Value-Based Care (VBC): Healthcare Overview and FAQ

The value-based care (VBC) healthcare delivery model prioritizes patient health outcomes by reimbursing providers (e.g., physicians and healthcare facilities) based on quality results instead of the number of services provided.

What is VBC in healthcare’s main goal? Value-based incentive programs encourage the healthcare system to deliver more value to patients, rather than maximizing the number of services provided. The focus is not on financial gain or cost savings — although those may be secondary benefits. Instead, the intention is to increase health value, measured by improvements in health and patient outcomes.

In this article, we’ll answer questions about the value-based care model. Then, we’ll provide answers that highlight how the model impacts your facility’s bottom line alongside some best practices for implementing VBC.

Value-Based vs. Fee-for-Service Models: A Comparison?

Models for healthcare in the U.S. have historically based payments on the number of services (e.g., office visits, treatments, and procedures) provided. These “fee-for-service” models incentivize providers to increase the number of services to maximize reimbursement. For example, a facility that performs three services for an admitted patient will be reimbursed for three, but if the patient received nine services, nine will be reimbursed.

So, how are VBC healthcare reimbursements different from other healthcare payment models? Newer value-based healthcare payment models reward providers for the outcomes of their services. The facility above would have to demonstrate that the services improved the patient’s health, using measurements related to the condition treated and expected outcomes. In other words, the increase in services wouldn’t automatically increase reimbursements for that hospital stay.

Why the switch to value-based repayments? In theory, VBC is meant to address the mismatch between healthcare costs and outcomes in the U.S. Almost one-fifth of the U.S. gross domestic product, twice as much as other developed nations, is spent on healthcare. And yet, health outcomes, including life expectancy and maternal mortality, are significantly worse in the U.S. than in similar countries.

In the 1980s, the Centers for Medicare and Medicaid Services (CMS) was instrumental in shifting toward care that was value-based in an effort to improve quality. Medicare initiated a payment system to pay hospitals a fixed amount for patient care based on a diagnosis-related group (DRG). In the 2010s, additional Value-Based Purchasing (VBP) programs were added to further drive health outcomes and reduce costs. In a final push, CMS established the goal to have 100% of its traditional Medicare beneficiaries receiving healthcare through VBC programs by the year 2030.

VBC: Frequently Asked Questions

We’ve reviewed the purpose and history of the value-based healthcare model. Now, we’ll answer some of the most frequently asked questions pertaining to this particular payment model.

What measures of success are providers accountable for under VBC?

Success is measured in several key areas, primarily quality, cost, and equity.

What is VBC’s main benefit?

There are quite a few key benefits to using this approach; but, to fully answer the question, we must take a comprehensive look at the advantages of prioritizing patient outcomes. The benefits of a value-based approach include:

• Establishing performance measures.
• Providing facilities with upfront information about prospective payments for certain patients and services.
• Lowering healthcare costs to save patients money and reduce financial toxicity.
• Helping providers achieve greater efficiency and patient satisfaction.
• Improving coordination of care for patients.
• Promoting healthier lives for patients and the greater society.
• Helping patients make more informed decisions as consumers by providing public reporting of outcomes data.
• Creating healthier communities by reducing health disparities.
• Decreasing unnecessary services to create more cost efficiencies and savings.
• Moving closer toward the “triple aim” framework.

What value-based care examples are currently being used?

CMS has a range of value-based programs to reward providers that improve care quality for Medicare beneficiaries and lower costs, including:

• End-Stage Renal Disease Quality Incentive Program
• Hospital Value-Based Purchasing Program
• Hospital Readmission Reduction Program
• Value Modifier Program
• Hospital-Acquired Condition Reduction Program
• Skilled Nursing Facility Value-Based Purchasing
• Home Health Value-Based Purchasing
• Medicare Shared Savings Program (alternative payment model with value-based goals)
• Making Care Primary Model

What are the benefits of value-based care for patients and populations that are underserved?

It’s easy to see the financial benefits of VBC. Healthcare’s biggest benefactors within this system are, arguably, the patients themselves. The holistic approach of this system encourages better care coordination and utilization of community resources for marginalized populations.

