Value-Based Healthcare: Who Needs It?

Value-Based Healthcare: Who Needs It?
Nov 29

What is value-based healthcare and what makes it value based? Historically America’s healthcare system used care delivery models focused on rewards or reimbursements in a fee-for-service (FFS) environment. That means that care providers are paid for rendered services (doctor visits, tests, surgical procedures, hospital stays, etc). In other words fee-for-service payment models promote the extensive use of various tests and procedures to bill the payers for.


Today, as the US government is very concerned with the rising costs of healthcare and waste in healthcare spending, there are certain changes in the approach to these payment models. The nation’s healthcare tab surpassed $10,000 per person in 2016. The Department of Health and Human Services projects that the growth of healthcare spending will average 5.8 percent from 2015 to 2025, and nearly 18 percent of the US gross domestic product is spent on healthcare.


Of course, the government has been taking certain measures to control healthcare spending. Among those we can name:

·         the Health Information Technology for Economic and Clinical Health Act (HITECH Act) which stimulates the adoption of electronic health records (EHRs) and their meaningful use and the extended deadline provided by this law for older systems to comply with the new accounting for disclosure rules is 2016

·         the American Recovery and Reinvestment Act of 2009 (ARRA), which is an economic stimulus bill and which funds tax cuts and supplements to social welfare programs and provides increased spending in some areas of the economy including the healthcare sector

·         Health Level 7, which is a set of international standards regulating the transfer of clinical and administrative data between software applications used by healthcare providers

·         the Affordable Care Act (ACA or Obamacare), the legislation adopted in 2010 which changed how uninsured Americans enroll in and receive healthcare coverage, the aim of which was to lower the cost of healthcare for the nation

·         the Medicare Access & CHIP Reauthorization Act of 2015 (MACRA), which unified Quality Payment Program (QPP) that changed how Medicare pays clinicians who provide care to Medicare beneficiaries

·         American Health Care Act of 2017 (AHCA or Trumpcare), the legislation introduced in March 2017 with the aim to reduce the federal deficit and to modify insurance coverage

One point to be mentioned is that the reimbursement of care providers correlates with the level of compliance with the legislation adopted for the healthcare industry, including HIPAA and the HITECH Act.


Is anything changing?

The situation has gotten so serious that the standard payment structure in the healthcare system in the United States is not efficient any more as it creates financial incentives for healthcare organizations to deliver as many services as possible without being accountable for quality and efficiency of those services. The greatest goal of healthcare transformation initiatives is to create effective payment models for hospitals, insurance companies (both federal and private), and public payers.


In February 2016, the Centers for Medicare and Medicaid Services (CMS) and America’s Health Insurance Plans (AHIP) introduced the Core Quality Measures Collaborative initiative, which aims to improve collaboration among public health plans, commercial insurers, physician groups and other stakeholders on major quality measurements. This move supports the shift towards value-based care due to massive healthcare expenditures and relatively low care quality. The CMS also aggressively pushes towards “value-based or quality-based reimbursement.” The target percentage of Medicare fees for service payments linked to quality and alternative payment models in 2018 is 50 per cent of all Medicare FSS.


In Europe the situation looks quite the same – European countries try to follow a global paradigm shift toward a value-based model of healthcare (VBH). The approach, which demands critical correlation of patient and societal outcomes with spending is aimed to create a more sustainable framework for payers and improved care for citizens.


Who needs value-based healthcare?

The value-based model can be critical for all the stakeholders in the industry – care providers, payers, and patients. Healthcare delivery based on outcomes tries to improve the health of a population and provide a better experience for patients, healthcare professionals and payers (both private and state), while managing costs efficiently. The ultimate goal pursued by a value-based healthcare system is to provide cost effective, science-based healthcare that incorporates patient benefits.


Value-based payment systems provide different way for how healthcare delivery is organized, paid for, and received. Though we should say that there’s still no single correct model of purchasing value-based healthcare. According to the Huffingtonpost, the choice of a model (for example, shared savings, payers bundles payment, accountable care models, shared risk, or global capitation) or a combination of several models depends on each organization’s capabilities, market position, financial situation, and value-based company goals.


Outcomes based healthcare is taking its first steps, but the trend seems to be widely accepted both in the US and in Europe.


Who is on the edge of value-based medicine?

The trend is moving forward slowly, but payers are increasingly tying reimbursements to the quality of care provided, not just the number and type of procedures. Let’s look at some examples from the front lines of healthcare providers who deliver care in line with the latest trends and standards.


·         Aetna presented a new “value-based care” model. As of early 2016, nearly 6.2 million Aetna medical members were receiving care from doctors, hospitals and others in value-based arrangements. That amounted to 40 percent of Aetna’s payments for medical care.

·         The Centers for Medicare and Medicaid Services (CMS) plan to spend $10 billion per year for the next 10 years for innovation efforts, many of which center on forms of value-based care. These efforts include the Pioneer Accountable Care Organization (ACO) model, Medicare Shared Savings Program (MSSP), and Bundled Payments for Care Improvement (BPCI).

·        The  Mayo Clinic works with the Frozen Section Pathology Lab to get microscopic analyses during breast cancer surgery to get valuable extra time in an operating room and to eliminate the need for repeat lumpectomy in about 96% of patients. In the short term perspective the clinic’s surgery costs are higher, but overall medical costs are reduced and patients get peace of mind much quicker. The value for provider and patient is obvious.


It should be mentioned that IT can be a great source for solutions supporting value-based care – the solutions that integrate clinical, financial and administrative information received from disparate sources, the ones that provide quality measurement tools, the solutions to track providers KPIs, and the ones designed for healthcare professionals to aid them in their work.


What are IT solutions for value-based healthcare in the market?

IT solutions here can be divided into several groups according to the stakeholders they are designed for: providers (management and analysis solutions), healthcare professionals (specialized medical IT solutions), and payers/insurers (solutions to design efficient insurance plans and so on).


To name a few:

·         IBM Watson Health value-based care offerings for providers and healthcare organizations include data driven solutions for population health management and business performance optimization

·         Various Telehealth solutions, like eVisit or doctors videochats, Virtual Nurse, etc

·         TriZetto’s patent-pending Value-Based Benefits Solution is a benefit design and incentive management software application. This application enables payers to customize benefits and other incentives for individual members based on health status, chronic conditions, or activities to promote their health and wellness.


What are the benefits of value-based healthcare delivery?

According to NEJM Catalyst, the benefits of a value-based healthcare system cover patients, providers, payers, suppliers, and society as a whole. Here are some benefits:


1.    Patients (especially those have chronic diseases or conditions) spend less money to achieve better health as value-based care models focus on quicker recovery and avoidance of chronic disease in the first place. As a result, there are fewer doctor’s visits, medical tests, and procedures, and less money spent on prescription medication.

2.    Higher efficiency for providers and greater patient satisfaction in the long run. Though new prevention-based services can be time-consuming in short term, the long-term benefits are obvious – better quality and patient engagement. A healthier society means a reduction in overall healthcare spending.

3.    Better cost control and risk reduction for payers as they are spread across a larger and healthier patient population. Value-based payment models allow payers to increase efficiency by bundling payments.


Take advantage of new possibilities to get more value for you and your customers. By involving IT professionals experienced in managing and leveraging healthcare data, you can get the solutions necessary to deliver state-of-the-art, value-based healthcare services. Don’t miss your chance to cut costs, track quality, and get insights. Get in touch with our professionals!


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