Value-Based Health Care Is Inevitable and That’s Good

Value-based care is a breakthrough, which aims to reduce health-care costs while improving quality and outcomes. It will eventually affect every patient in the country. However, not everyone is on board yet, because part of the value-based equation includes hospitals being paid less to provide better care. That is a significant challenge, but one that Cleveland Clinic sees as an opportunity to improve. Others must do the same.

How the Health-Care Industry Will Change

We are all aware that health care in the United States is overpriced, inefficient, and of varying quality. The goal of value-based care is to address this issue.

The Affordable Care Act includes a provision to change the way hospitals are paid, shifting from a reimbursement model that rewards procedures to one that rewards quality and outcomes. It will no longer be about how many patients you can see, how many tests and procedures you can order, or how much you can charge for these things in health care. Instead, it will be about costs and patient outcomes, such as faster recoveries, fewer readmissions, lower infection rates, and fewer medical errors. In other words, it will come down to price. That’s a good thing.

Whether providers like it or not, health care is transitioning from a skill-based art to a data-driven science, from independent physicians to hospital-employed physicians, and from one-size-fits-all community hospitals to vast hospital networks organized around centers of excellence. Each step in this process builds on the previous one. When hospitals pay physicians on an annual basis, a doctor is paid the same amount regardless of how many patients he sees, procedures he performs, or tests he orders. Our doctors are held accountable through one-year contracts and yearly performance reviews that include each doctor’s quality metrics, clinical outcomes, and research. Having all of your doctors on the same team also makes it easier to coordinate patient care among various groups of specialists.

The opportunity for large group practices and hospital consolidation grows as more independent physicians are hired by hospitals. As consolidation grows, data and transparency become more important as a means of ensuring that caregivers across the system provide comparable care. Of course, all of this leads back to quality, which necessitates efforts to achieve standardization, reduce variation, and eliminate unpleasant surprises. It entails analyzing processes, measuring outcomes, and changing practices until you achieve success. In order to remain viable in today’s rapidly changing environment, health care systems must reduce costs while improving quality and outcomes.

Value-Based Healthcare vs. Fee-for-Service

A value-based healthcare model differs significantly from the more traditional fee-for-service (FFS) model. Healthcare providers are compensated based on the amount, or quantity, of services delivered under the FFS model. 2 Office visits, tests, procedures, and other treatments are examples of these services. For each service that clinicians provide, reimbursement rates are established.

Clinicians are paid for each service individually under the FFS model. As a result, healthcare providers are effectively incentivized to provide more services per patient. Following the passage of the ACA in 2010, the United States’ healthcare system began to see a shift in the way healthcare services are delivered and paid for. Many healthcare delivery reforms have been implemented to prioritize quality of care over quantity. These reforms are commonly referred to as value-based healthcare.

Value-Based Care Reimbursement

Healthcare providers have a number of reimbursement options when transitioning from fee-for-service to value-based care. CMS has developed several different reimbursement models, and commercial payers have followed suit with their own variations and models. Pay for performance models provide incentives above and beyond the traditional fee for service schedule, based on performance and quality metrics. Effectiveness and efficiency, timeliness, safety, patient focus, and equitability are some of the most important quality metrics for value-based care.

Shared risk programs, bundled payments, capitated payments, and population-based payments are the next steps along the risk-reward continuum. These programs may necessitate increased investment in Health Information Technology (HIT), more in-depth quality and outcome analytics and reporting, and care coordination with ACOs and Patient Centered Medical Homes.

Implementing Value-Based Healthcare

There are steps you can take as a healthcare professional to start implementing value-based care in your practice. According to the American Medical Association (AMA), healthcare providers can take five steps to prepare their practices for value-based care:

• Determine your patient population and the opportunity;
• Create the care model;
• Collaboration for success;
• Encourage appropriate utilization, and
• Measure the impact and keep improving.

Following these five steps may appear simple, but implementing value-based care is nuanced and requires careful consideration and planning. As their practices navigate traditional revenue cycle management, many physicians must strike a balance between fee-for-service and value-based care.

When implementing value-based care, it is critical to embrace technology and form partnerships to ensure a smooth and cost-effective transition. A solid IT infrastructure, including an electronic health record system and population health management tools, is a good place to start.

Healthcare Transformation from Fee-Based to Value-Based Care

While clinicians support the goals of value-based care, there are some barriers to implementation. Providers may lack the necessary infrastructure and personnel to support value-based models. Programs may differ depending on the payer, with each plan having its own set of models, metrics, and documentation requirements.

According to one industry survey, several barriers to program participation include:

• Unrealistic objectives;
• complex metrics;
• risk and compliance issues;
• and program length and a delayed payment cycle.

In the United States, Value-Based Healthcare

Healthcare in the United States is paid for in a variety of ways, including government programs (such as Medicare and Medicaid), private insurance plans, and out of patients’ own pockets. Healthcare costs in the United States are higher than in other countries, regardless of funding source, putting a strain on the overall economy. Healthcare spending in the United States totaled $3.6 trillion in 2018, or $11,172 per person. These expenditures account for approximately 17.7% of the United States’ gross domestic product (GDP). In 2018, pure fee-for-service or fee-for-service with some value connection accounted for nearly two-thirds of healthcare payments.

Unfortunately, increased healthcare costs do not always result in improved patient health outcomes. When high-income countries in the Organization for Economic Cooperation and Development (OECD) are compared, the United States spends nearly twice as much on healthcare while having the lowest life expectancy and suicide rates. Furthermore, the United States has the highest chronic disease burden and an obesity rate that is twice as high as the OECD average.

These figures highlight the importance of closing the gap between the amount of money spent on healthcare and the value provided as evidenced by patient health outcomes. One way to start closing this gap is to transition from a fee-for-service model to one that incorporates value-based care principles. In the following section, we will discuss some practical tips for implementing value-based care.