Over the years, many approaches to healthcare have been attempted, all in an effort to improve the quality of care, outcomes, and affordability. Some methods have flourished, whereas others have failed miserably. However, one approach that has intrigued patients and physicians alike is the concept of “value-based care.”
What is value-based care?
Value-based care (VBC) is a delivery model where providers are paid based on patient outcomes. Providers, including physicians or hospital groups, can be paid by improving patient health, reducing incidents of chronic health problems and diseases, and instituting evidence-based lifestyle changes for their patients. The “value” in VBC is the measurable health outcomes derived from this delivery method. VBC models help physicians improve efficiency in care and effectiveness. Unlike a fee-for-service reimbursement model — wherein the doctor is reimbursed for providing services regardless of patient outcome or, often, the quality of care — the focus is on the value provided.
In other words, the better the outcome, the better the reimbursement.
VBC is somewhat in its infancy, having emerged as a possible approach in 2006 by Michael Porter and Elizabeth Olmsted Teisberg. The innovators who developed VBC suggested measurable outcomes and costs as central to the approach’s success, offering it as a replacement for the traditional fee-for-service physician reimbursement model.
When considering a VBC approach, one may wonder whether it truly improves a patient’s quality of care. Most signs point to a strong “possibly” or a less-emphatic “definitely.” Unfortunately, because the VBC model is not yet widely applied or utilized, it can be hard to see how effective it is in improving the quality of care in a quantifiable way.
The benefits of VBC
Studies conducted in 2015 showed that recently-implemented VBC plans through Medicare had helped reduce hospital readmissions by 8%. Under Medicare VBC plans, quality scores were very high. Because VBC focuses more on recovery than the quantity of procedures, better outcomes are more apt to happen. Chronic diseases such as diabetes or hypertension can get the preventative attention they need before they become more prominent, life-threatening problems. A VBC approach also brings closer scrutiny to medical errors, and rewards the best-performing physicians not based on the quantity of patients or procedures but the quality of outcomes. Patient satisfaction is high with a VBC approach.
One thing that is for certain — VBC is a money saver. Studies from 2020 show that VBC plans had saved a whopping $4.1 billion in 2020 alone. This money-saving aspect of VBC has led to the Centers for Medicare and Medicaid Services (CMS) implementing a host of value-based plans for their insured. Calling them Accountable Care Organizations (ACOs), CMS has implemented plans such as the Medicare Shared Savings Program, Next Generation ACO, and the Pioneer ACO.
Additionally, the latest projections from CMS see a wide pendulum swing towards a majority of VBC plans by 2030. Private insurance companies have followed the CMS example, implementing their own VBC plans. Starting in 2016, the Department of Health and Human Services began focusing on converting state-run fee-for-service plans into VBC plans, with a goal of 50% of traditional plans making the switch by 2018. However, their plan fell slightly short, with only 38% of healthcare plans following the VBC model by 2019.
As we emerge from the pandemic with new knowledge and a new way of looking at the healthcare needs of Americans, we will need to familiarize ourselves with the different modes of delivering quality care. The concept of VBC is still new and, therefore, challenging for many physicians to implement. This challenge is especially true of physicians accustomed to a fee-for-service model. However, there is potential behind VBC. As early adopters and champions for the system — such as CMS — share more data, it may emerge that the VBC model is the best way to save money and delivery high-quality patient care with incredible outcome