The US healthcare system has long struggled to identify a fair and efficient reimbursement scheme that aligns the incentives of patients, providers, and payers. Despite decades of efforts to increase efficiency and curb steadily rising healthcare costs, expenditures continue to rise;1 primary care remains overburdened,2 undervalued,3 and inefficiently used;4 and chronic conditions are rising in prevalence and severity,5 resulting in poor outcomes that are often avoidable and exacerbated strains on the system.
The current strains on our system are unsustainable, calling for innovative payment models and new risk-bearing paradigms. At Pearl Health, we believe these market forces and changes in social policy are converging with technological advancements to enable a tectonic shift in healthcare spending and risk management.
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2024 Top 50 VBC Thinkers
Fill out this short form to recognize someone leading the way in healthcare’s transition from volume to value.
In last year’s recognition of the Top 50 Value-Based Care Thinkers of 2022, we wrote about some of the challenges facing our healthcare system and celebrated the healthcare providers, policy makers, academics, and leaders across disciplines who are pushing the boundaries of our thinking and working to take on seemingly intractable problems to help our system transition from volume to value.
This year, we’re excited to recognize the Top 50 Value-Based Care Thinkers of 2023. In this piece, we offer our view on the biggest themes, news, and trends driving evolution and innovation in value-based care, along with perspectives and quotes graciously offered by many of our honorees. 2023 has been a big year for value-based care so far, and we’re proud to honor the Top 50 Thinkers leading the way!
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VBC News & Trends to Watch in 2023
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Physician Enablement: Momentum builds for technology companies focused on performance in risk
In recent years, as there has been more and more buzz about risk-based models across the healthcare ecosystem, we have seen several new entrants building technology and services that help providers perform in these models.
In the past, some companies have sought to equip providers to perform in value-based care by increasing their staffing resources and providing checklists to drive success in quality measures. However, as new programs, like ACO REACH, place providers at the center of care coordination, it has become increasingly apparent that easily accessible, real-time patient data is central to managing total cost of care across patient panels — this has given rise to a new class of technology-first physician enablement companies that are accelerating innovation in healthcare risk management and care delivery.
Evidence supporting the effectiveness of risk-based models, public policy momentum, growing participation among health plans, and increased interest from public market investors have generated a recent surge in attention on physician enablement technology,7 which has maintained momentum even as many sectors within the macro-environment have cooled.
The market has been receptive to Pearl’s investment in cutting-edge physician enablement technology. Read more about how Pearl Health raised $75M to fuel growth, diversify offerings, and accelerate value-based care innovation.
Our Technology
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Data Interoperability: TEFCA establishes first “network of networks” to drive interoperability forward
In February 2023, HHS announced the first six companies that will be recognized as Qualified Health Information Networks under TEFCA. While the six companies (CommonWell Health Alliance, eHealth Exchange, Epic, Health Gorilla, Kno2, and KONZA National Network) will not be officially designated as QHINs until after pre-production testing and project plan completion, the designation of these entities through the stringent approval process is a huge milestone.7
For decades, legislators, payers, providers, ancillary custodians of personal health information (PHI), and patients have struggled with the security-utility balance for managing healthcare data.
The Health Insurance Portability and Accountability Act (1996), commonly known by its acronym HIPAA, contained critical, landmark protections for patient privacy; it did not, however, preclude compliance with its terms by siloing health information. For many custodians of personal health information (PHI), rendering data inaccessible to other people and systems protected against HIPAA liability at minimal cost (compared to other safeguards, such as sophisticated encryption mechanisms), leading to data balkanization in our healthcare system.
The 21st Century Cures Act (2016) represented an effort to address the problem of PHI balkanization across systems and providers, promoting standardization of healthcare data, a precursor to interoperability. The 21st Century Cures Act prohibits custodians of PHI from achieving HIPAA compliance by inhibiting access to certain electronic PHI and unwarrantedly siloing the data.
The Trusted Exchange Framework and Common Agreement (TEFCA) was mandated by the 21st Century Cures Act, establishing the first-ever federally endorsed governance framework for the exchange of healthcare data across networks and setting a “minimum floor” of nationwide PHI interoperability.8,9 TEFCA drafts were released in 2018 and 2019 and healthcare leaders have been anticipating the establishment of a “network of networks” for PHI exchange for several years.10,11
TEFCA is structured to create national connectivity of electronic health records via the network of QHINs, which share information with each other and will be recognized under an umbrella organization called the Recognized Coordinating Entity (RCE).12
How TEFCA will be adopted in the near term remains uncertain, and it will require education, carefully considered incentives for participation, buy-in from stakeholders across the healthcare system, and investments in infrastructure; yet, the establishment of the first cohort of QHINs in 2023 makes clear that the healthcare system is rapidly evolving toward increased data interoperability to the benefit of patients and providers alike.
