In the healthcare industry, value-based care is a model for delivering healthcare that encourages physicians, hospitals, medical groups, and other providers to help patients improve their overall health and better manage chronic diseases in an evidence-based way. When delivering value-based care, the expected patient outcomes and costs are reimbursed after a payer considers similar outcomes and costs for other patients with the same condition. This helps providers determine what cost-effective treatments work best to receive the quality of care over the quantity of care.
In considering how value-based care impacts private practices, we find that physicians are being paid based on patient health outcomes that are both positive and avoid medical complications in the future. This is changing how private practices operate in terms of clinical and organizational workflows to underlying data infrastructure. As a result, some practices are joining Accountable care organizations or starting Patient-Centered Medical Home facilities.
How Does Value-Based Care Differ from Fee-Based Service?
Within the traditional fee-based model, providers are billing for each particular service rendered to the patient. This model encourages doctors to order tests and procedures conducive to defensive care but not always medically necessary. Fee-Based service rewards doctors for volume and quantity regardless of the outcome.
The transition from fee-based service changes a provider’s payment structure to reimbursement for the value of care they provide instead of the number of visits or tests they order. This difference makes a provider’s reimbursement contingent on the quality of care with comprehensive solutions that result in better patient outcomes. This often includes an improvement in patient status while patients are also reportedly safer and more satisfied.
Value-based care streamlines the process by offering providers incentives to find comprehensive solutions that improve patients’ well-being at lower costs. This could involve better management of patient health information, greater collaboration between providers, and better technologies like telehealth and remote patient monitoring.
Calculating Value-Based Services for Reimbursement
Value-based services are often calculated in bundles of care where a provider receives a fixed amount for services performed for each episode of care. This encourages collaboration among providers and reduces redundant testing and medical errors. Costs are reduced for both patients and providers without sacrificing the quality of care.
There is also a shared savings model where providers are paid fee-for-service, but the provider must meet quality and spending targets. Another option is a shared risk plan where providers can receive the greater financial reward, but spending must stay at or below target rates, or the provider will need to cover extra costs. Additionally, another shared risk value-based reimbursement option is called global capitalization. The provider is reimbursed a certain amount per patient regardless of what it costs the provider to treat the patient.
Value-Based Care – By the Numbers
While the effects of a global pandemic have completely skewed data in the health care industry, value-based care has been showing consistent growth as part of market share every year from 2015-2018. In 2018, the numbers showed that 36% of national reimbursement contracts are based on value-based care. Additionally, Medicaid has hit its goal of transitioning its payment model away from a fee-for-service. Medicaid targeted (and succeeded) at hitting a 90% target of paying for services tied to outcomes and alternative payment models.
While more than 1/3 of the market is transitioning to value-based care, many private care practices aren’t keeping up with the existing trend. However, value-based care is even more critical because experts predict that value-based care will continue to be an essential part of the healthcare industry. Tackling the issues associated with value-based care now will help you rise above your competition and position yourself as an expert in your field.
Value-based Care Models
A value-based care model begins when the provider looks at the patient’s condition and evaluates the potential outcomes and costs for the period that condition is likely to last. Part of measuring the outcome is putting together a multidisciplinary team that treats and cares for the patient over the entire cycle of the condition. Taking a multidisciplinary approach is part of how value-based care impacts private practices.
Another model for delivering value-based care is the Accountable care organization. These organizations drive the healthcare industry away from fee-for-service towards value-based care by coordinating patients and sharing financial risk. This is accomplished by placing the primary care physician at the core of patient care while forming a network of providers who share financial and medical responsibility for providing coordinated care.
Bundled payments for episodes of care are the most common method for sharing this financial responsibility because once a provider receives a bundled payment, they assume responsibility for any financial gains or losses when subtracting the cost of treating the patient from the payment received.
Another care delivery model that moves away from fee-for-service and promotes value-based care is the Patient-Centered Medical Home. While the Accountable Care Organization is reimbursed as part of a network, the Patient-Centered Medical Home operates as an individual practice that brings multiple clinicians and healthcare settings under one roof. They are usually paid fee-for-service for office visits with a monthly bundled care coordination fee.
Successes of Valued-Based Care
Value-based care saves billions of dollars every year by reducing excessive medical tests, readmissions, eliminating unnecessary administrative procedures, and preventing diseases from further deteriorating patients. This has also created stronger alliances among providers and drug companies to determine that drug costs are directly related to outcomes.
Private practice can streamline their process by implementing value-based care practices like coordinating with local hospitals and other healthcare providers. This coordination develops evidence-based care models while identifying patient populations and coordinating care incentives. Spending choices are also streamlined when healthcare costs are measured with improved patient care.
How Private Practices Implement Value-Based Care
Physician compensation involves more risk as they receive compensation for episodes of care that do not exceed spending benchmarks. This is causing physician compensation to move away from value to value with more accountability as private practices are seeing more of their compensation based on value-based metrics such as patient satisfaction, recovery, and health status.
As you incorporate value-based care models into your practice, it can be difficult to determine your pricing structure. CMS programs are a critical component of ensuring your success for the future. There are various approaches that you can take when it comes to structuring your fees, but ensuring that you remain competitive while reducing your risk is critical to building a thriving practice.
Physicians concerned with how value-based care impacts private practices are implementing useful and easy-to-incorporate tools for better decision-making and performance. This includes better health information management, improved data sharing, consumer-facing mobile health applications, telemedicine, and other real-time communication capabilities.
Care management capabilities are enhanced by medication and care management tools, greater patient engagement, pre-visit planning checklists, patient diaries, and better care coordination. Patients could also be assisted in finding support from family members. These care management practices will mitigate risk while helping patients achieve improved health and well-being.
Value-based care practices may be more challenging to implement. Providers may need to overhaul their financial and clinical processes, adopt new technologies, fulfill quality reporting tasks, monitor patient outcomes and track financial outcomes while taking on greater risk. Still, all of these steps will be more time and cost-effective. In the end, providers will have the satisfaction that patient care has been optimized and rewarded financially.