2022 is poised to be a big year for value-based care (VBC). The Centers for Medicare & Medicaid Services (CMS) and the Center for Medicare and Medicaid Innovation (CMMI) have charted a course toward VBC and away from traditional fee-for-service (FFS). January 1 of this year marked the start of the five-year performance period of CMS’s Direct Contracting program, the latest evolution of risk-sharing arrangements to produce value and high-quality healthcare. The rest of 2022 should see further continuance of VBC-related activities throughout the healthcare industry. We asked some of the top VBC thinkers to share their thoughts on the challenges and opportunities presented by this evolving approach.
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Value-based care is here to stay
What is VBC?
VBC is care delivery focused primarily on quality versus quantity; it’s healthcare where value takes precedence over volume. VBC programs incentivize healthcare providers toward aligned goals. Instead of focusing on billable events, providers can partner with patients and their families as well as other care team members on the highest leverage solutions to complex health issues.
Inherent in the VBC incentive structure is risk. But savvy providers understand there is also risk in continuing with the status quo and are comfortable taking on risk to embrace the correlating opportunities allowed. For these providers and their practices, risk means freedom. Risk provides a path toward autonomy. Perhaps somewhat counterintuitively, risk enables providers to take back control of their practice.
Why the shift towards VBC?
Our current healthcare system is not working. Compared to our peer countries, we have higher costs and worse outcomes. And our healthcare system is fraught with inequities. While some Americans have access to the best healthcare in the world, for too many others the system is inaccessible, unaffordable, and dangerous. While the effects of our current FFS system are readily apparent, the inertia within the healthcare system makes change difficult. Yubin Park, Chief Analytics Officer at ApolloMed, states the situation succinctly: “Fee-for-service is a form of addiction; we know it’s bad but difficult to quit (opinions are mine and not necessarily representative of the company).” To be sure, the transformation from FFS to VBC will be difficult, but it will be worth it.
ApolloMed
Why VBC is here to stay
- Where Medicare goes, healthcare goes. A decade ago, CMS responded to legislative changes such as the Affordable Care Act by implementing the first of many value-based programs. From the hospital readmission reduction program to accountable care organizations, the government is determined to enhance value in the healthcare system. As the largest payer of healthcare services, where CMS goes, the rest of the industry follows. VBC generally and Direct Contracting specifically are part of CMS’s larger quality strategy to reform the delivery and financing of healthcare to support the quadruple aims mentioned above. CMMI’s goal is for the vast majority of all Medicare beneficiaries and all Medicare beneficiaries with Parts A and B to be in a care relationship with accountability for quality and total cost of care by 2030.1
- Alignment of incentives. VBC aligns incentives around performance, shifting the focus away from the traditional FFS model. When providers are incentivized properly, they can focus their time on the activities that provide the best evidence- and experience-based outcomes. As Dave Chase, Chief Archaeologist, Co-founder & CEO of Health Rosetta notes: “Healthcare isn’t expensive. After all, clinicians only receive $0.27 of every $1 ostensibly spent on healthcare. What’s expensive is price-gouging, profiteering, administrative bloat, fraud and inappropriate care. Those focused on value choose to not participate in those schemes.” VBC offers a path to participate in care relationships with shared accountability for quality and total cost of care enabled through aligned incentives.
- Maturity of the health technology ecosystem. The CMS Interoperability and Patient Access Rule has resulted in yet another iteration toward data-enabled decision making.2 With technology advancements providing greater actionable insights, health care providers can better understand the total cost of care and how they can affect positive changes that benefit their patients, their practices, and the entire healthcare system.
Health Rosetta
Challenges facing primary care practices under value-based care
The benefits made available through VBC are not inevitable. Valinda Rutledge, Chief Corporate Affairs Officer at Upstream Care cautions that “many challenges still face primary care providers in the transition toward value-based care that must be addressed as we seek to reform the healthcare system toward rewarding for value over volume.”
Payer-provider misalignment
Upstream Care
Data complexity and inaccessibility
While recent legislation and marketplace results have produced great gains in interoperability and data transparency, for many primary care practices, these advancements are inaccessible. They simply don’t have the resources to access these technologies or don’t have the time or expertise to sift through byzantine data files to find meaningful solutions.
Opacity around total cost of care
While primary care physicians are responsible for influencing millions of dollars of spending toward a patient’s total cost of care, they typically are only aware of their direct expenses related to the patient’s care journey. The opacity of the costs a provider’s panel of patients incurs limits the provider from allocating time and energy toward high-leverage activities that serve everyone’s best interests.
Disjointed care team approach
For many primary care practices, the healthcare ecosystem is too complex to provide continuity of care for their patients. There are too many specialists aligned with too many different payer arrangements that change too frequently. Primary care practices can often feel like they’re playing a game where the rules are constantly changing.
