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If you own a medical practice or are employed by one, you should be thinking about value-based care, or VBC. Value-based care is a model that emphasizes the value and quality of healthcare services rather than the volume of services delivered. The mantra of value-based care—value over volume.

Does value-based care represent a meaningful shift in healthcare?

Value-based care represents a shift in focus from traditional fee-for-service care where providers are paid based on the services they perform (e.g., tests, procedures, office visits, consultations, etc.) Under VBC, payment is linked to the outcomes and effectiveness of care, while managing cost.

Why do we need value-based care?

Value-based care seeks to address challenges that have arisen from traditional fee-for-service healthcare, such as escalating costs, inconsistent quality, fragmented delivery of care, and inequities in care among different communities.

Value-based care offers a path to improve patient outcomes, reduce costs, and enhance overall quality of healthcare. VBC programs and initiatives may be implemented to reduce hospital readmissions, better manage chronic conditions, and improve patient health at the individual and population level.

What are the most important components of value-based care?

If your practice already participates in any kind of value-based care program, or would like to, these are important components:

  • Quality measures – healthcare providers and practices are measured and evaluated based on various quality metrics, such as patient satisfaction, clinical outcomes, and adherence to evidence-based guidelines.
  • Population health management – providers often must manage the health of a population rather than just individual patients; the focus is on preventive care, wellness, and early intervention to prevent costly acute care episodes.
  • Care coordination – value-based care promotes better coordination among healthcare providers to reduce duplication and fragmentation of services.
  • Alternative approaches to payment – several payment models are associated with value-based care, including pay-for-performance, bundled payments, and accountable care organizations (ACOs); these models often involve financial incentives to encourage providers to meet or exceed quality and cost-efficiency targets.
  • Data analyticsdata and analytics play a crucial role in value-based care; analytics may help your practice track patient outcomes, make better-informed decisions, and identify gaps in care.
  • Patient-centered care – in the value-based models, patients are actively involved in their care decisions; shared decision-making is encouraged; and providers are encouraged to consider patient preferences and values in planning care.
  • Risk-sharing – in some value-based payment models, your practice will be expected to share financial risk with payers (private insurance companies or government entities) based on your ability to meet quality and cost targets.

Is value-based care likely to impact my practice?

The impact of value-based care on your medical practice will vary depending on factors such as the type of medical practice you own or are employed by, your payer mix, location, patient demographics, and the specific value-based care programs in which your practice chooses to participate.

Here are some types of practices that are more likely to be affected by value-based care:

  • Primary care practicesprimary care practices are at the forefront of value-based care initiatives; they are often responsible for care coordination, preventive services, and managing chronic conditions, all of which are central to value-based care.
  • Specialty practices focused on chronic care – value-based care emphasizes the management of chronic conditions to prevent complications and reduce costs; specialty practices that focus on chronic disease management such as cardiology and endocrinology are the most likely to be affected by value-based care. Some more specialized medical practices, such as certain surgical specialties or those that deal with rarer conditions, are less likely to participate in value-based care programs due to the unique nature of their patient populations and services.
  • Accountable care organizations (ACOs) – ACOs and other types of integrated health systems as well as multi-specialty practices are well-positioned to participate in and benefit from value-based care; such practices can coordinate care across various settings and services. For more information, see the sections on ACOs below.
  • Pediatric practicespediatric practices may adopt value based care measures that focus on child wellness, immunization, and preventive care.
  • Geriatric practices – these practices face the challenges of managing multiple chronic conditions, medication adherence, and end-of-life care, all of which are relevant to value-based care.
  • Federally Qualified Health Centers (FQHCs) – FQHCs serve underserved and vulnerable populations, making them significant participants in value-based care initiatives aimed at improving healthcare access and outcomes in these communities.

What types of payers are more likely to push my practice toward value-based payment?

Healthcare payers that may encourage or seek to enforce participation in value-based care initiatives typically include:

  • Medicare – the Centers for Medicare & Medicaid Services (CMS) has been a strong advocate for value-based care and has launched various value-based programs, including the Medicare Shared Savings Program (MSSP) and the Merit-Based Incentive Payment System (MIPS).
  • Medicaid – state Medicaid programs often implement value-based care initiatives to improve care quality and reduce costs, and they may encourage or even require, provider participation.
  • Commercial insurers – many private health insurance companies have developed their own value-based payment models and contracts with healthcare providers; these insurers seek to control costs and improve care quality.
  • Accountable care organizations (ACOs) – whether led by healthcare systems or physician groups, ACOs actively promote value-based care and often contract with participating providers based on shared savings or risk-sharing arrangements.
  • Integrated health systems – large healthcare networks and hospital-based healthcare systems may implement value-based care to optimize care delivery, streamline costs, and enhance patient outcomes.
  • Self-funded employers – some self-funded employers are embracing value-based care to provide their employees with high-quality, cost-effective healthcare; they may work through third-party administrators to implement aspects of value-based care.

What measures will my practice be held accountable for under value-based care?

