Two canoes, one canoeist: The accelerated transition to value-based care

As federal initiatives push for value-based care, healthcare organizations are grappling with the transition from fee-for-service. They’re looking for help from technology advancements and data.

This article is part of the July 2023 COVERstory.

Up to this point, the confounding challenges value-based care has been reflected in two caricatures.

One shows a runner exerting to reach a finish line that is being moved down the road, constantly just out of reach. The other shows a hapless canoeist with a foot in two boats – one named fee-for-service and the other value-based care – that are drifting apart, leaving him in an increasingly perilous position. 

Both mental pictures have seemingly stalled wide adoption of value-based care reimbursement methodologies, with the upheaval caused by the COVID-19 pandemic slowing the transition as well. But now, a timeline is emerging and economic realities may be lining up to provide an impetus to shift to value-based care. 

And, for good measure, the experience of leading organizations that have found success with value-based care can provide guidance for making this challenging transition. 

Fed pressure for the shift 

The finish line for value-based care may no longer be receding into some nondescript distant time, as federal initiatives are setting ambitious goals for value-based care approaches, and other payers are likely to follow suit. 

Over the past dozen years, accountable care organizations (ACOs) have been the chief vehicle for testing and implementing value-based approaches. A Pioneer ACO program was developed through the CMS Innovation Center to test ways of improving care to patients while reducing program costs. Pioneer ACOs, as an adjunct to the Medicare Shared Savings Program, received incentives to meet standards for quality performance and reducing costs. The program was initiated in 2012 and, by the third year of the program, participating ACOs could move to a population-based payment model, which with a prospective per-beneficiary, per-month payment intended to replace some or all of the ACO’s fee-for-service reimbursement. 

However, overall adoption of value-based care reimbursement methodologies has been slow, leaving many healthcare organizations reticent to make major shifts away from fee-for-service (FFS) reimbursement, which employs a logic that is almost completely at conflict with value-based care tenets. In essence, FFS incentivizes providers to give patients as many billable healthcare services with little reference to quality. 

Even so, value-based arrangements have struggled to gain significant shares of providers’ revenue streams. Data from the Health Care Payment Learning and Action Network noted that 59.5 percent of healthcare payments – from 63 commercial plans, five state Medicaid programs and Medicare – had some linkage to value and quality. Most value-based payment approaches offer shared savings that flexes based on the total cost of care, typically set on how much was spent over the past year. 

These shared savings programs have demonstrated improved care quality while saving money. For example, in fiscal year 2020, ACOs participating in the Medicare Shared Savings Program earned performance payments (shared savings) of nearly $2.3 billion, while saving Medicare about $1.9 billion, the fourth consecutive year of net savings for the federal program. 

But the percentage of value-based care contracts that contain downside risk is far lower for organizations – in October 2021, KLAS Research estimated that only about 10 percent of healthcare organizations’ revenue comes from downside risk agreements, which build on the foundational success of shared savings contracts to achieve more advanced, high-value outcomes. 

Federal agencies are still struggling to improve messaging on its efforts to move Medicare recipients from FFS to Medicare Advantage plan, recent research indicates. A study by Harvard Medical School and Inovalon shows significant differences in economic status, race and other social or clinical characteristics of beneficiaries enrolled in the two types of plans. For example, Medicare Advantage enrollees are twice as likely to be non-white and have less net worth. 

“The insights from tracking the beneficiary journey pre- and post-enrollment in MA or FFS are critical for determining Medicare effectiveness and designing plans that meet members' unique needs, particularly as MA grows rapidly,” a spokesman for the research notes. Further analysis of the data is expected to uncover how Medicare addresses health disparities and how enrolling in MA or FFS affects healthcare utilization, costs, and outcomes.  

But there’s much impetus to change by the end of this decade. That’s because the Centers for Medicare & Medicaid Services is working toward a strategic goal of moving 100 percent of original Medicare beneficiaries and the majority of those covered by Medicaid into accountable care by 2030. 

While CMS has been known to push back deadlines such as this, providers increasingly know the shift will happen eventually, says Bradley Hunter, vice president of value-based care and core solutions for KLAS. “And with commercial payers, many are looking at what CMS is doing and say, ‘This makes a lot of sense.’ Many are looking at risk-based contracts and asking how to move that risk downstream so providers are more at risk,” he adds. 

Rationalizing the conflicting incentives 

But many organizations have struggled with the diametrically opposed challenges embodied in traditional and comfortable fee-for-service arrangements and the quality-predicated incentives of value-based care, notes Danielle Scheurer, MD, chief quality officer for the Medical University of South Carolina. 

MUSC Health has been pursuing value-based care approaches for about 10 years – its focusing on cost containment, quality metrics and patient experience, and mixing in health equity now – but Scheurer knows the confliction caused by balancing the new models against key fee-for-service metrics. 

“Most organizations do straddle those two canoes,” she says, but explains that achieving some value-based care goals can provide benefits across the organization. For example, if value-based care can reduce the number of inpatients or emergency department visits, that frees up capacity for other patients, while reducing some of the pressure on clinical staff that can lead to burnout or clinician turnover. 

The consistent, predictable payments from value-based can even out some of the variations in utilization that wreak havoc with revenue streams under fee-for-service, says Hunter of KLAS. He notes that healthcare organizations have struggled post-pandemic to gain steady revenue from services. “They look at their neighbors that are fully capitated in their contracts, and it was business as usual for them – they don’t have to worry about streams of income.” 