Treating the whole person by using a comprehensive approach encourages providers to take a holistic view of community health. Increased preventative care services, expanded access to care, and cost savings offer benefits for vulnerable populations.

Are there problems with value-based care?

Yes. There are adoption barriers from providers who prefer the fee-for-service payment model, even if it excludes Medicare patients from their services. Some argue the fee-for-service model, although flawed, is more straightforward for providers and patients to understand. Linking payment to outcomes can make billing unnecessarily complex and challenging.

In addition, some have argued that instead of addressing health disparities, VBC exacerbates the issue and widens the gap. Safety-net hospitals, for example, are disproportionately penalized by many of the outcome measures — some of which haven’t been shown to provide any health benefits. Vulnerable populations are more likely to access healthcare through these safety-net institutions which are already often underfunded and under-resourced.

How does the model transform the approach of healthcare providers?

With its primary aim of improving health, value-based programs put patient-centered care at the forefront of healthcare delivery. The model also encourages preventative and holistic care practices. By changing the focus of the payment structure from services to people, care can be delivered in more compassionate and personalized ways. Care is relational instead of transactional.

Implementing VBC: Healthcare Facility Best Practices

The transition to VBC-style reimbursements is gaining traction across healthcare. If you want to stay a step ahead within the change management process of implementing this new system, here are some initial steps to consider.

1. Ensure Buy-In From Stakeholders

Operating costs may initially suffer during the shift from fee-for-service to value-based repayments. High patient volumes and tightly controlled operating costs are a must to ensure viability throughout the change. With initial, solid buy-in from stakeholders and facility leaders, these challenges will be accepted as part of the process, allowing the change to continue to progress toward eventual, sustainable growth.

Tips:

• Develop and present a plan for optimizing margins (through waste reduction efforts and operating efficiency, for example) to help reduce the financial impacts of the transition period.
• Focus on increasing patient volume as a key strategy for minimizing losses, potentially through increased marketing efforts or community health initiatives.

2. Invest in Care Coordination Efforts

Deliberate care organization can enhance the patient experience and outcomes. It’s done by de-fragmenting care and combining knowledge, perspectives, and judgment from the entire team to streamline treatments and their effectiveness. If value-added care is the goal, this is a crucial step to achieving it.

Tips:

• Consider electronic health record (EHR) systems that offer seamless interprofessional collaboration and communication across the patient’s care journey.
• Develop an interdisciplinary rounding approach that maximizes teamwork, allowing for better collaboration at the height of a patient’s complexity of care needs.

3. Strengthen EBP Education Efforts

Evidence-based practice (EBP) has consistently been linked to positive patient outcomes and improved patient safety. As you direct your organization toward a value-based approach, renew education efforts that strengthen the use of EBP and decision-making.

Tips:

• Empower unit-based or nursing professional councils to host routine educational events around specific EBPs and their significance.
• Review current protocols in use at your facility and update them according to the latest evidence and expert guidance.

4. Develop Your Patient Relationships

Patient engagement is an integral component of clinical outcomes. Developing an effective patient relationship management system can help foster better understanding around the care plan, and better follow-through on critical aspects of care.

Tips:

• Consider offering more remote services to improve access for patients while reducing costs.
• Renew efforts to optimize the patient experience by collecting patient feedback and using it to guide outreach and care initiatives.

5. Start Slow and Revise As Needed

Implementing new systems comes with challenges and risks — that includes VBC. Healthcare facilities can manage that risk by going slow, potentially implementing the program with one type of service at a time. As the program develops, more services can be added to that payment model while data-driven adjustments are made to ensure lasting success.

Tips:

• Use quality metrics to identify the best-suited services for the initial transition to VBC — ideally ones that have the highest association with positive outcomes (or high patient volumes).
• Employ a shared-governance approach to assessing the program’s successes and challenges. Revise according to the team’s data and recommendations.

Looking for More Ways to Improve the Value of Your Patient Care?

Get the most out of your reimbursement model, whether it’s fee-for-service or VBC. Healthcare can be costly, which is why IntelyCare’s here to help. With our facility guides and best practice recommendations you’ll be equipped to better optimize not just your patients’ outcomes, but your organizational success, too.