Value Based Care is the New Health Care

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Healthcare delivery in the United States is the one of the costliest affairs for the residents of the nation. To put things in perspective, U.S. healthcare costs over $3 trillion every year. 

According to the Centers for Medicare and Medicaid Services (CMS), "U.S. health care spending grew 5.8 percent in 2015, reaching $3.2 trillion or $9,990 per person. As a share of the nation's Gross Domestic Product, health spending accounted for 17.8 percent."

The healthcare costs account for almost 20% of the United States GDP which is significantly higher than other countries, and is not sustainable long-term.  Many people have been calling for urgent healthcare transition(reform) and Value-Based Care  is a term that has been long awaited.  Make no mistake, the U.S. healthcare system has the most leading-edge care possible on the planet — the question is “Overall, is it efficient and as valuable as what is costs?”

The shift from volume-care to value-based care is no easier than accepting smart phones/tablets in replacement of the at-one-time-believed “irreplaceable” bulky PCs and laptops.  It takes time, it takes technology advances, and it takes culture and mindset shifts of both providers and consumers. 

The Transition

This shift from the fee-for-service (i.e. volume-based care) payment models to value-based care compel health systems to blend operational, financial, clinical, and other data to improve quality, control costs and managing provider networks, and patient access. The U.S. Government is building a new payment landscape and creating a new paradigm which underscores the responsibility of coordinating complete episode care along with bearing the risks of costs and quality outcomes.

Value-based care has emerged as a successful model with the refinement of information technology and application of strategies to the traditional fee-for-service (i.e. volume-based) payment mechanism that ruled healthcare for the last several decades. Value-based Care is a highly integrated program and includes the medical Shared Savings Program, value based payments to the hospitals, and others. 

Reshaping the healthcare models, a multitude of new payment models have been established, out of which the most important is Value-based Reimbursement. The Obama Administration introduced and implemented multiple Value-based Reimbursement verticals including bundled payments, medical home models, variations of Accountable Care Organizations (ACOs) and special incentives to physicians for care coordination, giving way to many more innovations. 

MACRA’s sweeping payment reform provisions comprise of several steps to facilitate providers to participate in Alternative Payment Models (APMs) for initial bonus payments, exemption from Merit-Based Incentive Payment System (MIPS) requirements, and other potential conditional incentives. The healthcare providers participating in APMs are eligible for higher annual payment updates for their fee-for-service revenue stream beginning in 2026. Further, MACRA also establishes a 2-track system for identifying qualifying participants 

1) Beginning in 2019, if they receive a significant share of APM revenue in Medicare alone; or 

2) Beginning in 2021, if they receive a significant share of APM revenue through Medicare or a combination of Medicare and other payers.

The Department of Health & Human Services (HHS) aims for transitioning 30 percent of the fee-for-service Medicare payments to value based care models by the end of 2016 and expects 50 percent of traditional payments undergo this care transition by 2018.

Bundle Payments

Also called as episode based payments, this introduces a single payment for services provided under a complete episode of care. The value based healthcare initiatives are being appreciated by care-givers, payers, and other stakeholders.

·         The Centers for Medicare and Medicaid Services (CMS) estimated a growth at the rate of $10 billion per year for medical reformation efforts like value-based care models.

·         Aetna invested 15 percent of its spending towards Value-based Care efforts and announced to invest up to 45 percent by 2017.

·         The Department of Health & Human Services aims at targeting 30 percent of their payments to value-based care payment models by the end of 2016 and would increase this to 50 percent by 2018.

Centers for Medicare and Medicaid Services (CMS) instituted the Comprehensive Care for Joint Replacement (CJR) Model for Medicare patient joint replacement treatments into basically a fixed-fee with incentives arrangement in which hospitals are accountable for both quality and financials.  There are many details on this program but it seems to be the start of the transition to a Value-based Care mindset for years to come.  This program alone is looking to save CMS over $340 million over 5 years.  MACRA extends and consolidates some of the those type of programs over the next 5- 10 years with incentives to providers along the path.  Many more procedures are in process for review and incentive payment models being determine.

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• Value Based Care is the New Health Care