Meri Brick|7/15/2021|7 min read

The Ins And Outs Of Value-Based Care

A movement toward better patient outcomes


The concept of value-based care was first introduced in 2006 but it recently gained traction throughout the pandemic. COVID-19 can be credited for changing healthcare operations throughout the world and also encouraging industry players to evaluate the way care is delivered to patients. Many healthcare experts feel that moving to a value-based care model might be the key to unlocking unprecedented quality of care everywhere and the answer to a much healthier population.

Value-based care vs. traditional care

​​Value-based care, sometimes referred to as ‘pay for performance’, is a cutting-edge model that rewards physicians and other healthcare providers for actual patient outcomes. It is a complete switch-up from traditional ‘fee-for-service’ where providers are compensated based on the number of patients seen, tests ordered and services performed.

When comparing the two, it’s helpful to think of them in terms of quality vs. quantity. Rather than being paid for the number of touch points a doctor has had with a patient, value-based care centers around the measurable outcomes patients experience as a result of exceptional care. (e.g. less ER visits, shortened hospital stays or lower blood sugar levels).

You may be wondering, why the change? Critics of the traditional fee-for-service model often fault it for enticing providers to over-treat patients. This ends up being quite costly for all payers involved, from the insurance companies to the government to the patients, due to its nature of treating symptoms with expensive and sometimes avoidable measures. It can also mean a longer period of uncertainty before proper diagnosis or treatment.

With the fee-for-service model, patients typically receive a disjointed care experience across multiple clinicians spanning multiple specialties with little collaboration or long-term strategizing. This can make it difficult to build up trust and confidence with the patient, especially since many already struggle with seeking medical attention. Through value-based care, clinicians can deliver comprehensive care that pinpoints and addresses all root causes and ensures that people are only paying for and receiving the medical care they need. No energy is exerted on anything they don’t.

Value-based care models

Value-based care is entirely patient-focused, results-oriented and data-driven. It’s also frequently viewed as a way to treat the whole person with cross-functional specialists, multiple data sources and invested attention on lifestyle and environment. Within the scope of value-based care, there are a few different models that organizations can adopt. Although they all revolve around the quality of care, there are some important differences that set them apart.

Accountable Care Organizations (ACOs)

Accountable Care Organizations (ACOs), were first introduced in 2012 as a Medicare payment model. They have now expanded past just Medicare and into private payer settings across the healthcare industry. An ACO is a group of healthcare providers that focus on streamlining and delivering the best care to patients. They accomplish this by utilizing data and best practices to reduce the cost of healthcare services, improve patient satisfaction and outcomes and increase efficiency of visits.

Bundle payment

Bundle Payment, also known as ‘episode-of-care based payment’, is another value-based care model. It is predetermined and encompasses all the care and services a patient receives during treatment for a specific condition.

Let’s say a patient comes in to get treated for a broken arm. Under this model, the physician has to walk through the entire patient experience including all of their follow up visits (if relevant to the patient's condition) and set the cost of the total treatment plan beforehand. In this case, the physician would add up the costs starting with the initial visit and end with the day the patient gets their cast off and is fully healed.

This payment model incentivizes healthcare providers to coordinate in advance, improve efficiency, lower costs and establish continuity of care. Since the cost is predetermined, the providers cover any losses between the actual cost and the predetermined price. On the flip-side, if the provider keeps costs below that predetermined price, they receive those savings. Also, a win-win for the health insurance providers as they assume less risk and are able to see the alignment of incentives.

Patient-Centered Medical Homes (PCMH)

The PCMH isn’t necessarily a value-based care model, instead it’s more of a strategy used by organizations to achieve value-based care goals. It aims to cover all care needs the patient may have and includes five attributes that must classify it. These attributes are defined by the Patient Centered Medical Home Resource Center within the U.S. Department of Health & Human Services.

They are as follows:

  • Comprehensive Care: The PCMH is accountable for meeting a large majority of each patient’s physical and mental health care needs, including prevention and wellness, acute care and chronic care.

  • Patient-Centered: The PCMH provides healthcare that is relationship-based with an orientation toward the whole person. They recognize that patients and families are core members of the care team.

  • Coordinated Care: The PCMH coordinates care across all elements of the broader healthcare system, including specialty care, hospitals, home healthcare, community services and supports.

  • Accessible Services: The PCMH delivers accessible services with shorter waiting times for urgent needs, enhanced in-person hours, around-the-clock telephone or electronic access to a member of the care team and alternative methods of communication such as email and telephone.

