This year has been forecasted to be pivotal for the growth of value-based care (VBC), which also is called value-based healthcare (VBHC). A recent report from S&P Global Ratings predicts the shift to VBC to gain traction in 2019, “…as cost pressures mount, payers continue to drive change and nontraditional players enter the healthcare arena. This increasing shift to a pricing model that is more dependent on quality and outcomes will be a major disruption to the health care industry, likely pressure sales growth and margins, and create new winners and losers.”
If you want your healthcare organization to be among the winners, you’ll need to understand and be fully prepared to implement the VBHC model. Providers like you will face new challenges with this reimbursement approach, and are using new tools and technologies to meet them, such as applications that enable you to better manage the health needs of patients under your care. The intent is to minimize needless spending for acute and emergency care and provide services to help those with chronic conditions better manage their diseases or conditions.
Increased interoperability will propel value-based care forward. With access to complete patient information, via “electronic medical records” and “electronic health records” (or “EMR” and “EHR”), a truly value-based healthcare system will finally realize its potential.
How value-based care differs from fee-for-service
Value-based care is simply the idea of improving quality and outcomes for patients. Reaching this goal is based on a set of changes in the ways patients receive care.
With a value-based healthcare delivery model providers, including hospitals and physicians, are paid based on patient health outcomes. Value-based care differs from a fee-for-service approach, where providers are paid based on the amount of healthcare services they deliver, not on how they help the patient.
This means that with value-based care, healthcare organization are held accountable for the care they deliver. And they are compensated on the patient results of their care, not on how many tests and treatments are ordered.
With value-based care it comes down to delivering quality over quantity.
Why there is a shift to value-based care
A recent report showed that forty-seven percent of healthcare business was tied to value-based care by the end of 2017, according to HealthPayerIntelligence. That source reported results of a recent Health Care Transformation Task Force (HCTTF) study showing that more and more payers and providers are shifting their contracts away from fee-for-service arrangements, representing a steady increase to value-based care over time.
This upward trend appears encouraging for payers and providers who believe that paying for performance is the industry’s most promising strategy for controlling costs, which, at face value, leads to better health and better care for patients.
Another reason for the shift is that the Centers for Medicare and Medicaid Services (CMS) recently finalized an overhaul that will base any payments on a value-based care model by 2020.
Additionally, employers are turning to employee health plans that stress patient outcomes, especially ones that are value-based. These businesses have found that through enhanced reporting and collaboration, doctors can identify areas to gain efficiencies, reduce unnecessary care, and most importantly, improve patient satisfaction and health. With the cost of care better controlled companies can save money on health plans.
Switching to VBC won’t happening overnight
Certainly, value-based care is up-and-coming trend. The why aren’t all organizations switching to VBC right now? Why are they so reluctant?
Complications and challenges are causing many healthcare organizations to hold back for the time being. They are reluctant to make the switch to new payment models because they are:
- Afraid of moving away from the same, comfortable, fee-for-service payment models they’ve always used.
- Waiting for the entire industry to shift to value-based care.
- Hesitant to step outside their comfort zone… nervous about being labeled by their Board as a trailblazer or early adopter who just was not fully ready for VBC.
- Overly cautious about adopting and making any major investment new and expensive technology and applications that will support new payment models.
- Wary about investing in major staff training and taking people away from their primary jobs.
- Unprepared…without the right people in place to implement a value-based care model.
According to a report from Deloitte Insights, these kinds of doubts and worries could put health care organizations at risk of falling behind when it comes to value-based care.
Plus, value-based care will impact revenue cycles
Modern Healthcare tells us that, “Now, with revenue streams dependent on new quality and cost performance measures, benchmarks compiled from peer groups, episode costs beyond practice walls and more, forecasting payment has become much more challenging.” According to the article, these changes will mean that healthcare organization will have to revisit their existing means revenue cycle management (RCM) approaches and evolve them in four major areas:
- Optimize based on value, not just volume. Practice financial performance once depended primarily on the number of patient encounters and the type of services delivered. By contrast, value-based programs identify specific quality, cost, and other output measures upon which reimbursement levels depend.
- Minimize risk, not just denials. As value-based contracts grow, financial leaders must also anticipate and model the new risk factors that could negatively influence future practice revenue.
- Shift focus from in-office encounters to care delivered across all settings and conditions. Many value-based care models instead accountability for total episode costs, which can be driven by patient visits to other settings (like emergency departments and urgent care), other providers and specialists, and other treatments, including those received in the home. This requires proper integrations and interfaces, partnering with clinicians, and focusing on treating patients based on risk, with a holistic view of their “whole person” care.
- Move from retrospective to real-time reporting and action. VBC needs a new foundation of data management that pulls from all the relevant clinical and financial sources that impact quality measure performance, synchronizes it with those sources, and enables a layer of advanced analytics.
How to keep pace with VBC’s challenges and changes
Whether you’re ready or not, value-based care is taking over healthcare. It’s going to take new technology and appropriately trained personnel to switch to value-based care. Blue Eagle Consulting experts can help you analyze your current situation, understand where you need assistance, train staff, and help your organization phase in value-based care solutions.