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Signal-Action Framework & Urgency Score
In this document, you’ll learn about the algorithm and signals that power the insights surfaced within the Pearl Platform.
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Signal-Action Framework & Urgency Score
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Provider-Led Risk: Medicare’s ACO REACH model launches with more than 130k providers and 2.1 million beneficiaries
In 2022, the Centers for Medicare and Medicaid Services (CMS) redesigned their previous Direct Contracting model to create the Accountable Care Organization (ACO) Realizing Equity, Access, and Community Health (REACH) model — an innovative value-based care model to improve the quality of care for people with Traditional Medicare through better care coordination and by increasing access to accountable care in underserved communities.13
In January 2023, the REACH model officially launched with 132 ACOs with 131,772 health care providers and organizations providing care to an estimated 2.1 million beneficiaries.14 CMS has set a goal to have 100% of Traditional Medicare Beneficiaries in an accountable care relationship by 2030 and has made it clear that the REACH model is one of its main innovation initiatives to help achieve this goal.15
“CMS is testing a redesigned model because accountable care organizations make it possible for people in Traditional Medicare to receive greater support managing their chronic diseases, facilitate smoother transitions from the hospital to their homes, and ensure beneficiaries receive preventive care that keeps them healthy,” said CMS Deputy Administrator and Director of the CMS Innovation Center Liz Fowler, PhD, JD. “Under the ACO REACH Model, health care providers can receive more predictable revenue and use those dollars more flexibly to meet their patients’ needs — and to be more resilient in the face of health challenges like the current public health pandemic. The bottom line is that ACOs can improve health care quality and make people healthier, which can also lead to lower total costs of care.”16
In addition to pursuing deeper investment in care coordination and health equity, with the ACO REACH model, CMS aimed to address stakeholder feedback from previous models and make value-based care more patient- and provider-centric.17
For PCPs, ACO REACH presents an opportunity to embrace a more proactive care model for their Traditional Medicare patients, align incentives with keeping patients healthy, and increase revenue for effectively managing care. There are several key features in the ACO REACH model that enable this care model, including:
- Stabilized Revenue: The model enables providers to transition from fee-for-service (FFS) to stable monthly primary care capitation (PCC) payments.
- No Minimum Savings Rate: Groups start earning from the first dollar of shared savings.
- Less Administrative Work: None of the quality measures require active administrative work (e.g. chart submissions, widgets, MIPS) on the part of providers or their staff. Just high quality care.
- Voluntary Alignment: Unlike other models, ACO REACH allows for patients to become aligned with the model throughout the performance year.
At Pearl, we believe that innovative value-based care models, like ACO REACH, have the potential to improve patient experiences and outcomes while also presenting opportunities for PCPs to enhance revenue with improved outcomes.
We developed a self-serve Value-Based Care Advisor tool to make it easy for providers to understand the financial implications of participating in the model before diving in. Interested in exploring participation in ACO REACH? Click the link below!
How much more could your practice earn with Pearl?
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Risk Adjustment: CMS issues Medicare Advantage Risk Adjustment Data Validation (RADV) Final Rule
In January 2023, following nearly 20 years of rulemaking efforts — including proposed policy, public comment, and challenges in the courts — the Centers for Medicare and Medicaid Services (CMS) released the long-awaited Risk Adjustment Data Validation (RADV) final rule.18
RADV functions as CMS’s primary audit and oversight tool for Medicare Advantage (MA) payments,19 radically increasing the federal government’s power to conduct targeted audits, identify payments made to Medicare Advantage Organizations (MAOs) in instances where medical diagnoses submitted for payment were not found in the beneficiary’s medical record, and recoup payments deemed to be improper.20
As with proposed rules in 2014 and 2018,21 insurance industry advocates strongly oppose key elements of the RADV final rule. Particularly contentious are RADV’s extrapolation to previous plan years and elimination of the fee-for-service (FFS) adjuster:
- Extrapolation: CMS takes a sample of enrolled beneficiaries in MA plans in a certain year and compares the diagnoses to the medical records to ensure the plan was billed correctly. Under the RADV final rule, CMS will extrapolate the error rate to every plan year starting in 2018, resulting in an estimated $479 million in overpayments in addition to the $4.7 billion CMS estimates will be collected from insurers from 2023-2032.22
- FFS Adjuster: In previous proposed rules, CMS applied a FFS adjuster to account for the difference in the documentation requirements for MA audits vs. traditional Medicare. CMS has claimed that, after carefully studying the impacts of the FFS Adjuster, it was no longer needed, having a negligible effect; however, insurers have argued that “without the FFS adjuster, plans will be held to an impossible burden of no errors whatsoever in their claims.” 23
While Medicare Advantage plans and other insurance industry advocates argue that the policy will raise prices, reduce benefits for those who choose MA, and yield fewer plan options in the future, CMS officials defend RADV and the measured approach with which the rule was developed.
