The healthcare system is rapidly adopting alternative payment methodologies and overall moving away from the traditional fee for service system. The primary form of alternative payment is value based care, which is also broadly categorized as paying for quality as opposed to quantity. As suggested, value based care focuses on a comprehensive approach to care and is largely considered to encourage thinking about cafe beyond the walls of a healthcare provider’s office.
At this point in time, value based care initiatives still represent significantly less than half of most providers’ reimbursements. While there are some exceptions to that rule, when thinking nationally, the percentage of providers with a large portion of value based reimbursement agreements is not overwhelming. Such circumstances exist despite multiple Medicare accountable care organization models, bundled payment initiatives, and similar programs or projects to move away from fee for service.
Since value based care focuses on quality, a greater incentive exists to expand the scope of care and types of services that are offered. Value based care often also directly leads to shared risk or capitated payments, where the provider is responsible for providing pretty much all care on a predetermined budget. Accordingly, the goal becomes how to keep patients healthy and minimize the risk of a serious complication in the future. As such, coordinating care in a variety of settings and also engaging with patients in different ways is encouraged. For example, case coordinators or care managers may help find out what social factors in a patient’s life are contributing to a particular outcome or issue. Integration with mental or behavioral health is also encouraged since mental and physical health issues can rarely be separated.
While value based care encourages an expanding array of services, each additional service costs money to provide. Arguably, value based care payments help to cover those costs because providers are no longer paid per service provided (fee for service) but instead based upon a range of factors about the patient population being served. Since payment comes in regardless of whether services are provided and there is an incentive to avoid providing an abundance of traditional services, the capitated or monthly payment can be used to cover the cost of the newer, non-traditional services. Such is the ideal scenario.
As so often happens, the reality differs. The cost of providing the additional services, both in terms of staff compensation and the services, can easily outpace the revenue difference seen from preset payments as opposed to service-based payments. Engaging in a fundamental transformation of operations is not cheap. Many organizations cannot afford to change to a model that could succeed in the new world or the cost of changing eats up any potential extra revenue generated by controlling costs.
A prime example of the difficulty to transform systems can be seen in the background for the upcoming transition of MassHealth (Medicaid in Massachusetts) to delivering at least eighty percent (80%) of care through accountable care organizations. The reform of MassHealth is being accomplished through a waiver with the federal government. The waiver includes $1.8 billion of federal funding to help pay for the cost of providers implementing new care models and otherwise delivering a different type of care. The $1.8 billion will be paid out over five years. The funding is great, but to some degree ignores a looming question suggested above: what happens when there is no supplemental funding? Will organizations be able to keep new programs in place, or will delivery revert back to how it was because staff cannot be paid and new infrastructure is too expensive? The answer to that question will determine whether there is a fundamental flaw built into value based care, or if ingenuity can really change the healthcare system.
The other major challenge in the value based care world is the moving targets of how success is defined and the variety of definitions of success. Each value based care program )whether thinking about one of the many Medicare programs, any state’s Medicaid program or a privately run program) uses different measures for success. While the measures may be the same, the means of proving that the measure was satisfied can be different. Those differences can be significant or minimal. Regardless of the scope of the difference, the fact that a difference exists means more cost for each provider to succeed and potentially having to do the same thing in a slightly different way. Further, the measures used may not even be reflective of high-value care, making the incentive almost perverse. Until quality measures can be refined, some providers may be scared away from one or more or even all value based care programs for fear of being penalized for trying to do the right thing.
While there is near universal agreement that the healthcare system cannot remain as it has been, value based care is also not accepted as the guaranteed solution. Many challenges remain and many questions exist as to the ability to fund the change. While those challenges exist, they should not be viewed as insurmountable challenges and especially not as a reason to avoid change. There will be and has been pain, but that will hopefully lead to a solution that works across the board and truly achieves the goal of improving the quality of care received by all.