. According to a 2018 KPMG poll cited by HealthLeaders, 46 percent of healthcare organizations saw improved profitability from value-based contracts, up from 23 percent two years prior.
Current Applications of VBC
Under the VBC umbrella are several patient-centric models designed to streamline resources to deliver coordinated, comprehensive and personalized care.
The Patient Centered Medical Home (PCMH) is one such model. Implemented by the Agency for Healthcare Research and Quality, the PCMH is an integrated healthcare approach in which a coordinated care team is led by a primary care physician to address the varying needs of the patient — both clinical and nonclinical.
Accountable care organizations (ACOs) are another example. ACOs are groups of providers who voluntarily team up to deliver affordable, high-quality care to patient populations. The model requires a high degree of coordination to sustain the payment model.
In addition to its Medicare ACO program, the Centers for Medicare & Medicaid Services (CMS) has implemented a number of its own value-based programs linking patient outcomes to provider payment. These include:
- End-Stage Renal Disease Quality Incentive Program (ESRD QIP)
- Hospital Value-Based Purchasing (HVBP) Program
- Hospital Readmission Reduction (HRR) Program
- Value Modifier (VM) Program (also called the Physician Value-Based Modifier or PVBM)
- Hospital Acquired Conditions (HAC) Reduction Program
Facilitating the Future of Patient-Centric Care
While the long-term implications of value-based models have yet to be seen, the movement toward a less fragmented, more comprehensive approach to healthcare is one we can expect to continue. Critical to the success of VBC is the seamless delivery of appropriate information to patients and providers through analytics, engagement and technology-driven health solutions. Entities that can assist in delivering this information will help drive the goal to transition from fee-for-service to fee-for-performance.
How are you helping to make value based care programs successful?