“CMS is committed to protecting people with Medicare and being a responsible steward of taxpayer dollars,” said CMS Administrator Chiquita Brooks-LaSure. “By establishing our approach to RADV audits through this regulation, we are protecting access to Medicare both now and for future generations.” 24
Regardless of the outcome of future litigation, the implications of the RADV final rule will continue to be felt by MAOs, contracted and at-risk providers who complete the clinical documentation to support risk adjustment, and vendors that support providers in accurately capturing patient diagnoses.25 The debate over RADV reflects underlying tensions in our healthcare system that are unlikely to abate without transforming existing incentive structures. As it stands, CMS will continue to push for increased scrutiny over coding accuracy and more oversight into risk adjustment in MA, making it increasingly critical for plans and providers to enhance their capabilities to capture patient diagnoses accurately while also reducing cost of care across Medicare patient panels.
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Artificial Intelligence: The meteoric rise of ChatGPT sparks debate over AI’s implications for healthcare
Given the banner year that ChatGPT has had so far, we would be remiss if we did not acknowledge the foreseeable implications of artificial intelligence on our healthcare system. Since its prototype launched on November 30, 2022 (with more than 1 million users in its first week),27 the AI chatbot has captured public attention and sparked speculation and heated debate about the far-reaching implications of AI across industries and domains. Healthcare is no exception.
Artificial intelligence is not new, nor is the debate around its potential. Yet, the ease of use and accessibility of ChatGPT is groundbreaking, making AI significantly “less abstract and more practical than the impressive but often esoteric advances that had been brewing in academia and a handful of high-tech companies over the last few years.”28 Given the attention and billions of dollars in R&D investments being made by technology giants and consumer brands alike,29 rapid advancements in AI will surely accelerate.
For some, advances in AI will result in economic pain and hardship, as many jobs (including well-paying ones requiring creative skills and logical reasoning, previously thought immune to automation) become obsolete.30,31 Yet, as a recent Harvard Business Review article on ChatGPT puts it: “the genie is not going back into the bottle. The forward march of technology will continue, and we must harness the new capabilities to benefit society. To do so, we must ask what new systems we can build with these tools.”
In the near term, it is easy to imagine using ChatGPT-like capabilities to provide virtual assistants to patients in scheduling appointments, navigating the healthcare system, supporting with medical translation services, and providing basic instructions for managing health and wellness remotely. There are surely myriad other applications that have the potential to empower patients to obtain resources to manage their health in new ways.
More controversial is the extent to which AI will influence clinical decision making in the near term. With vast amounts of interoperable patient data and breakthroughs in computing power, data science, and biology, it is reasonable to believe that AI technology will be used by clinicians to provide increasingly personalized care to patients — to what extent and on what timeline remains uncertain. For the foreseeable future, as generative AI is still in its nascency, it is not able to replace the clinical judgment of skilled physicians; perhaps over time, however, as the technology advances, it might come to make fewer errors, and some believe it will ultimately “match or even surpass the predictive powers (and clinical quality) of medical professionals.” 32
If applied to enable providers with insights that help them more effectively forecast risk and manage care across large patient populations, this technology has the potential to both increase the sustainability of our healthcare system and align providers with their patients in a way that results in better care and more financial reward flowing to those who coordinate it.
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Real response from ChatGPT on AI's impact on VBC:
How will artificial intelligence help to drive value-based care forward?
- Personalized Care: AI can help healthcare providers analyze large amounts of patient data and provide personalized care plans based on individual health risks, genetics, and lifestyles. This can lead to better patient outcomes and a more efficient use of healthcare resources.
- Population Health Management: AI can enable healthcare providers to identify high-risk patients, forecast health trends, and develop targeted interventions to improve patient outcomes. This can reduce healthcare costs by preventing avoidable hospitalizations and improving patient adherence to treatment plans.
- Remote Monitoring and Telemedicine: AI can help healthcare providers monitor patients remotely and provide telemedicine services, improving access to care and reducing the need for in-person visits. This can be particularly beneficial for patients in rural or underserved areas.
- Improved Efficiency: AI can help automate routine tasks, such as scheduling appointments and managing medical records, freeing up healthcare providers to focus on patient care. This can reduce administrative costs and improve the efficiency of healthcare delivery.
- Disease Detection and Diagnosis: AI can help healthcare providers detect diseases earlier and with greater accuracy, improving patient outcomes and reducing healthcare costs. For example, AI algorithms can analyze medical images to detect cancer or diagnose rare diseases.
