The concept of value-based payment (VBP) has taken root across the healthcare industry. VBP is a “value over volume” approach. Unlike fee-for-service (FFS) models, which motivate providers to see as many patients as possible, value-based payment (VBP) models incentivize providers to optimize patient care by improving care quality, reducing costs and inefficiencies, and ultimately advancing population health.
This approach benefits both providers and patients. Under FFS, payers typically reimburse practices only for face-to-face patient encounters, and providers often need to pack schedules tightly to generate adequate revenue. Under VBP, providers generate revenue by improving patient outcomes and minimizing unnecessary patient costs. This makes it financially sustainable for practices to dedicate more resources to activities that keep patients healthy and focus less on increasing visit volume.
VBP prioritizes value over volume in all aspects of care. VBP emphasizes care coordination: care team members work together to reduce gaps in preventive and chronic care, and ensure patients attend specialist appointments and receive diagnostic testing. VBP allows providers to take a holistic approach: payers incentivize providers to address behavioral and social determinants of health – in addition to physical health – to improve overall patient outcomes. VBP emphasizes preventive care and chronic disease management: patients play a larger role in their own care and spend less on costly procedures. VBP rewards improved population health: providers can take the time to explore opportunities for improving outcomes across their entire patient panel.*
VBP in action: contacting unengaged patients
Dr. Wu is a pediatrician whose patient population experiences high rates of asthma. After agreeing to a VBP contract with his largest payer, he started reviewing quality reports regularly and discovered that 50 patients with severe asthma had not visited the practice in over a year. His staff scheduled appointments and found that 20 visited an emergency department (ED) for asthma-related issues without his knowledge. The practice now uses EHR alerts to ensure he sees these patients more regularly (not only when their condition worsens), creates asthma action plans, and educates parents on appropriate ED usage. The practice’s medical assistant contacts parents to ensure they fill long-acting asthma control prescriptions.
These workflow changes improved patient and provider satisfaction and reduced ED utilization, which lowered costs. Because Dr. Wu improved quality and lowered costs, his payer disbursed a “quality bonus” and shared the resulting savings with the practice. Under FFS, a payer would only reward Dr. Wu for seeing patients, not for reviewing quality reports or proactively contacting and educating patients. Although Dr. Wu saw fewer patients overall while the practice focused on these workflow changes, he increased overall practice revenue for the year.
Providers who thrive under VBP deliver high quality, team-based, holistic patient care. The specifics of VBP arrangements vary across payers, but these core tenets remain the same:
All payers, including the Centers for Medicare & Medicaid Services, are shifting toward VBP. New York State Medicaid plans to cover 80% of primary care services under VBP arrangements by 2020. Most commercial payers already offer VBP arrangements, and New York State is working with payers to align their incentives.
Each payer has a different approach, and many already reimburse providers based on quality outcomes. The Quality Payment Program and the Medicare Shared Savings Program are Medicare’s VBP programs. The Delivery System Reform Incentive Payment Program (DSRIP) was New York State’s first step on the path toward a fully VBP system. Incentives for meeting Healthcare Effectiveness Data and Information Set (HEDIS) measures for any payer are a form of VBP. Payers establish VBP contracts with individual providers or with clinically integrated networks, Independent Provider Associations (IPAs), and Accountable Care Organizations (ACOs).
VBP in action: meeting established goals
Dr. Suarez has 415 hypertensive patients. Under her FFS contracts, she is only reimbursed for office visits. Under her new VBP contract, she is eligible for a significant “quality bonus” for achieving blood pressure control for 85% of those patients. To ensure the practice can meet this target, she hired a care coordinator to make appointment reminder calls, follow up on referrals, and remind patients every month to use their blood pressure logs (which she integrates with EHR records). The coordinator also uses the EHR’s automated text reminder feature to ensure patients fill medications in a timely manner. Dr. Suarez’ experience in quality payment lead to improved performance in the Merit-Based Incentive Payment System, and her practice now has enough resources to consider more advanced VBP contracts.
VBP in action: investing in care coordination
Dr. Jackson has 40 patients with major depressive disorder. These patients require significant care coordination with specialists. Under Dr. Jackson’s old FFS contract, the payer did not reimburse her for time spent on care coordination. Through her new VBP contract, Dr. Jackson’s IPA helped to identify that these patients have a high total cost of care, then negotiated shared savings payments from two of her plans. These shared savings allow Dr. Jackson to financially sustain her strong care coordination workflows.
Shifting from volume-based to value-based payment goes beyond signing new contracts. Providers need to invest time and resources in practice transformation to implement VBP operations and sustain them in the long term. This requires integrating administrative and clinical teams to align the new approach to patient care with workflows designed to meet VBP requirements. Practices can start preparing now by taking the following steps.
Assess the Practice
Learn About New York State Patient-Centered Medical Home (NYS PCMH)
NYS PCMH prepares primary care practices for VBP. The New York-specific PCMH model focuses more on VBP readiness than other PCMH models .
Contact NYC REACH
NYC REACH provides free support with VBP operations and assesses practices individually to determine readiness and identify opportunities for improvement. To learn more, contact email@example.com.
Watch the Understanding Value-Based Payment webinar on the NYC REACH resource library at www.nycreach.org (Practice Transformation folder). NYC REACH will continue to develop VBP-related resources and trainings.
*All “VBP in action” stories in this article are fictional examples that demonstrate how VBP works in a typical New York City practice.