If you participate in a value-based care program, expect to be held accountable for at least some of the criteria listed blew:

  • Quality measures – these measures assess the quality of care delivered to patients; examples include preventive care, such as immunizations and cancer screenings, chronic disease management, or patient safety indicators that screen for adverse events.
  • Clinical outcomes such as complication rates for surgeries and mortality rates.
  • Patient experience measures – these measures evaluate patient satisfaction and the overall care experience; they may incorporate patient surveys to assess factors such as communication, access to care, and provider responsiveness.
  • Resource use and utilization measures such as ER visits, hospital admissions and length of stay.
  • Population health measures – such measures focus on improving the health of a defined patient population; providers may be held accountable for managing chronic conditions; encouraging preventive care and screenings; or taking action to reduce health disparities among patient groups.
  • Care coordination measures – these measures seek to assess how effectively providers coordinate care across different settings and specialties, such as ensuring seamless transitions of care and reducing duplicative or unnecessary tests and procedures.
  • Interoperability measures – these measures may focus on adoption and use of EHRs and other interoperability technologies that meet certain criteria for the exchange of patient information.
  • Health information exchange measures may evaluate sharing of patient health information among providers and organizations to improve care coordination and reduce duplication of services.
  • Adherence to clinical guidelines – value-based care programs may monitor whether providers follow evidence-based clinical guidelines and best practices in their care delivery.
  • Efficiency measures – may monitor cost-effectiveness of care delivery, including such factors as resource utilization, length of hospital stays, and the use of high-cost services.
  • Cost – providers may be assessed on the cost of care delivered to patients, such as total cost of care for a patient or population or cost per episode of care.
  • Financial risk – in some value-based care models, providers may be held accountable for achieving cost savings targets or managing financial risk.

What is the Merit-Based Incentive Payment System?

The Merit-Based Incentive Payment System (MIPS) is one of the most important value-based care programs in effect today. The Centers for Medicare & Medicaid Services (CMS) introduced the Merit-Based Incentive Payment System (MIPS) in 2017 as part of its effort to transition healthcare delivery away from the fee-for-service model.

MIPS evaluates and rewards providers based on their performance on targeted measures when delivering care to Medicare patients, thereby shifting the Medicare program toward value-based care. The MIPs program continues to serve as the most important component in CMS’s initiative to transform healthcare delivery from fee-for-service to fee-for-value.

What is the significance of MIPS for my medical practice?

MIPS represents a significant shift in how you are reimbursed for Medicare services. Here's what it may mean to your practice:

  • Financial impact – MIPS scores directly affect Medicare reimbursement. High scores can lead to upward payment adjustments, while low scores can result in payment penalties. To maximize Medicare reimbursement, focus on performance improvement.
  • Quality improvement – MIPS incentivizes practices to enhance quality of care. This may involve implementing a better EHR, adopting evidence-based practices, and focusing on patient outcomes.
  • Reporting requirements –  Under MIPS, your practice is required to utilize an ONC Certified EHR and report data on various quality measures and improvement activities; this necessitates significant data collection, reporting, and documentation efforts.
  • Interoperability –  Practices need to prioritize interoperability and health information exchange to succeed in the Promoting Interoperability category.

What is an Accountable Care Organization?

An Accountable Care Organization (ACO) is a group of healthcare providers who voluntarily come together to provide coordinated care to a defined population of patients. It is a collaborative entity that can include doctors, other types of clinicians, and hospitals.

Physician-led ACOs are often initiated and governed by a group of independent physicians or physician practices. Alternatively, ACOs may be organized and operated by large healthcare systems. The primary goal of an ACO is to improve the quality of care while controlling healthcare costs.

How do ACOs support value-based care?

ACOs are a key component of the implementation of value-based care. They:

  • are accountable for the health outcomes and expenditures of their attributed patient population—the patients who are formally assigned or attributed to the ACO, usually within the context of a value-based care model.
  • link financial incentives for providers to the achievement of quality and cost goals.
  • place a strong emphasis on care coordination, both within their organization and across the healthcare continuum.

These factors encourage providers who participate in the ACO to focus on preventive care, care coordination, and evidence-based practices.

One of the most well-known ACO programs under Medicare is the Medicare Shared Savings Program (MSSP). ACOs that participate in MSSP have the opportunity to share in any cost savings they generate when they meet quality benchmarks and cost-savings targets. This encourages providers to work together to improve patient care and manage healthcare costs—goals that align with the principles of value-based care.

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John Ellis, DO

Vice President of Regulatory & Clinical Affairs at NextGen Healthcare

Dr. Ellis is a board-certified Family Medicine physician who serves as the Vice President of the Regulatory & Clinical Affairs team at NextGen Healthcare. His previous experience includes working as an Adjunct Assistant Professor at the Arizona College of Osteopathic Medicine and serving as the Chairman of the Family Medicine Department at Arrowhead Abrazo Community Hospital. Dr. Ellis founded his own family medicine practice in Arizona and has been using EHR’s since 2003.