The Top 50 Value-Based Care Thinkers of 2023
At Pearl Health, we see the wide adoption of value-based care models as a way to both make our healthcare system more sustainable and to provide better, more proactive patient care. We’re proud of the part we play in empowering providers to drive the transition from volume to value, and we’re excited to recognize the leaders who are shaping the future of value-based healthcare.
- Statista, “U.S. Health Expenditure as Percent of GDP from 1960 to 2021.”
- University of Chicago, “Primary care doctors would need more than 24 hours in a day to provide recommended care,” August 2022
- PCPs are under-compensated, compared both to other verticals of the healthcare system (among the lowest ranked specialties by annual compensation) and to the value they bring to that system (the average PCP generally earns $266k, but influences ~$10M in downstream healthcare costs). Sources: Farzad Mostashari, Darshak Sanghavi, Mark McClellan, “Health Reform and Physician-Led Accountable Care: The Paradox of Primary Care Physician Leadership,” JAMA, May 2014. Medical Group Management Association (MGMA), “New MGMA research finds physician compensation on the rise,” Cision PR Newswire, May 2019.
- Healthcare spending per capita in the US is about twice that of comparable countries; yet, US healthcare consumers engage in routine care less often. Higher (and more efficient) utilization of primary care services can decrease systemic costs overall by mitigating risks before chronic conditions develop or acute events occur. Sources: Peterson-KFF Health System Tracker, “Health consumption expenditures per capita, U.S. dollars, PPP adjusted, 2020 or nearest year.” OECD Health Statistics, “Number of doctor consultations per person (2017 or most recent available),” 2019.
- Wullianallur Raghupathi and Viju Raghupathi, “An Empirical Study of Chronic Diseases in the United States: A Visual Analytics Approach to Public Health,” 2018.
- Jacob Effron, Vital Signs, “Taking On Risk: The Present and Future of Risk-Based Businesses in Healthcare,” April 26, 2022.
- Fierce Healthcare, “HHS ushered in the first group of TEFCA’s Qualified Health Information Networks,” February 14, 2023.
- Becker’s Health IT, “With TEFCA, Interoperability in the United States Launches Ahead,” February 22, 2023.
- Oracle Cerner, “TEFCA: A leap toward achieving nationwide interoperability,” August 31, 2022.
- Healthcare IT News, “Everything you wanted to know about TEFCA (but were afraid to ask),” January 27, 2022.
- Fierce Healthcare, February 14, 2023.
- Healthcare IT News, “Everything you wanted to know about TEFCA (but were afraid to ask),” January 27, 2022.
- CMS, “Accountable Care Organization (ACO) Realizing Equity, Access, and Community Health (REACH) Model,” February 24, 2022.
- CMS, “CMS Announces Increase in 2023 in Organizations and Beneficiaries Benefiting from Coordinated Care in Accountable Care Relationship,” January 17, 2023.
- CMS, January 17, 2023.
- CMS, “CMS Redesigns Accountable Care Organization Model to Provide Better Care for People with Traditional Medicare,” February 24, 2022.
- CMS Innovation Center, “ACO REACH,” Accessed April 17, 2023.
- Ropes & Gray, “Extrapolation Has Arrived: CMS Finalizes Medicare Advantage Risk Adjustment Rule,” February 16, 2023.
- CMS, “Medicare Advantage Risk Adjustment Data Validation Final Rule (CMS-4185-F2) Fact Sheet,” January 30, 2023.
- Milliman, “Medicare Advantage Risk Adjustment Data Validation (RADV) final rule: An early read on a long-awaited rule,” February 8, 2023.
- Ropes & Gray, February 16, 2023.
- Fierce Healthcare, “Medicare Advantage plans lose out in final RADV audit rule that ditches fee-for-service adjuster,” January 30, 2023.
- Fierce Healthcare, January 30, 2023.
- CMS, January 30, 2023.
- Ropes & Gray, February 16, 2023.
- CMS, “CMS Issues Final Rule to Protect Medicare, Strengthen Medicare Advantage, and Hold Insurers Accountable,” January 30, 2023.
- Forbes, “What is ChatGPT? How AI Is Transforming Multiple Industries,” February 1, 2023.
- David Rotman. MIT Technology Review, “ChatGPT is about to revolutionize the economy. We need to decide what that looks like,” March 25, 2023.
- David Rotman. MIT Technology Review, March 25, 2023.
- David Rotman. MIT Technology Review, March 25, 2023.
- Ajay Agrawal, Joshua Gans, Avi Goldfarb. Harvard Business Review, “ChatGPT and How AI Disrupts Industries,” December 12, 2022.
- Robert Pearl, M.D., Forbes, “5 Ways ChatGPT Will Change Healthcare Forever, For Better,” February 13, 2023.
