What is value-based care?
Over the past 10 years, value-based care reimbursement has risen in popularity as an alternative to traditional fee-for-service reimbursement that pays providers retrospectively for services delivered based on invoices or annual fee schedules. Under the traditional fee-for-service model, medical providers were reimbursed for the number of services performed. Unfortunately, this led some to order unnecessary tests and procedures and take on more patients than they could handle. Each service was paid for separately and the costs of tests and procedures increased despite patient outcomes plateauing or even declining.
The aim of value-based care is to provide better care for individual patients, reduce healthcare costs, and improve population health management strategies. This means that care is based on quality rather than quantity, placing the needs of the patient above the revenue of the practice. Payments are connected to the quality of care provided and focus on rewarding efficiency and effectiveness. Some of the measures that are used as a benchmark for the quality of care include reducing hospital readmission, improving preventative care, and using certified health IT.
How does it work?
Designed to hold medical providers accountable for the costs and outcomes, value-based reimbursements are calculated based on specific metrics. In theory, this system should incentivize providers to use data analytics, evidence-based medicine, and newer technology to increase the quality of care provided. Some of the models created include accountable care organizations, patient-centered medical homes, and bundled payments.
Accountable care organizations (ACO) are networks of healthcare providers that are committed to giving Medicare beneficiaries value-based care. Under this program, providers volunteer to participate in an ACO and can then share the savings is the organization is able to reduce healthcare costs while delivering high-quality care. There is some financial risk for joining these networks as providers may have to repay Medicare if value-based care is not provided to patients. However, the potential to save money can be significant depending on the ACO agreement so it is important that providers make sure that they fully understand the agreements and the parameters that the care they provide will be measured.
Bundled payments are another way to ensure value-based care. In this method, providers are reimbursed for treating a particular condition rather than paying for each individual treatment or the healthcare professionals that administered it. The third method to promote value-based care is to create patient-centered medical homes which offer healthcare services coordinated through a primary care physician, effectively creating a one-stop-shop for patients.
Is it working?
To facilitate this transition from fee-for-service reimbursement to value-based care, the Centers for Medicare & Medicaid Services has introduced a variety of value-based care models including the Next Generation ACO Model, the Medicare Shared Savings Program, and the Pioneer Accountable Care Organization Model. Private payers have followed suit.
Despite the variety of care models that have been introduced, the uptake in value-based care has been relatively slow. The Department of Health & Human Services initially set a goal of converting 30% of fee-for-service Medicare payments to value-based payment models by the end of 2016 and then 50% by 2018. However, by 2019 only 38.2% of healthcare expenditures were through value-based payment models.
How can Orchard Medical Management help?
While value-based care offers many benefits for patients, it does present difficulties for medical providers. The biggest challenges to adopting this method include limited staffing resources, a lack of control over other providers, and the behavior of patients. Orchard Medical Management can help medical providers transition from a fee-for-service model to a value-based care model by offering support in practice management, revenue cycle management, and human resources. Give us a call at (603) 232-4513 to learn more!