You’ve probably noticed the incredible investment in the healthcare technology space over the last couple of years.

Value-based care (VBC), or value-based reimbursement, is a common buzzword in healthcare. But not everyone is clear on what it means exactly.

As the U.S. healthcare industry evolves toward VBC, many health providers and new technology solutions may feel like they’re falling behind. This introduction to VBC will give you the basics and help you catch up.

First, let’s define what VBC is replacing: fee-for-service (FFS) care.

What is fee-for-service (FFS) care?

VBC is intended to replace the FFS model, which has been predominant in healthcare for many years. Under this model, payers are billed for individual services.

For example, a person who visits the emergency room for a mental health incident may be billed for the hospital room, each medication he or she receives, each lab test or imaging test, and the psychiatrist’s fee. The organization is paid on exactly what it provides, with no measurement of the outcome.

What is value in healthcare?

Value is the operative word in “value-based care,” but what does it mean in the context of VBC? At its core, value is all about getting your money’s worth. It means that the patient has received a service that has changed them for the better.

Let’s say you pay a contractor to remodel your kitchen. The fee might include new cabinets, flooring, sink, and countertop. If the contractor does a high-quality, timely job, you feel better off afterward. You got value for the contractor’s fee. I’ve actually incorporated a value-based reimbursement model for all home repairs. I get a contract, negotiate the final pricing and timeline, then I can work out the specific incentives to get the work done better, faster, cleaner etcetera. If this is done the contractor gets a bonus payment.

But what if that remodel doesn’t go well? Perhaps the contractor made a mistake, or did something incorrectly? At that point, you can withhold payments or sign off until the work is properly completed. In a fee-for-service model, there are no such levers.

Healthcare can sometimes work the same way. Patients and insurers may pay providers for services that don’t add value, meaning there is no agreed-upon outcome that means success.

This may include:

  • Unnecessary tests, or testing over and over
  • Treatments that address symptoms rather than underlying causes
  • Treatments for hospital-acquired infections and other errors

In these cases, the patient and payers did not receive value for what they paid.

VBC aims to increase the value of healthcare by attaching patient outcomes to the reimbursement that providers—either individual clinicians or healthcare organizations—receive for their services. Under a VBC model, providers that see better patient outcomes get better reimbursement rates. This can also lead to stronger partnerships due to greater trust from patients, payers, and referring providers. The goal is that all ships will rise.

What are patient outcomes?

Patient outcomes are simply the results of the services and care that patients receive from healthcare clinicians, organizations, and facilities.

Outcomes can include:

  • Treating acute conditions
  • Maintaining or improving chronic conditions
  • Preventing unwanted results
  • Promoting patient safety
  • Patient satisfaction with their services

Let’s go back to our example of the patient who visits the ER for a mental health incident. Under VBC, payers would examine certain measurements related to that patient’s outcome.

For example:

  • Was he or she referred to additional care after discharge?
  • Did the ER providers follow up with the patient?
  • Did the patient have another, preventable ER visit soon afterward?

All these factors could affect that patient’s health outcomes, and thus have an influence on the providers’ reimbursement for that patient’s visit. As you may have noticed, there are a lot of new applications out there that are focused on helping the patient/consumer understand their illness better, and educating or nudging them to improve self-care.

As we know, achieving good outcomes is not always straightforward. Many different factors contribute to patient outcomes. That’s why it is important to record, store, analyze and combine population health data with specific patient/consumer data to get a more objective or realistic view of what affects outcomes. This is where digital health technology can help providers maintain useful, accurate data to measure and track outcomes.

If you’re looking at new digital health technology for your organization, it’s important to keep the evolving VBC landscape in focus. Now, most if not all of your clients live within an hour of your location.

Be sure to choose a solution that can stay up-to-date and evolve with your industry that is able to look at a wide variety of data, not just provide you specifics for Medicaid state reporting and HEDIS measures.

Have any questions or need more information about using VBC and finding the right health tech solution?

Contact Ted Wright today to get your questions answered.