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Value-Based Care Models as Alternatives to Fee for Service

Value-Based Care Models

Many major providers did not properly plan for the previous presidential election results. Aetna CEO, Mark Bertolini, according to an article published in the Hartford Courant, sent his team back to the drawing board to develop another plan due to the potential repeal of the Affordable Care Act by the Trump administration.

Many Payers are reeling to adjust to this election result and the uncertainty and direction could cause the expenditure of a great deal of money and resources before the smoke clears.

One thing the two administrations (Obamacare and Trumpcare) should agree upon is the concept of value-based care as an alternative to Fee for Service.

Although fee-for-service reimbursement models promote quantity of services, value-based care models reward healthcare providers for the quality of care that they give to patients. Value-based care is focused on providing better care for individuals, improving population health management, and reducing costs by rewarding Providers for more effective and meaningful patient outcomes. Let’s dig a little deeper.

Fee-for-service models:

  • Providers are paid for the specific services they performed.
  • Services are billed separately (not bundled)
  • Costs are calculated by what commercial payers and Medicare would pay

Under Fee-for-service models, costs increased and outcomes were not improving. Doctors were seeing more patients and claims were processed in a fragmented network.

Value based service models: (Four of the most popular)

  • The Accountable Care Organization (ACO) – groups of healthcare providers, doctors and hospitals who provide patients with quality, synchronized care for better patient outcomes
  • Bundled Payments – administered for services related to a specific care episode. This gives providers the flexibility to construct the bundles, develop the health care delivery structure, and control the allocation of payments among participating providers,
  • The Patient Centered Medical Home (PCMH) – where providers treat patients by collaborating with a primary care physician who coordinates all required and logical care. Kind of like a cousin of the ACO.
  • Pay for performance (Medicare) – awards bonuses and enacts penalties on providers to improve or see their patients migrate to higher-quality options

Value-based models seek to decrease the current fragmentation of systems, which drive up the costs of Fee-for-service based models, through the promotion of collaboration, bundling and a focus on the patient outcomes as opposed to the control of specific costs and activities.

So, which way are we headed?

Sylvia M. Burwell of the department of Health and Human Services, announced the HSS’s plan to move away from Fee-for service models and committed to guidelines and a timeline to do so. Within the next few years, the HSS plans to shift 50% of Fee-for-service payments to Value based. The ACO even has created several of new institutions and payment arrangements to drive in that direction. Anyone who wants to work with Medicare needs to follow suit.

According to a KPMG survey, 26% of Payers plan to enter Value based payment arrangements by 2020.

It only makes sense that Payers and Providers will be pursuing technologies and analytics capable of sharing and measuring healthcare cost, data and quality from many sources.

The transition from fee-for-service to pay-for-value has been referred to as one of the greatest financial challenges the U.S. healthcare system currently faces,” stated a survey from Healthcare Information and Management Systems Society.

Historically, the pursuit of improving patient outcomes through value-based models has met with considerable success suggesting this is the direction both the government and the private sector should be headed, after all, a better patient outcome is the goal, right?

I would be very interested to share your opinions, thoughts and comments.

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