Since the passage of the Affordable Care Act (ACA) in 2010, America’s healthcare industry has made a drastic shift from a fee-for-service model to value-based care (VBC). Much of that transition, is thanks in part, to the first VBC model: accountable care organizations or ACOs.
An ACO is a group of healthcare providers who coordinate care for patients with a particular type of insurance. Medicare ACOs are especially common, but a growing number of commercial ACOs are starting to coordinate care for their privately insured members as well.
Under a fee-for-service model, providers were reimbursed for the number of patients seen and services provided. Value-based care, on the other hand, rewards physicians for providing quality care as part of the triple aim: improved patient care, improved population health, and lower healthcare costs.
ACOs laid a foundation for the creation of other alternative payment models (APMs) Currently, there are over 40 APMs that tie payment to quality of performance instead of billable services. These include:
- Accountable health communities
- Integrated care for kids
- Home health value-based purchasing
- Patient-centered medical homes
- Oncology care two-sided risk arrangements.
As more providers transition to VBC models, it’s important to consider a fourth aim: provider satisfaction. This is because value-based models pose a large administrative burden.
What do successful VBC models include?
VBC isn’t one-size-fits-all, so it’s important for providers to adopt a model that makes sense for their organization. While no two alternative payment models are exactly alike, there are three key features almost every APM contains:
- Care coordination
- Financial risk
- Quality metrics
In order for patients to access high-quality healthcare, communication is absolutely necessary. That’s why VBC models encourage community care coordination between and among different providers using technology that allows for the secure exchange of health information.
Two value-based models that highlight the importance of care coordination are accountable care organizations (ACOs) and the patient-centered medical model.
In an accountable care organization (ACO), providers partner together to deliver coordinated care to all of the patients in their network, and in a patient-centered medical home model, a patients’ primary care provider is the center of care for coordination efforts.
To increase care coordination, many payer organizations have also developed population health management strategies. These strategies support providers in their mission to improve the health of the community as a whole.
Value-based models can present three types of risk: upside risk, downside risk, or both, in a two-sided risk model.
Upside financial risk: Under this model, payment is based on a patient’s initial health status and services required. If a physician is able to provide appropriate and necessary care for less than the contracted payment, the shared savings are divided between the patient and the provider. However, if a provider exceeds the initial bundled payment allocation, patients aren’t penalized.
Downside financial risk: Under this model, providers must reimburse a patient for incurred losses if they exceed certain financial benchmarks. A good example of this is CMS’ bundled payment model for acute myocardial infarction episodes. This model is a retrospective episode-based payment, so following aftercare for an acute myocardial infarction, care costs are examined. If a patient’s costs exceed the quality-adjusted targeted price, providers must repay the losses to CMS.
Two-sided risk: Two-sided risk combines both models. Currently, upside risks are more popular for providers, but the Centers for Medicaid and Medicare Services (CMS) is implementing limitations on a number of value-based programs to encourage down-side risk. As a result, Commercial Payers are following suit.
The third component of many successful VBC models is quality metrics.
Many VBC models use quality metrics to determine reimbursement rates. In other words, a provider only receives a payment if they meet a specific set of quality indicators. Some total cost of care contracts even require providers to exceed certain quality metrics before they can move forward with cost of care savings calculations.
As a general rule, quality metrics focus on preventive care and patient-reported outcomes. For example, a hospital might be reimbursed after meeting a certain level of patient satisfaction ratings, while a health system might be reimbursed if a certain number of employees participate in a wellness program.
Successful examples of VBC
All over the country, stakeholders for health systems and state agencies are adopting different VBC models to better serve their unique patient populations and communities.
One example is Maryland. Maryland is the first state to adopt a state-wide all-payer model.
Earlier this year, their contract expanded to include entities outside of a hospital setting, including mental health providers, long-term care, primary care, and community resources. This move will ensure better community care coordination and will also provide key insights into the social determinants of health (SDoH) throughout the state.
Another state that’s adopted VBC is Vermont. The Vermont All-Payer Accountable Care Organization Model combines Medicare, Medicaid, and commercial payers with a focus on particular health outcomes.
VBC: Using data to measure outcomes
Part of the triple aim of healthcare is better health for populations. VBC models are unique in that they enable healthcare providers to use data analytics to categorize members of a specific population by risk.
Providers can use this information to identify gaps in care and develop strategies to assist members of the community who are most in need. For example, under a VBC model, a provider can monitor patients who didn’t come in for an annual checkup or those who haven’t received immunizations.
VBC: Treating the whole person
Every patient population is different, but given the high volume of value-based care models, stakeholders from healthy systems and state agencies can select an APM that aligns with their system capabilities and client-base.
What’s more, VBC encourages increased communication and collaboration between healthcare providers and social services entities, improving community care coordination and patient outcomes, in general.