Keys to success for primary care practices under value-based care
Despite the challenges facing primary care practices, the transition to value-based care is not only possible, but is becoming increasingly manageable due to changes throughout the healthcare industry. Stephanie Quinn points out that “to be successful, practices must have the resources – technology and human – to care for their patients. Stable revenue streams and real-time, actionable patient-level data will create efficiencies and lead to better health outcomes and experiences. The AAFP is working with family medicine practices across the country to ensure patients get the best care possible.”
Tighter payer-provider alignment
With CMS taking a strong stance regarding the movement toward VBC, other payers are recognizing the need to transition their business models accordingly. We’ve seen how health policy can serve as a catalyst for system transformation. Because healthcare is such a large and complex industry, change happens incrementally – but change does happen. Most payers understand the inevitability of VBC and are deciding to proactively align with providers instead of waiting until it’s too late. For primary care practices, now is the time to realign payer contracts to take advantage of these changing dynamics.
Integrated technology layer
Fortunately for primary care practices, there are various organizations providing actionable analytics that take advantage of technological advances in interoperability and data transparency – at a reasonable price and via user-friendly, intuitive interfaces. The combination of increased access and practicality of these technology resources allows primary care practices to better monitor and evaluate how their workflows affect the ultimate purpose of their efforts: providing high-reliable services for their patients and communities.
Transparency regarding total cost of care
As CMS further doubles down on value based programs, it ushers in a new era of transparency regarding the total cost of care. Primary care practices can take advantage of more frequent, timely cost reporting to inform real-time decisions. For example, if a practice identifies a cohort of patients experiencing higher hospital readmission rates, it can take proactive steps to implement a more comprehensive post-discharge care planning process. It’s very likely any expenses related to the enhanced care planning will be more than offset by the reduction in readmission spending. Whereas before VBC, primary practices were primarily shielded from costs such as those related to readmissions, the future will see increasing accountability and shared rewards realized by primary care practices that can effectively manage the total cost of care.
As total cost of care becomes more transparent, primary care practices will be able to benchmark against their peers. This can both inspire and challenge practices to leverage community knowledge and experience. Ultimately, transparency makes the entire healthcare system more accountable for value. And it will reward those practices that embrace rather than run from accountability and opportunity.
Integration with care team network
The transformation of the healthcare system will take the combined efforts of all stakeholders. Primary care practices can identify new partners who are similarly aligned around value creation. A strength of the Direct Contracting model is that it encourages the formation of networks of aligned specialists and other providers while also maintaining choice for patients. Providers can identify specialists who demonstrate high-quality, low-cost care while allowing for true patient-centered autonomy. They can work with an ever-growing cadre of partners who provide disease-specific tools to manage cohorts of patients. Through open, transparent communication, providers and patients can co-manage complex clinical and personal issues and make decisions that achieve the Quadruple Aim in a respectful, sustainable manner. “In value-based care,” notes Dave Chase, “the most important “medical instrument” is communication. Communication among all members of the care team, especially the most important member (the individual — aka patient), ensures optimal health outcomes.”
Conclusion
VBC shifts the conversation from “what’s reimbursable” to “what works.” It provides a new challenge for all health care stakeholders to reimagine healthcare. It provides new mechanisms to support true practice transformation, such as stable, predictable payments to manage patients instead of a focus on encounters. It provides a vision for the future of healthcare – a future defined by value and enabled through aligned incentives throughout the healthcare ecosystem.
Christopher Chen, MD, CEO of ChenMed, highlights the opportunities of VBC for primary care: “Value-based care is the key underpinning of our ability to solve physician burnout, health inequities, and lack of affordability. The winners in the status quo fee-for-service system won’t drive change, but primary care doctors can lead the way. With a payment shift and technology built for managing health, primary care can be equipped to take accountability for the whole patient.”
ChenMed
At Pearl Health, we’re helping shepherd the industry along this changing landscape. We help by democratizing access to value in healthcare. We help by providing actionable insights through a robust technology platform. We help by enabling access and visibility into healthcare cost and performance. We help by fostering coordinated care team network development. We help by sharing evidence- and experience-based best practices and supporting practice-level implementation.
We’re honored to have had some of the top VBC thinkers share their thoughts around this topic. Fortunately for everyone involved with and affected by the healthcare system, there are numerous voices speaking up for a value-driven approach to health and healthcare.
Here’s our list of the top 50 VBC thinkers of 2022.3
- CMS Innovation Center Strategy Refresh
- Federal Register :: Medicare and Medicaid Programs; Patient Protection and Affordable Care Act; Interoperability and Patient Access for Medicare Advantage Organization and Medicaid Managed Care Plans, State Medicaid Agencies, CHIP Agencies and CHIP Managed Care Entities, Issuers of Qualified Health Plans on the Federally-Facilitated Exchanges, and Health Care Providers
- This list was developed through a combination of factors. To keep the list unbiased, we didn’t include anyone associated with Pearl Health including our advisors.
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