Guide to Accelerating the Transition to Value-Based Care

The COVID19 pandemic has exposed healthcare system vulnerabilities throughout the globe. In the U.S., observers cite numerous issues – from unequal access to care to underfunded public health departments to multiple underlying long-lasting conditions that exacerbate outcomes. All these must be addressed to achieve a sustainable post-pandemic healthcare system.

As the healthcare landscape continuously changes, the shift from outmoded fee-for-service to value-based care is among the potential changes attracting more attention. The new delivery model compensates healthcare providers based on their patient’s health outcomes instead of incentivizing them to perform expensive tests and procedures.

This concept isn’t entirely new. While organizations may have taken the first steps or expressed interest in the model, it has gained traction, albeit slowly, in the United States.


The ABC of Value-Based Care

Value-based care is centered on engaging the patient, improving communication across the healthcare system, and cutting the overall cost of care.

  • In this model, providers get rewards for the quality of care they deliver rather than based on the number of services they deliver. They’re also encouraged to offer preventative treatments and incentivized to coordinate care across the patient’s entire care team.
  • Patients and caregivers are encouraged to contribute to decision-making, implement preventative behaviors, and be part of the care planning process.
  • Policymakers and payers continue getting rid of outdated red tape regulations, reducing administrative requirements and burdens, and inspiring risk-bearing arrangements among providers.

Ultimately, value-based care places patients at the core of the healthcare system while simultaneously rewarding effective and efficient providers.


Defining Common Value-Based Care Terminology

Here are the most commonly used terms:

  • Affordable Care Act(ACA) 2010 – Through this act, the Federal government propelled value-based care, creating the first model: ACO, which coordinates patient care using  geographically pre-defined primary, specialty, and acute care provider organizations. Despite Medicare ACOs being common, most commercial ACOs also deliver coordinated care for privately insured members.
  • Accountable Care Organizations(ACO) – This group of medical practitioners and facilities came together to encourage coordination in improving care quality and limiting bureaucratic inefficiencies, and sharing administrative services.
  • Fee-for-service(FFS) – In this traditional and most popular model, healthcare organizations and providers are reimbursed according to the services rendered (e.g., treatments, tests ordered, appointments, and prescriptions issued) regardless of whether they result in a better outcome.
  • Alternative Payment Model (APM) – Is a payment reform that incorporates total cost and quality of care into healthcare reimbursement. It also provides additional compensation as an incentive for quality, affordable, coordinated care focused on better patient outcomes.
  • Value-Based Purchasing(VBP) – This program rewards acute care facilities with incentive payments for their quality care in the inpatient setting. It adjusts hospital payments based on their quality of care under IPPS (Inpatient Prospective Payment System). It can also enhance the quality of care, and hospital stay experiences for patients.

The Historical Shift from Fee for Service (FFS) to APMs.

The conventional U.S. healthcare payment model – FFS – has been around for nearly a century. In this model, primary care practitioners earn per visit, per person, and a separate fee for respective services delivered. Every time a patient gets a service, they or their third-party payers will be billed for each procedure, visit, test, and treatment.

Despite the systems, longevity, the following problems make it unsuitable in today’s market environment:

  • Increased healthcare costs
  • Lack of focus on quality
  • Reduced barriers to low-cost settings
  • Diminished focus on preventative care
  • More focus on service volume

These concerns have necessitated a shift from FFS to fee-for-value. The CMS (Centers for Medicare & Medicaid Services) drives the movement by making significant changes that tie Medicare reimbursement rates to quality and setting goals to support a continuous transition to the value-based model through the Affordable Care Act.


value-based care


Efficacy of Value-Based Payment and Health Disparities

 Alternative Payment Model (APM)

APMs experimentation in the previous decade has had its wins and losses. But it has proved that if well-designed, it can drive value improvements and cost savings. The more advanced models have successfully shifted greater accountability to providers. However, value-based payment critics argue that the movement has been a disappointment, with only a few cutting Medicare costs and others generating losses.

Rightfully, observers note numerous underperforming models in the current APM landscape. However, one decade of middling results doesn’t imply that value-based payment deserves abandonment. The decade of experimentation has delivered the right design and implementation knowledge to revolutionize healthcare delivery. Savvy healthcare providers are building on the successful APMs to phase out those that don’t deliver.

To date, there’ve been modest and inconsistent alternative payment models. Bundled models have delivered modest savings per episode for surgical procedures, especially in simpler joint replacements. Their savings for conditions like congestive heart failure have been smaller. While nothing has been saved for other conditions like acute myocardial infarctions and cancer.

Accountable Care Organizations (ACOs)

Population-based ACOs have delivered modest savings for beneficiaries and improved several quality dimensions. Evaluations noted greater savings in physician-led ACOs than their hospital-led counterparts through reduced hospitalizations; the longer a participant takes in the program, the greater the savings.

In hospital-led ACOs, lost admission revenues reduce the savings through fewer hospitalizations; hence they’ve focused on cutting post-acute care spending. Although they’ve been most savings in high-cost population models, evidence suggests that this results from risk selection and mean regression.

Value-based payment

Value-based payment hasn’t improved care access or health outcomes for populations experiencing social risk factors, including ethnic and racial minorities, the disabled, and rural populations. Despite increasing recognition, these disparities are evident across all payers.

Value-based payment can achieve the desired health equity by directly addressing systemic racism. The model must also focus more on assessing racial disparities and connecting the data to financial outcomes. The pandemic’s unequal impact on minority and low-income communities underscores the need to ensure value-based payment equity.


A Value-Based Model Requires a Massive Shift in Mindset

Providers must understand the limits when navigating the risk continuum. This includes implementing a great company culture open to innovation and sustainable change. To effectively migrate from the fee-for-service model to a value-based arrangement, providers must transition their mindset from legacy success indicators like services or encounter volume and commit to health care outcomes.

The key is to stop seeing inclusion and diversity as expenses. Providers should embrace them as a growth strategy to aid the movement toward value-based care. The massive changes in population and the industry’s response to this diversity are significant shifts that deserve attention in each industry participant’s core strategy.

While training may deliver the required skill set, you’ll need the right mindset from the start. And the day-to-day decisions made by individuals within the organization will impact the outcome.


Let Clinify Health Aid Your Migration to Value-based Care

Clinify Health is at the center of the revolution, enabling physician independence and financial stability for providers in underserved locations. We’ll help your independent practice or community health center succeed through customized practice migration services that entail a value-based contract system, quality measures, and care gaps management.


Reach out to learn how you’ll seamlessly transition your organization to a value-based payment model.

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