By 2030, the Centers for Medicare and Medicaid Services plans to see all Medicare beneficiaries and most Medicaid beneficiaries enrolled in Value-Based Payment (VBP) or Value-Based Care (VBC) programs. Simply put, VBC links the compensation of healthcare providers to patients’ health outcomes in the longer run. The formula holds doctors more accountable for improving the well-being of the people under their care and provides them with sufficient freedom and incentive to deliver the right care at the right time.
VBC is a remedy for the pitfalls of the traditional fee-for-service system. Fee-for-service means doctors and hospitals are compensated for each service they deliver; they are rewarded for volume—they are paid more if they deliver more services, even if these do not achieve the desired result. VBC changes that dynamic by incentivizing the provision of quality care for the good of the patient—bringing costs down in the process.
VBC also offers a solution for the troubled state of healthcare in the US. The country spends a greater percentage of its GDP on healthcare than other countries. Yet, the US sees the highest incidence of preventable deaths and has the highest infant mortality rate. What’s more, longstanding inequality of access to healthcare leaves people of color and the underserved more vulnerable to illness and disease than the rest of the population. VBC promises to revolutionize healthcare for the most vulnerable.
VBC produced significant savings for taxpayers, as better health keeps people out of ERs and costly hospital beds, and all along, doctors are rewarded for doing a better job. The latter depends to a large degree on the coordination of a patient’s care; that means a primary care physician keeps close track of all the services a patient is getting or needs. This includes medical care as well as behavioral health services. Significantly, doctors are also encouraged and rewarded for being aware of patients’ social needs. Such needs would never be attended to in the fee-for-service model.
Quality of care in the VBC is driven by key dimensions, including efficiency, meaning doctors only use resources that are needed; equity in care stipulates that quality of care does not vary based on race, gender, or income; care is centered on the patient and respects values, preferences, and particular needs; and timeliness means care is given without lengthy delays.
VBC models feature different approaches to doctors’ risks. There is an upside-only risk, with doctors getting more revenue if meet or exceed standards when it comes to quality, cost, or equity. A two-sided risk means doctors also stand to lose revenue if they fail to achieve specific measurements of success. This formula is believed to discourage risk-averse doctors from joining VBC programs.
There are also non-financial rewards for doctors who join VBC programs. The freedom to deliver the right aid at the right time can give providers a sense of purpose and mission. Participation in VBC also enhances a doctor’s reputation.
There is growing interest in VBC models on the part of the commercial healthcare sector. It seems clear the significant growth of the model will require that VBC models become more accessible and offer greater incentives, especially for those providers serving disadvantaged populations. Overall, more research is needed to determine the impact of VBC models on patients, doctors, and the healthcare system at large.
There is a success story in New York City, where SOMOS, a network of 2,500 doctors—most of them primary care providers—is serving some one million of the city’s most needy Medicaid patients. Caring for Hispanics, African Americans, and Asian Americans, the organization has been developing a VBC program since 2014, when it joined New York State’s Delivery System Reform Incentive Payment (DSRIP) program—one of the country’s first such programs.
SOMOS puts its doctors in the optimal position to deliver superior care to their patients. Thanks to the work of Community Health Workers—who visit patients’ homes to remind patients to keep medical appointments—doctors learn of the social circumstances of the patients’ households. These are the Social Determinants of Health. For example, mold in subpar housing may impact physical as well as mental health, while poverty can mean that there are no means to buy fresh and healthy foods.
SOMOS transforms doctors’ practices into Patient-Centered Medical Homes, a gateway to all the care needed for patients, with staff keeping close track of, for example, care given by specialists and its contribution to the patient’s overall health. SOMOS doctors bring another dimension to the job: in many cases, they share a cultural and ethnic background with their patients in whose communities they live and work. Their intimate knowledge of their patients’ health needs and their personal circumstances make doctors into trusted figures and leaders of their communities. This dimension is key to SOMOS’s VBC success. That success translated into savings of $330M through a reduction of 25 percent in the number of ER visits and the number of unnecessary hospitalizations.
There is no doubt that the transformation of US healthcare—especially for the neediest Americans—will require the adoption and embrace of VBC programs. Both doctors and patients are the better for it.
