Value-based care (VBC) is a crucial step towards improving access, equity, and quality healthcare for Americans.
Since the inception of Blue Cross Blue Shield in the 1930s, the US healthcare system has relied primarily on fee-for-service (FFS) payment practices. Essentially, you go to the doctor for a specific need, the doctor serves that specific need, the doctor is paid for that service.
While this may seem like a natural payment practice, America’s decades of loyalty to FFS have contributed to skyrocketing healthcare costs and sinking healthcare outcomes.
Fortunately, with the introduction of value-based care, the healthcare industry has seen a breakthrough in care delivery. This innovative care delivery model incentivizes providers to deliver better care by basing payment on the quality of care rendered to the member, rather than the service itself.
Continue reading to learn more about what value-based care is, how it works, and how it’s helping reduce costs and improve health outcomes across the medical industry.
What Is Value-Based Healthcare?
Value-based healthcare is a delivery model that drives better health outcomes by tying provider payment to the quality of care delivered. By using value-based-care payment models, payers incentivize providers to help members live safer, healthier lives.
In contrast to fee-for-service models, which just compensate physicians and hospitals for the service performed, value-based care rewards providers for delivering quality outcomes. This includes closing gaps in care, encouraging preventative measures, and working to mitigate social determinant of health (SDOH) risks.
Why Value-Based Care Is Necessary?
Studies consistently demonstrate what we in the healthcare industry already know all too well — the United States spends more per capita on healthcare than any other high-income country, and yet we have poorer health outcomes than these countries.
While the lack of accessible and timely healthcare plays a major part in this disparity, studies, like this one from the Commonwealth Fund, attribute the poor state of American healthcare outcomes to:
- Inadequate prevention and management of chronic diseases
- Delayed diagnoses
- Incomplete adherence to treatments
- Wasteful overuse of drugs and technologies
- Coordination and safety problems
Fee-for-service care and payment practices haven’t helped mitigate these problems because providers are only involved in and motivated to treat specific needs.
Value-based care, on the other hand, encourages providers to work together with payers to treat members holistically, because reimbursement isn’t simply tied to the service, but attached to the whole health of the member.
This results in improved health for individuals because care teams and providers aren’t merely targeting specific conditions, but are also collaborating to maintain health in the interim. This includes providing preventative measures, carefully avoiding unnecessary treatment, and helping vulnerable populations address social determinant of health needs.
The Benefits of Value-Based Care Solutions
An unfortunate consequence of FFS is that it results in a medical system that only takes care of people once they’re sick. One of the benefits of VBC is that it is helping us recover from this flaw in our healthcare.
With value-based healthcare, payers and providers work together to help healthy individuals avoid illness, help sick members recover and stay healthy, and help vulnerable populations and those with chronic medical conditions mitigate the symptoms of their illnesses and stay as healthy as possible.
Let’s explore a few more benefits of value-based health care and the implications this new payment model has for payers, providers, and members.
1. Payers Spend Less On Member Care
Value-based care allows payers to more effectively control costs and mitigate risk than fee-for-service models. Two ways that VBC helps payers are:
- Bundled payments. Value-based care enables payers to create bundled payments for everything from a member’s full care cycle to all the services required to care for chronic conditions. This increases billing efficiency and reduces costs for the payer.
- Reduced risk. With VBC, payers can protect their investments and premium pools by spreading risk across large member populations.
2. Providers Earn More & Are Valued More By Members
While providers may initially worry about earning less under a value-based care model, the reality is that doctors and hospitals are rewarded by switching to VBC. Here are a couple of the ways that the value-based care model of payment helps providers:
- Financial benefits. Value-based care rewards healthcare providers with incentive-based payments for the quality of care they provide to people, so high-quality providers, that invest in the holistic health of their members, usually see an increase in earnings with VBC. Additionally, VBC eliminates the financial risk of capitated payment systems.
- Increased member satisfaction. Since VBC helps providers increase the health of member populations, providers will see a decrease in chronic disease management and an increase in prevention-based services over time. With the focus moving to value, rather than volume, member satisfaction and engagement measures will increase.
3. Members Spend Less & See Better Health Outcomes
Managing chronic conditions like high blood pressure, obesity, and diabetes is extremely costly for members. Here are a few ways that switching to a value-based care payment plan helps members reduce health expenses and see better results:
- Reduced spending & better outcomes. Because VBC helps providers improve the health of populations, members that are part of a value-based health care plan often see their conditions improve. Additionally, VBC’s emphasis on preventative treatments helps protect members from the onset of additional conditions. Together, both effects of value-based care help reduce health care spending, as members spend less time at the doctor’s office.
How Does Value-Based Care Reduce Costs?
As mentioned in the previous section, value-based care reduces costs for everyone in the healthcare industry, including members, providers, and payers.
In addition to the examples given above, here are two more ways that VBC helps reduce healthcare spending:
- VBC medical management platforms, like InfoMC’s Incedo™, help care teams close gaps in care, eliminate repetitive procedures and unnecessary hospitalizations.
- Value-based care mitigates the cost of expensive treatments by helping members improve their health and avoid chronic, high-cost conditions through consistent, preventative treatments.
- Early detection of potential problems and fast identification of risk factors.
- Increased prescribing of generic medications to enhance health stability.
- Improved care coordination, with software like Incedo™, to help improve member health across the continuum of care.
- Support for evidence-based decision-making and personalized treatment plans.
How Does Value-Based Care Affect Social Determinants of Health?
Value-based care equips vulnerable populations with a support network to help them mitigate social determinant of health risks.
Because VBC strives to improve the holistic health of the member, instead of simply treating specific conditions, payers and providers work together to ensure that members are able to improve their health despite negative social determinant of health impacts.
For example, payers using value-based care methods promote the healthcare outcomes of vulnerable members by providing them with:
- Access to healthy food
- Transportation for shopping and medical appointments
- Housing assistance
- Grooming needs
- Vocational training
- Financial assistance for medical bills
- Social integration and social support systems
- Translation services
- Linguistic/cultural competency training
- Early childhood education
For members without severe SDOH challenges, value-based care ensures that members are taking the necessary preventative measures in order to stay healthy. For example, getting their flu shots, shingles shots, and staying on top of annual tests and doctor visits.
In short, value-based care emphasizes closing gaps in care that may be holding back the health of a member.
What Are Value-Based Care Models?
Under the umbrella of value-based care, there is a wide range of value-based payment models that providers and payers use to arrange payment.
While most of these payment models have much in common there are some differences depending on the kind of provider giving the care; for example, specialist physicians and hospitals.
Some of the most common value-based payment models include:
- Merit-Based Incentive Payment System (MIPS)
- Alternative Payment Model (APM)
- Pay-For-Performance Model
- Shared Savings Model
- Shared Risk Model
- Bundled Payment / Episode of Care Model
The ideal model for each organization depends on their goals and finding a VBC model that aligns with those objectives.
How InfoMC Helps Support Value-Based Healthcare Initiatives
Through their value-based care initiatives, InfoMC’s customers are required and incentivized to enhance quality of care, manage costs, and improve the health of the populations they serve.
Our whole-person, value-based care platform, Incedo™ provides a person-centered medical management system to drive improved operational efficiencies and health outcomes while enabling them to leverage sophisticated analytics designed specifically to support value-based care.