There is growing interest in, and implementation of so-called – value-based healthcare – across the country. It is a decidedly different way to both deliver and pay for healthcare, and seeks to accomplish the seemingly unattainable goals of lower cost, improved quality of care, with better outcomes. And unlike many of the “healthcare cost reducing strategies” that have heretofore been implemented, this one addresses both the supply and demand for healthcare. So what exactly is value-based healthcare, and how does it work?
Knowing that the ultimate goal of value-based health plans, and every other healthcare cost management protocol that’s been implemented throughout the decades, is to lower cost and improve quality, both the delivery and payment models must be disrupted. In short, both patients and healthcare providers must pivot from historical patterns and reimbursement models, and embrace a more efficient, and ultimately better way forward. Let’s look at both of the main stakeholders in healthcare separately, as they each seek to embrace value-based healthcare.
PATIENTS
In order to achieve the aforementioned aims, patients must embrace both wellness and prevention. Wellness involves things like proper diet/nutrition, regular exercise, reduced stress, adequate sleep, and proper hydration. Prevention, and this is key, requires patients to schedule regular, annual routine physicals; and to accept various healthcare treatments such as complete blood counts (CBC), colonoscopy, vaccination, mammogram, pap smear, etc. It’s far easier (and less expensive!) to get in front of and prevent chronic illness than to treat it after the fact. Many healthcare experts estimate that upwards of 75% of all healthcare expenses are attributable to PREVENTABLE chronic illness. And with America’s healthcare spend total approaching $4 trillion per year (and nearly 1/3 of our gross domestic product), just think of the impact on our economy if we could slice a huge piece out of this figure?! Patients should be reminded that one of the many aspects of the Affordable Care Act (ACA) was the requirement that insurance payers cover the cost of preventive care, in full, at 100%. In other words, no cost sharing (i.e., copay, deductible, coinsurance) for care that is deemed and listed as preventive in nature. See – https://smstevensandassociates.com/preventive-healthcare-services-and-coverage/
And on the subject of eliminating financial barriers to healthcare, value-based health plans look very different than the typical health insurance plan construct that people have grown accustomed to over the years. Value-based plans, unlike their “traditional/copay” and “high deductible/spending account” counterparts, seek to significantly reduce cost sharing requirements that patients must pay, such as copays, deductibles, and coinsurance. In fact, a typical value based health plan might not have any deductible, a $0 copay for primary care, $25 copay for specialty care, and lower coinsurance/out of pocket costs for things like hospital care, imaging, and outpatient surgery. Importantly, value-based health plans are usually aligned with Accountable Care Organizations (ACO)*, and may require patients to have a designated (or possibly personally selected) primary care physician, who directs and authorizes specialty and other types of care. *See – https://smstevensandassociates.com/accountable-care-the-savior-of-u-s-healthcare/
PROVIDERS
Aligning incentives between providers and patients has long been an aim of any form of healthcare reform. The problem is, the prevailing provider reimbursement model – fee for service – rewards quantity of care delivered (e.g. tests, procedures, imaging, etc.), in most cases, irrespective of outcomes, quality, or patient satisfaction.
The value-based healthcare model, coupled with accountable care organizations (ACOs), dramatically alters the reimbursement model, and instead, pays based on quality of care and patient satisfaction. Add to this, the fact that payments are generally bundled in a value based model, versus charging patients for each individual test, service, or procedure, which is characteristic of fee for service. Lastly, value-based healthcare models tend to offer lower unit cost of care, largely attributable to the tighter medical management protocols in place, and the relationship between patient and primary care doctor. In short, fewer billable services and lower prices for care leads to (the potential for) hefty healthcare cost reductions.
Another important component to the necessary provider level changes is the use and reliance on electronic medical records (EMR). The rollout of this technology, and the lack of standardization has been, to say the least, clunky. But use of EMR is on the rise, and more and more providers are embracing this technology both for its efficiency, and ability to help standardize care delivery.
So to summarize, value-based healthcare seeks to reduce hospital admissions and lengths of stay, avoid unnecessary trips to the emergency room, lower unit cost of care, have a more holistic and collaborative approach to patient care, and utilize EMR. And for their part, patients will have to seek care/services from the more tightly managed ACO networks (versus the prevailing indemnity and PPO network arrangements), and develop a solid relationship with their primary care doctor. Such a proactive approach should inevitably keep healthcare costs down, result in better healthcare outcomes, and improve overall health and well-being!
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