By Nick Mercadante & Ann Burr Clevenger
Value-based care has been a catchphrase in the healthcare industry for more than a decade. It is often used without context by health plans and some providers to describe how care should be provided. But what does it really mean in practice? How have its principles been applied in different care settings? More importantly, what impact has it had on quality of care provided and rising healthcare costs?
The Basic Tenets
The New England Journal of Medicine describes value-based healthcare as “a healthcare delivery model in which providers, including hospitals and physicians, are paid based on patient health outcomes. Under value-based care agreements, providers are rewarded for helping patients improve their health, reduce the effects and incidence of chronic disease, and live healthier lives in an evidence-based way.” This justification for reimbursement to providers for the care they provide fundamentally differs from the traditional “fee-for-service” model, where providers are reimbursed by submitting claims based on the type of procedures and services performed, without consideration for quality.
In theory, the goal of healthcare providers is to diagnose and treat a condition, improving the health and prognosis of the patient. A delivery model that bases financial compensation on evidence that a patient is healthier, and requires fewer professional interventions, should be a no-brainer, right? In fact, it kind of makes you wonder why we ever had a system that rewards providers when people come back for repeat treatment of an acute condition or, worse, go to the emergency room in crisis instead.
When it comes to insurance plans, the case for value-based care is even more obvious. Treatment that achieves better outcomes is less likely to result in “wasted” care, or potentially more expensive treatments down the road. Healthier people presumably are staying out of hospitals and doctors’ offices and are not racking up tens of thousands of dollars in healthcare bills that have to be covered (at least partially) by insurance. Win-win.
Not so fast.
The Challenges
One major challenge is that determining what care is “valuable,” or capable of improving health outcomes at lower cost, requires evidence. For many treatments, particularly in evolving areas of medicine such as mental health and substance use disorder, or diabetes prevention and care, the evidence is evolving as well. Consequently, measuring health outcomes and patient satisfaction, and establishing the benchmarks for value-based payments, has proven challenging.
Additionally, in order for healthcare providers to adapt to the needs of the health plan, they must adopt robust data registries with measurement-based care software and systems to track patient progress, and report it back to the plans. They also must establish contracts with benchmarks that are achievable, and then provide the care as planned or run the risk of not being paid. Execution requires a level of sophistication, contracting expertise, investment, training and operations that many practices simply cannot achieve today. A recent survey of providers highlighted this significant concern, and the general fear that payors hold the upper hand in bargaining power.
Financial pressure is another issue. Most healthcare providers today work on slim margins, in part perpetuated by reimbursement challenges. Transitioning from fee-for-service to value-based care requires significant upfront investment in infrastructure, training, and technology, as well as accepting downside risk, which can make adoption a non-starter. In addition, incentives are inconsistent. While the current reimbursement system still heavily favors volume over value, it’s at least relatively predictable and limits treating some patients as more “valuable” than others, from a provider perspective.
Along those lines, value-based care programs have additionally run into criticism for potentially exacerbating healthcare disparities due to implicit bias in patient selection, widening gaps between those who receive high quality care, and those who don’t, based on socio-economic, race, geographic, and other factors.
Lastly, patient engagement and care coordination continue to confound providers and health plans alike. Successful value-based care requires active patient participation, which can be hard to ensure due to various factors such as education, socioeconomic status, health literacy, and trust. Patients often aren’t properly incentivized to participate in their own care in a meaningful way. Creating seamless coordination among different healthcare providers, and between the health plan and participating provider around the patient, is hindered by historically fragmented healthcare software that lacks interoperability.
Value-based care has been successful when used in acute care and specific applications where out-of-control spending can be limited by greater or better care coordination; i.e. an inexpensive and simple intervention to prevent more expensive and more complex care. Examples include end-stage kidney disease and oncology in highly controlled and sophisticated practices that have invested in software, data systems, and training to execute the value-based coordinated care plan and tracking.
But most others, particularly at the federal level, could safely be qualified as financial disasters for all involved, losing billions of dollars without significant improvement to health outcomes.
The Decision Makers
A major question we need to be asking when defining what value-based care is, is who is determining its path and application of its central tenets? Top-down plans usually most benefit those at the top who decide them. It is obvious inherent bias – health plans and government programs who generally create the plans that providers align to, or contract for, stand to gain the most.