Achieving strategic missions 

Increasingly, leading healthcare organizations are seeing strategic and missional benefits in embracing value-based care approaches. 

For example, Geisinger, a Danville, Pa.-based healthcare system, operates a health plan, and half of those patients are in value-based care arrangements, says Jonathon Welch, chief medical officer for population initiatives. 

“We can do outside-the-box interventions that keep people healthy,” Welch says in explaining why Geisinger gravitates toward value-based care approaches. “We can do what patients need to restore their health and stay healthy. We have integration between specialists and primary care physicians, and that’s been an important part of our history. We have a medical school that’s able to train the next generation of providers in population health.” 

Geisinger leaders also maintain the vision for value-based care principles and “taking on the responsibility for quality and the virtuous cycle,” he adds. “If a patient is taken care of well and they don’t wind up in a hospital, then we can reinvest that healthcare dollar in another way.” 

That theme is echoed by Scheurer of MUSC Health. “We do try to grow these programs to the fullest extent possible,” she says. “At the end of the day, taking care of patients in value-based care offers better care. For a lot of the programs, if we hit key goals around quality and utilization, because we get paid on a per-member, per-month basis, that fee goes up the better you perform, and that allows us to reinvest resources into the care structure.” 

Because of the emphasis that value-based care places on whole-patient support, it can enable primary care physician offices to offer more services, says Michelle Ilitch, vice president of network solutions and value based programs at Priority Health, a Grand Rapids, Mich.-based health plan. 

“If we can reinvest in resources to enable better care management and care navigation, we can reinvest resources to provide more high-touch services that, in traditional fee-for-service, are not reimbursed,” Scheurer adds. “In these models, we can manage patients better – it’s really a win-win for health systems and patients.” 

Technology a key enabler 

Maturing information technology systems, analytics and information exchange are emerging as key factors in achieving success in value-based care, leading organizations and analysts say. 

Scheurer points to the need for seamless data exchange among providers, payers and program participants. “If you don’t have good data exchange platforms, these programs don’t work very well,” she explains. “Data transfer has to be accurate – you can’t be using manual chart abstraction to run programs. I do think that the programs have become easier over time, easier to scale to seamlessly transfer data between ourselves and our payers. It’s made it more feasible to increase the scale and scope of the programs. Data is really the key.” 

Priority Health’s Ilitch goes a step beyond that. “Technology is really the gold standard,” she contends. “We don’t want physicians chasing down their passwords – we want them to sign into one screen to see all the information on their patients.” 

Toward that end, Priority Health is maximizing use of its electronic health records system from Epic, using its payer platform to facilitate information coordination. “Doctors can see if I’ve done my homework as a patient – a lot of times, that’s a paper chase or requires logging into three different systems. We want the gold standard to be the electronic health record; we don’t want to create other processes or workflows that live outside the medical record.” 

Technology providers are looking to meet that need, suggests Michael Palantoni, vice president of product management and platform services for athenahealth. “In general, to be successful in value-based care, providers need to provide relevant context and ease of action in the clinical workflow,” he says. “The industry has built a lot of tools outside of the workflow, like separate analytics and population health programs. Those need to be brought into the moment of care.” For its part, athenahealth aims to do that with a cloud-based approach for its electronic health record. 

Other technologies hold promise for enabling better care under value-based care methodologies, says Geisinger’s Welch, illustrating the potential of remote patient monitoring in improving care. “It’s a really exciting area,” he says. “It’s getting to a point where we can see a part of a patient’s life that was not visible to us before.” 

For example, remote technology enables Geisinger to operate a customized PACE program that allows it to track a frail patient’s use of a walker. If a patient suddenly stops using a walker, the system can reach out and see if there’s a medical reason and elevate the case for intervention. “One of the principles here is that we can’t wait for patients to come to us; how do we proactively build that relationship?” he says. 

Coordination, cooperation the keys 

Leading provider organizations have been advancing their value-based care strategies by collaborating with technology providers, KLAS notes in an October 2021 report on managing downside risk in population health management initiatives. 

In the report, KLAS identifies three core principles mastered by “deep adopters of downside risk.” These include: 

Active, collaborative vendor relationships. Success requires a lot of effort, and “both parties must be willing to put in the necessary work,” the KLAS report notes. Providers and IT vendors need to work in tandem to develop the technology that’s needed. 

Organizational investment and buy-in. “Leading organizations have value-based reimbursement (VBR) advocates in senior leadership positions and work toward complete buy-in from senior leadership and physicians. The report lists common approaches as adjusting physician contracts, distributing leadership statements supporting VBR and creating a separate leadership structure for VBR. 

Willingness to take on commercial risk and work with payers. The KLAS report notes that pioneers have expanded VBR initiatives beyond Medicare and Medicaid to include downside risk agreements with commercial payers. 

Shifting to value-based care, and achieving success, requires significant cooperation and collaboration between all entities, says Ilitch of Priority Health. “I do feel like it’s 1776 sometimes and we’re trying to create a constitution that brings together diverse stakeholders to determine how to distribute the value that you are going to create. How can we help providers learn the psychology and get away from the HEDIS check-the-box mentality. We want to ignite a fire for how can we create value.” 

The transition is still complicated, especially for specialist physicians, who don’t see a direct line to how their income will be maintained under value-based care approaches.

“The struggle continues to be how we will help make them profitable,” she says. “That’s where the transition is going to be complex. It will be less about whether you treated the patient. Value-based care appeals to those who remember when healthcare was less complicated. When technology supplies that relief, there’s a lot of success” in making the switch. 

Return to the July 2023 COVERstory.

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