Meri Brick|3/3/2022|3 min read

The Migration From “Fee-For-Service” To “Value-Based Care”

Healthcare organizations and reimbursement models migrate to more a more holistic and preventative care approach


As healthcare organizations migrate to a more holistic and preventative approach to patient care, healthcare provider reimbursement models are doing the same. Experts in the healthcare industry are advocating for a change from the traditional fee-for-service model to the increasingly popular value-based care model.

What does this mean? Read on to find out!

Fee-for-service vs. value-based care

To understand why value-based care is gaining popularity, we first need to define the differences between the two reimbursement models.


In the fee-for-service reimbursement model, providers are paid and reimbursed based on the services provided. Every service provided, aka tests ordered and run, medications prescribed, treatment given, and any other service done by the provider is billed separately.

This model, as you can imagine, has resulted in providers taking on an increasing number of patients to make more money. You may be wondering, why the change from this traditional model? There are a couple of reasons that patients, providers, and payers are noting in advocacy for the switch to the value-based care model.

  • Over treatment The over treatment of patients is one reason why individuals are advocating for the reimbursement model switch. Since providers are being paid based on the number of services they deliver, it entices some providers to over-treat patients to receive a higher paycheck. This results in higher medical bills for patients and is quite costly for insurance payers.

  • Provider Burnout With providers taking on more and more patients due to this reimbursement model, it has also resulted in an increasing amount of burnout among providers. Burnout results in a lack of motivation, decreased productivity, and poor performance. In the healthcare field, this can be dangerous for the provider and the patient.

This is where value-based care comes into play.

Value-based care

The value-based care reimbursement model focuses on quality of care provided rather than quantity of services rendered. So, instead of providers charging and being paid by service they perform, they are paid based on patient satisfaction and outcome. Basically, this model promotes quality over quantity.

Within the bucket of value-based care, there are a few different model routes that organizations can take.

  • Accountable Care Organizations (ACOs) Accountable Care Organizations, often referred to as ACOs, is a group of physicians, hospitals, and other healthcare providers that give streamlined, high-quality care to individuals under Medicare.

  • Bundle Payment Bundle payment, or ‘episode-of-care based payment’, is a payment model that determines all the care and services a patient will receive for a certain condition before the patient receives any treatment. After the care plan is determined, the cost is bundled into one payment.

  • Patient-Centered Medical Homes (PCMH) This route isn’t necessarily a value-based care model, but a strategy organizations can use to achieve the same goals. It includes five buckets that these organizations must meet to cover all patient needs. These attributes, as defined by the US Department of Health & Human Services, include:

    • Comprehensive Care

    • Patient-Centered

    • Coordinated Care

    • Accessible Services

    • Quality and Safety

So, what does this migration to value-based care mean for providers, payers, and patients?

  • Provider Impact Since value-based care doesn’t focus on quantity, it allows providers to scale back on the number of patients seen per day. With over 50% of providers experiencing some sort of burnout, this is a huge win for the healthcare industry! An added bonus? A majority of these visits can be done virtually which adds more flexibility and time back in the day.

  • Payer Impact Value-based care actually saves payers money over time. One of the largest costs in the healthcare system is unmet medical needs. With the main focus of this model being on patient outcomes, unmet medical needs should decrease significantly.

  • Patient Impact The impact for patients is an obvious one - increased patient satisfaction and outcomes! In the value-based care model, providers focus on running tests and providing treatments that are necessary for the patient. This means no unnecessary hoops for patients to jump through and a way to live longer, healthier lives. A win-win scenario!

To dive in deeper on the value-based care model, check out our blog ‘The Ins and Outs of Value-Based Care’.

Looking ahead

Now that we talked about why value-based care is gaining traction, let’s look at what the future looks like for this reimbursement model.

The Centers of Medicare and Medicaid Services are already taking a huge leap to fully adopt value-based care for their beneficiaries. They announced at the end of 2021, that they expect all individuals covered under Medicare to be treated by a value-based care provider by 2030. Other payers haven’t made this leap just yet, but with CMS pushing towards this model in the coming years, it may prompt others to do the same.

Change takes time and especially in the healthcare field, it won’t happen overnight. But, the future is looking bright for this reimbursement model as patients, providers, and payers start seeing the benefits value-based care provides them.

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