What if those making the decisions are not governed by any rules? (That’s a rhetorical question). Why wouldn’t they create and advance whatever mechanism will save them money? They are trying to drive either a profit for their shareholders, or program savings. Health plans have no creed…no oath to do what is in the best interests of the patient and their health. Their power over defining programs inherently biases their decision-making toward overweighting cost savings. The 12-month cycle of a health plan and its related deductible means that denying higher cost procedures, or at least significantly delaying them, could be a cost-saving mechanism. Is this who should be telling primary care and other medical professionals what to do and what not to do? Do they really have the patient’s health in mind?
If those creating the programs and defining value-based care stand to gain the most, and the unquestioned balance of power is tilted in their favor, who might be the better choice to define and advance what value-based care could be? What if decisions about best intervention and what constitutes quality was actually put in the hands of providers, with oversight from their peers?
One such program, known as the Improving Wisely Intervention, aims to do just that. Improving Wisely is a peer-to-peer audit and feedback intervention protocol to reduce overuse of certain high-cost or high-risk surgeries and treatments. A 2021 study observed Improving Wisely methodology applied to Mohs Micrographic Surgeries for skin cancer. The study conducted a process evaluation on Mohs surgeons’ perceptions of the implementation quality and perceived impact of the Improving Wisely intervention. Surgeons in the Improving Wisely intervention arm, comprised of members of the American College of Mohs Surgeons (ACMS) were invited to complete surveys and key informant interviews. Participants described perceptions of implementation quality perceived impact of the Improving Wisely intervention, and barriers and facilitators to changing surgeons’ clinical practice patterns to reduce Mohs overuse. The study concluded that 89% of the 730 surgeons participating were satisfied with the peer-to-peer audit-and-feedback methodology’s ability to improve patient care and reduce annual costs. They recommended the template for other specialties in order to improve quality while controlling unnecessary costs.
Maybe most importantly, how can we help patients, as ultimate health care consumers, hold the keys in determining quality, or at least adequately inform them so they can make their own decisions? We have seemingly taken a major first step with the Hospital Price Transparency Rule. But the conceit here is that patients are adequately informed on where to look for price transparency data, or that price even factors into their decision-making process.
A working paper published by the National Bureau of Economic Research in 2018 studied how privately insured individuals choose MRI scan providers. In the study, it was determined overwhelmingly that patients chose a higher-cost MRI scan, even when lower-priced options were available. The cause for this was cited as the influence of referring physicians. Patients were 22 times more likely to listen to a physician referral to choose their next care, than they were by cost or by geography.
To that end, how can we ensure that patients are active participants in their own care, and that their most trusted confidant – their provider – is guiding them toward the best and most necessary treatments. The Choosing Wisely campaign, originally an initiative of the American Board of Internal Medicine, has been widely adopted already by leading healthcare provider associations and affinity groups. The aim is to better inform patients of the questions they should be asking, and remind providers of their critical role, and influence, in patient decision-making. This leads to better and harmless patient-centered care. By boosting focus on informed consent, empowering patients through dialogue, and consideration of care options as a treatment planning imperative, associations and providers have begun to clear a path for reducing unnecessary health care services. Patients themselves are at the center of this effort.
The Upshot
Actual progress toward reaching more value-based care arrangements and alternative payment arrangements has moved slower than anticipated. Nevertheless, in 2021, CMS established a goal to place 100% of Medicare beneficiaries and the majority of Medicaid beneficiaries into some type of value-based care arrangement by 2030. So the industry appears to be hurtling ahead. It doesn’t seem to matter whether providers are confident in their ability to adapt, or the programs are proven sustainable, or we even know what we are collectively defining as value.
Right now, the answer to the question “what is value-based care,” is muddy at best, defeating at worst. “Value-based care” has been a hot catchphrase alongside other phrases like “integrated care delivery system” and “social determinants of health.” But at present, it’s a marketing buzzword that holds untapped promise. We cannot continue to pat the healthcare industry on the back for trying, particularly when value-based care has produced little value and the decision-makers’ motivations are suspect.
We need to start asking what should we be doing and who should be deciding it. Maybe the answer has been right under our noses, for 2,500 years. Physicians take the Hippocratic Oath as they enter medical school, and medical practice. Whether the classical version, or the modern version, both uphold standards for not doing harm to a patient, exercising best practices supported by science, and applying only those treatments that are necessary and effective. They also instill central tenets of self-governance and peer support mechanisms within the fields and specialties. When applied with an appropriate methodology this may be the very best means for driving quality and determining value, as well as imparting the patient with the wisdom to choose the right treatment for them, at the right price.
Now we just need to fix a monopolized system that won’t allow this, or pay for it.