Insights

What Is Value-Based Care? The Future of Healthcare

July 22, 2021

LMI Staff

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Value-Based Care

It’s no secret that healthcare costs in the United States far outpace those of other countries.

The Affordable Care Act’s push toward value-based care sought to bring the cost curve down without sacrificing quality. While value-based care has reduced costs by improving care coordination between providers, we believe the government can and should do more.

Share Data To Reduce Costs and Improve Treatment Outcomes

Coordinated care reduces costs by giving providers a patient’s medical history, cutting down on extraneous testing. With better data sharing and proactivity from policymakers and stakeholders, coordinated care can promote more holistic options, such as increasing interoperability and data sharing between healthcare providers at the local level so physicians can tailor specific preventive care treatments or encourage healthier lifestyle choices for the individual. At a government level, anonymized aggregated data from providers and insurers facilitates better understanding and modeling of population trends, enabling the Centers for Disease Control and Prevention and other agencies to launch preventive care public outreach campaigns, targeting benefits to those most in need. Federal support for improvements in data sharing (without sacrificing privacy) will move these initiatives forward.

Models from the Center for Medicare and Medicaid Innovation can guide a nationwide approach. Maryland has partnered with the Centers for Medicare & Medicaid Services on a Total Cost of Care model to limit per-person total costs for the healthcare of its citizens (this model updates Maryland’s all-payer model, which caps hospital expenditures in the state). This innovation set clear limits the cost of healthcare while requiring that caps do not lower the quality of care. One key to the program’s success is improved data sharing throughout a patient’s network of care providers.

Through LMI’s implementation of nearly 10 of these types of models, we have seen that they can deliver quality, cost-effective health outcomes and, ultimately, foster a more efficient healthcare system. Bringing expert stakeholders together with the right analytic tools and operational knowledge enhances program oversight and improves model compliance activities—ultimately improving results.

Change Incentives and Focus On Transparency

At the federal level, value-based care enables programs like Medicare and Medicaid to pay for the results of care, not the volume of service. The Health Care Payment Learning & Action Network (HCPLAN), a group of public and private organizations, sets targets for value-based payments. By 2025, HCPLAN aims to tie up to 50% of payments to the quality and value of care using a risk-sharing model. This means that providers will be more aligned in delivering high-quality, individualized, and efficient care, incentivized to offer the most effective treatments rather than lucrative ones. The risk-sharing model benefits payers like Medicare and Medicaid but also helps patients better understand healthcare costs, supporting informed decision-making.

Value-based care improves price transparency by focusing on the total cost of care and not the number of tests and procedures. Price transparency data is still hard to come by at the patient level but it shouldn’t be. Knowing the price of medical care empowers patients to budget and demonstrates the importance of preventive care, which can mitigate problems early, often with reduced effect on the patient and a lower cost overall.

A January 1, 2021, federal pricing transparency rule for hospitals seeks to require providers to display pricing information on their websites. However, in part due to the pandemic, initial compliance has been low. Structural factors also limit compliance: a JAMA analysis of more than 5,000 hospitals found that almost half lacked machine-readable pricing data. Others had broken or incorrectly linked files, underscoring the need for investment in the accuracy and utility of the underlying data.

It remains too early to tell whether the rule will improve pricing transparency; however, coordinated pressure or incentives from state and federal governments could push providers to solve compliance issues and furnish this information to patients ahead of treatment. Price comparison tools from the federal government could assist patients with independent information for decisions about treatment options.

Increase the Pace of Healthcare System Modernization

The shift to value-based care has affected the modernization of the healthcare system significantly. Early adopters of alternative payment models have improved data collection and sharing in their organizations and provider networks. New technology, automation, and data analytics create opportunities for greater efficiency and, ultimately, lower overhead.

At the individual level, value-based care improves the patient experience through telemedicine and online patient portals. Telemedicine expands the availability of care for rural and hard-to-reach populations unable to visit a provider’s office regularly. Modern tools, like online portals and video calls, appeal to younger patients who don’t engage with the healthcare system as frequently. Telemedicine can be a boon for patients with chronic conditions—remote management eases the burden of staying on top of treatment plans for providers and patients, eliminating the additional cost and time of traveling to an office.

The use of these tools grew during the pandemic, but the standard of care accompanying them isn’t fully codified and providers’ acceptance has been ad hoc. The federal government should offer guidance on how tools like telemedicine will be reimbursed after the pandemic. Will providers receive the same rate as an in-person office visit? If not, the reduced reimbursement could limit availability. Given telemedicine’s efficiencies, policymakers can formalize its use and create a more cohesive standard of care by incentivizing providers through inclusion of these tools in value-based payment frameworks.

The healthcare system in the U.S. is at an inflection point. The past year has highlighted the need for changes. Continued improvement and expansion of value-based care can lead the way. These themes begin the critical discussions needed to realize the promise set forth in the Affordable Care Act.

LMI has more than two decades of experience analyzing diverse healthcare data to inform health program and policy improvements. We work at the intersection of science, policy, logistics, and analytics to facilitate innovation in healthcare provision and payment, implement federal healthcare priorities, advance health security, and optimize service delivery and program effectiveness.

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