  • Quality and Safety: The PCMH demonstrates a commitment to quality improvement through ongoing engagement in activities such as using evidence-based medicine and clinical decision-support tools to guide shared decision making with patients and families, engaging in performance measurement and improvement, collecting patient experiences and satisfaction insights and practicing population health management.

The impact of value-based care

All change comes with an impact on the people it touches. With value-based care, three primary groups are affected: the patients, the healthcare providers and the insurance payers.

Patient impact

An obvious impact of value-based care is increased patient satisfaction since providers are being paid based on the efficiency, quality and effectiveness of the care they provide. Physicians focus only on the tests and treatments that are necessary to care for the patient, which means no unnecessary steps the patient has to go through - leading to a satisfaction rate that is off the charts.

Patients also save money long-term with this concept. Since the value-based model focuses on preventative care, patients will have fewer doctor visits and medical treatments down the road and should go on to lead much longer, healthier lives.

Provider impact

A survey conducted by the Physicians Foundation found that the average doctor sees 20 patients per day or about 7,300 patients a year. That large number of patients can be attributed to the quantity over care model that has run the healthcare industry for decades. No wonder around 50% of physicians experience some degree of burnout.

Value-based care decreases the volume of patients a single physician receives, helping to reduce burnout while increasing patient satisfaction. After all, a happy and healthy patient is the optimal outcome, right? A majority of these value-based care visits can also be performed virtually via telehealth, also adding more flexibility to the physician’s day-to-day operations.

Payer impact

Three of the biggest drivers of current healthcare costs are unmet medical needs, mental health care and social needs - all of which turn into steep medical bills if care is delivered too late. That is why improving people’s outcomes through task-driven care actually saves payers money over time. Taking this one step further, tapping into the Bundle Payment model we discussed earlier also allows for payers to support the most difficult patients at a fixed price.

As Judd Arnold, CIO of Cornelia Lake Research Management, summarized it… About 5% of healthcare spend is currently at the primary care level with your doctor. That leaves 95% left for everything else, although the vast majority lies in hospital stays. The goal of value-based care is to invest more early on in preventative measures to save more in the long run. If we could increase that 5% on PCPs to even 7% or 10%, then those hospitalization rates should drop drastically - some studies have shown a 30-50% decrease. This model not only ends up contributing to better health for the patients but the costs dip for all parties involved.

Measuring value-based care

Now that we’ve covered the why of value-based care, let’s discuss the how when it comes to measuring the quality of care patients receive over time.

As you would expect, it takes considerable time to measure quality of care across a patient. Providers must have a baseline from where they started and consistent data to accurately track their performance along the way. This data will not only help providers get information on the patient's progress and overall health but it will also indicate where they can improve and make corrections to keep the patient moving towards their health goals.

Most, if not all, value-based care contracts have set measures that providers must meet before being reimbursed. The Agency for Healthcare Research and Quality (AHRQ) established six key areas that payers and providers can use to score their quality of care.

  • Safety: This includes things like preventable infections and unnecessary hospitalizations as key quality indicators.

  • Effectiveness: One of the most common ways you can measure effective care is by examining readmission rates. (In many instances) if effective and proper care was given to the patient, readmission rates should be low.

  • Timeliness: This is oftentimes a patient-reported measure that can be carried out via surveys to get a pulse on how quickly the patient feels they were treated.

  • Efficiency: Efficient care is most closely tied to the traditional fee-for-service model. This measures whether the appropriate treatment was performed and whether or not it was effective. For example, was the provider able to regulate the blood sugar of their diabetic patient?

  • Equitability: Equitable care can be a difficult area to measure. Population health data is a good way to understand if a provider is meeting this standard. Many value-based care deals that use this measure focus on preventive screening. If a certain percentage of their patient population does this, they will be rewarded.

  • Patient-centeredness: This is another patient-reported measure that is mostly carried out through surveys, as well. These surveys will include questions relating to the patients care team and if they felt their concerns and priorities were heard.

As more and more practices shift to this care model, it’s important to note that the measurement metrics will be constantly evolving and improving. The primary goal of any value-based care is to ensure the highest quality of care is being delivered to the patient and that’s exactly what they will continue doing through these data points.

Tying it back to telehealth

With the boom in telehealth adoption, it will be easier than ever to meet with your primary care provider from the comfort of your own home. Obviously, hands-on care will still need to be done in the office, but the majority of your check-ups can be performed online quickly and more frequently.

Since we are on the topic of telehealth...

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And that sums up the ins and outs of value-based care! The future is looking bright for this new healthcare delivery model, so take this new wealth of knowledge and be on the lookout for future innovators in this space.