In 2017, the Healthcare Financial Management Association (HFMA) presented a success story for implementing a value-based compensation model for primary care. It revealed that “The medical group of one large health system realized significant improvements in the quality of care delivered to patients from implementing a quality-based bonus program for its providers.”
The medical group initiated its program after observing that commercial payers were moving away from fee-for-service to offering incentives for improved value-based care. These actions, although deemed to be highly successful, were taken largely on the part of the medical group itself. But what would happen if payers worked to motivate providers to take the same approach? This article looks at the concept of value-based care and discusses how payers can help move providers along the value-based care continuum.
What is Value Based Care and Why is it Important?
The traditional form of payer reimbursement was a fee-for-service model, which incentivized providers based on quantity rather than quality. The value-based care model, however, seeks to reimburse providers based on the quality of the care itself, as well as positive patient outcomes.
The concept of a value-based care model figures prominently in CMS (Centers for Medicare & Medicaid Services) payment structures. CMS implements initiatives to assure that Medicare beneficiaries receive a high quality of care. Quality measures include pay for reporting, quality improvement, and public reporting. They are currently testing quality measure data submission from Electronic Health Records for physicians and will soon begin testing hospitals. By 2025, the goal is to have 100 percent of reimbursements tied to value-based contracts.
Value-based care is important for many reasons:
- Higher levels of patient care, resulting in increased patient satisfaction
- Lower overall costs throughout the healthcare system
- Better-educated patients
- Reduced medical errors
- Increased care efficiencies for healthcare providers
- Stronger cost control measures for payers
Evidence of value-based care’s effectiveness is seen in Medicare Advantage health plans, which receive a monthly payment for each beneficiary’s care. They are incentivized to use those dollars most efficiently. Recent research published in JAMA Network Open shows that value-based care is indeed helping to drive down acute care episodes among Medicare Advantage beneficiaries.
Are Payers and Providers on the Same Value-Based Care Page?
Although the benefits appear to be strong for payers and providers, the transition from fee-for-service to value based care has been somewhat challenging. In 2019, only 38.2 percent of healthcare dollars were found to have flowed through some type of value-based payment model. But, prodded by CMS and patients themselves, payers have been making more progress towards value-based care since then.
In 2020, HealthPayer Intelligence reported that over 90 percent of payers in one survey expected alternative payment models to increase but were still moving toward value-based payment models that were based on fee-for-service structures. Providers may be reluctant to accept the financial risk associated with basing their payment on results instead of the more-assured form of getting paid for each service. The challenge now is to bring payers and providers to the same level of understanding regarding the benefits of value-based care. Motivating the entire system to adapt to value-based care will require patience, education, technology and perseverance.
How Payers Can Motivate More Providers to Adapt a Value Based Care Model
“For healthcare organizations to successfully transition to value-based care, data sharing methods between providers and payers must be faster, more transparent, and done with trust.”
~ RevCycleIntelligence (May 17, 2022)
Continuing the transition from fee-based to value-based care may mean a change in mindset and methodology for local providers. Payers can help ease this transition in many ways:
- Provide adaptation time: It might take time for some providers to fully adapt their practice mindset to the value-based care model. Recognizing this, Blue Cross and Blue Shield of North Carolina created multi-year agreements to help set up their providers for success over time in the value-based care transition. Over a span of about two years, they were able to achieve 52 percent membership in value-based care arrangements.
- Payment support during the transition: It may be difficult and costly for practices to adapt to value-based care models. To minimize the financial risk, monthly payments from payers and bonuses for positive advancement, can serve as motivational forces during the transition time. Providers cannot be immediately accountable for outcomes in the earlier stages of transition but should see increasing responsibility for results as time goes on.
- Technical support: Payers can provide technical support for providers during the early stages of transition. This might include online tools or reports so that providers can identify their poor results, isolate excessive spending and compare their performance to their peers. Payers can also pass along information from high-performing practices about tactics they employ to achieve success.
- Transparent data sharing: The key to efficient data sharing is to focus on those areas which benefit patients and their health outcomes. Software systems that promote interoperability are critical to optimized data sharing, so participating providers have timely, accurate access to data to understand their progress towards achieving quality and budgetary measures.
- Effective care coordination: Improved care coordination between payer and provider can greatly affect outcomes and costs. In some cases, a provider may decide on a treatment plan based on personal patient interaction, only to have it declined by the payer due to cost reasons. Empowering the provider to take a stronger role in determining a treatment plan that achieves the value-based outcomes often leads to a better care and prevention perspective.
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