As healthcare costs continue to rise, those picking up the tab for doctor and hospital costs are rapidly moving to value-based care payment models that require medical care providers to be measured, rated, and scored. The challenge for healthcare institutions is how to adapt their structure for a successful transition.

But to better understand how can organizations deliver value-based care, it’s useful to understand what is value-based care and how does it affect healthcare providers. Let’s start from the beginning.

What Is Value-Based Care?

Value-based care is a type of payment model that pays doctors and hospitals for treating patients in the right place, at the right time and with just the right amount of care. You can look at it as a financial incentive to motivate healthcare providers to meet specific performance measures related to the quality and efficiency of the process. The same way, it penalizes weaker experiences, such as medical errors.

Value-based care has been growing in popularity compared to the traditional fee-for-service method.  Look no further than the nation’s largest health insurance companies for a snapshot into this trend. Insurers, including U.S. government Medicare and Medicaid programs, are trying to slow U.S. health spending expected to eclipse $3.3 trillion this year by eliminating unnecessary tests and procedures common with fee-for-service medicine.

Learn how you can adapt your digital strategy to accelerate the delivery of value-based care

Value-Based Care vs. Fee-for-Service

The most significant difference between these two models is that in traditional fee-for-service, healthcare providers are rewarded by insurance companies and government agencies based on the volume of care delivered. The payments are unbundled and paid separately, so the more tests and procedures they order, the more healthcare providers get paid. The problem with this method is that it encourages doctors and physicians to request tests and procedures that aren’t necessarily needed.

In opposition to fee-for-service models, in value-based care, doctors and physicians are incentivized to engage with patients to provide the right care based on the patient’s needs. They are encouraged to invest in new technology and break silos between different doctors, specialists, and surgeons by aligning their efforts with multiple providers.

Value-Based Care Model: How Does It Work? 

Many healthcare organizations are redesigning their structure to support this new model. So, how does value-based care work in real life?

Well, there are several variations within this model. Here are the most common:

  • Accountable Care Organizations: ACO encourages the coordination between all doctors, hospitals, and other healthcare providers involved in the care of the patient to improve quality and eliminate bureaucratic inefficiencies. Data sharing, including clinical and claims data, is essential to success.
  • Bundled Payments: Different from fee-for-service, in the bundled payment model, even if a treatment involves multiple providers, they are collectively reimbursed instead of individually paid. 
  • Patient-Centered Medical Home: PCMH encourages the practices of a personal provider that, together with a qualified medical team, provides continuous, accessible, family-centered, comprehensive, compassionate and culturally-sensitive healthcare to achieve the best outcomes. This way, the patient is taken care of by a single doctor and team.

Is Value-Based Care the Future of Healthcare?

By the end of 2020, UnitedHealth, the nation’s largest health insurance company, estimates $75 billion of its payments to medical care providers “will be tied to value-based care relationships,” UnitedHealth Group said in its most recent value-based care report. The insurer’s 15-page “value-based care” report includes data from 110,000 doctors and 1,100 hospitals who provided care to 15 million UnitedHealth members from value-based arrangements.

Physician data sharing and value-based incentives round out true end-to-end alignment of a progressive health system,” David Wichmann, chief executive officer of UnitedHealth told analysts on the company’s second-quarter earnings call on July 18. "Value-based payments to care providers are growing more than 15 percent in 2019, aligning incentives to practice high-quality care, while improving the effective use of health system resources. We expect these value-based payments to ramp at an even more accelerated pace in the coming years."

There were more than 1,000 ACOs spread across the U.S. last year that represented more than 1,400 contracts with commercial and government insurers covering more than 32 million Americans, according to a 2018 analysis in the Journal Health Affairs. At that time, 10 percent of the U.S. population was covered by an ACO, compared to just 6 percent the previous year, Health Affairs said.

And since that study, insurers have announced plans this year to escalate the shift to ACOs and other value-based models. Cigna, for example, moved up its timeline, notifying medical-care providers earlier this year that the insurer eclipsed a goal of having 50 percent of its health plan payments made through “alternative payment arrangements in the company’s top 40 markets.

When Cigna made its announcement that it had surpassed its goal, it indicated that the move to value-based reimbursement is no passing fad. “This is a critical milestone as we work to accelerate the pace of change in health care delivery in the United States,” Cigna chief medical officer Dr. Scott Josephs said at the time.

For value-based models to work, health plans say they are trying to better engage with patients and their clinicians and doctors to improve outcomes and drive down costs. This means the silos that have existed when physicians and other providers have operated in an uncoordinated fashion are disappearing as ACOs group more and more providers together.

In these new value-based models, consumer power in the healthcare system is growing at an incredible rate.

And physicians are beginning to notice these shifts to value are intensifying with more demands that patients be satisfied as customers. Just this month, physician staffing company Merritt Hawkins said that for the first time in more than half of the firm’s searches—or 56 percent—conducted for its clients that include large medical groups, hospitals, academic medical centers and outpatient care facilities “featured a bonus based in whole or in part on quality metrics.” These were for measures such as patient satisfaction and adherence to treatment protocols, according to the firm’s 2019 Review of Physician and Advanced Practitioner Recruiting Incentives.

The adoption of such measures is occurring at a rapid pace given that just 43 percent of contracts in Merritt’s 2018 Review Of Physician and Advanced Practitioner Recruiting Incentives offered a quality-based production bonus.

How to Accelerate Value-Based Care

With the pressure on for providers to shift their treatment models from fee-for-service to value-based care, the need to have a technology solution that can help them move quickly to a patient-centric care structure is paramount.

OutSystems allows a health delivery organization (HDO) to rapidly build integrated omnichannel care solutions for both patients and physicians that range from telehealth systems, patient portals, mobile healthcare apps, and beyond. The OutSystems low-code platform also enables an HDO to create a single 360-degree view of the patient by pulling in third-party unstructured data from sources such as wearable devices and other third-party applications.

In the future, physicians will increasingly have a financial incentive to want to participate in value-based arrangements if the Merritt Hawkins report is any indication. According to the report, “In instances where the production bonus includes quality metrics, the 2019 Review indicates that, on average, 11% of the physician’s total compensation will be determined by quality, up from 8% the previous year.”

So, if you’re eager to accelerate the delivery of value-based care, schedule a demo to see how low-code can give you the support you need for a successful transition.