Value-based care: What's working, what isn't and where to go from here

While alternative payment models such as ACOs aim to improve quality while lowering cost, 86 percent of U.S. physicians are still reimbursed in a fee-for-service model.[1] This is a disincentive to engage in preventive care and reduce readmissions on a global scale.

During an executive roundtable hosted by Change Healthcare at the Becker's 2nd Health IT + Clinical Leadership + Pharmacy 2020 event on May 2 in Chicago, attendees discussed the gap between committing to value-based care and taking on risk. Tina Foster, RN, vice president of advisory and analytics visualization services, and Deb Bulger, CPHQ, executive director of strategic programs at Change Healthcare, led the discussion

Regional biases

Data analysis illustrates how variation in care access and treatment options across the nation affects care patterns. Where there are more hospital beds per capita, patients are more likely admitted to the hospital.[2] Likewise, a higher volume of intensive care unit beds within a community leads to higher rates of ICU care, and patients in regions with increased specialists per capital are more likely to see a specialist than a primary care physician.[3]

The same is true for primary care; in areas with more primary care physicians, the population has a statistically significant improvement in life expectancy and decrease in mortality.

"We intuitively get that. It makes sense," Ms. Foster said. "We are engaging the folks more in communities with primary care physicians and navigating them to preventive care. The findings weren't really earth shattering … I believe to some degree we completely conditioned ourselves with a provider culture conditioned to bring in the bill for a procedure, medication, visit or full bed, and their livelihood is quantified by it."

Many health systems have found it difficult to abandon volume-based practices when their fee-for-service reimbursement depends on the amount of care provided.

First steps toward change

To make an effective leap to value-based care, Ms. Foster touched on three concepts:

  1. Know your market: The key to understanding the market is knowing who the important players are and where your organization fits in. "It's very important to understand the market and that means different things to different folks," Ms. Foster said. "If you are in a role within your organization that means leading an ACO, then your market includes shared savings and contracted risk, potentially downside risk. If you are a healthcare organization that is 80 percent fee-for-service, then your market is whoever your referral base is."
  1. Maximize your mindshare: Optimizing the mindshare of all players in the market requires transparent, consumable quality reporting. To change the mindshare often requires overcoming cultural barriers to truly examine quality and provide that information to physicians. Physicians may not trust hospital executives, because the administrative decision-making process is complex and, historically, hasn't been transparent. Then the challenge is to convince physicians value-based care will positively affect their patients and outcomes.
  1. Harness motivation: The motivation for change should focus on reducing variation to achieve quality instead of cost cutting. "Everyone I interact with feels like we have been trying to cut our way to healthcare reform, and that feels exhausting," Ms. Foster said. "We are trying to cut our way to transformation when in fact variability exists within the organization. Having better reporting, information and data is where the opportunities will come instead of trying to cut ourselves."

Taking on risk

One of CMS' key solutions to value-based care over the past decade has been ACOs. Results show the Track 1 ACOs , which are only shared savings without downside risk, actually raise the cost of care. However, among the 44 organizations that took on downside risk as part of the Next Generation ACOs, CMS realized $164 million in savings for 2017. While the risk-bearing ACOs generated savings, many organizations have decided to drop out before taking on risk.

"If health systems don't have skin in the game, it's just experimenting and harder to achieve the real results," Ms. Foster said. "It's almost like you have to have the real threat there [to obtain savings]."

The chief quality officer at a rural hospital illustrated this point. She reported the hospital initially received a grant to participate in an ACO along with independent physicians in the area. However, when the grant ended the physicians decided not to stay in the ACO. "They didn't see the immediate impact of the ACO, so they're going back [to fee-for-service]," she said.

In the future, CMS Administrator Seema Verma aims to incentivize healthcare providers to take on greater risk by allowing more flexibility to innovate with payment models for high quality care delivery. Regardless of the payment model, Ms. Foster advised healthcare organizations to drill down the cost of care in the decision-making process to understand:

  • Which activities are profitable and control utilization
  • The overall effect of unprofitable departments on costs
  • How home care prevents readmissions
  • Where to pursue partnerships within and outside of the organization's network

The director of strategic sourcing and value analysis at a Chicago-based health system advocated for ACO emersion, although it can be a long process. "The beauty of going through that journey from conception to launching a new care model is you can't really show profitability until all the pieces start falling into place," she said. "It takes time to get there. It was a three-year journey minimum for us, but that's part of being able become a champion and leading this."

Participants in the roundtable agreed that understanding the marketplace, changing organizational culture and accessing data outside of the institution were all barriers to achieving value-based care. The manager of value-based arrangements at a health system in the Midwest experienced these challenges systemwide, for both rural and urban communities.

The myth of claims data

In some cases, outside entities examine claims data to develop rankings, ratings and awards. However, there are significant issues with relying on claims data to identify quality.

"If you're in an ACO and your targets continue to be low, you're building benchmarks based on the data you have and could be leaving shared savings on the table because of the way you are getting measured," Ms. Bulger said. The data may not be captured correctly and is often old by the time it's analyzed. Payers have tools that ensure billing codes align with the description of a procedure; clinicians should too.

"What if your physicians had the billing code information upfront while they were caring for patients?" Ms. Bulger said. "What if the system could alert patients about issues as well?"

A solution to pinpoint billing code information could be beneficial, and the attendees also felt simple physician education could also go a long way. "If we talk about why it's important [to enter all patient information], we can tell them why we need to do this for the patients," said a nurse leader from a children's hospital on the East Coast. "We are leveraging annual wellness visits that don't have to be performed by physicians to overcome this issue and get them in the record. We also use medical assistants and patient coordinators to promote patient attendance. Our physicians appreciate that."


Healthcare's fee-for-service reimbursement models have created a cultural barrier to delivering high-value care, defined as the best possible outcome for the lowest cost. Patient patterns developed in the fee-for-service environment are also tough habits to break. Without evidence and effective communication, it's challenging to persuade clinicians and patients to change their behavior. However, armed with appropriate tools, data and messaging, health systems can develop a value-based care strategy that improves patient outcomes.

[1] Healthcare IT

[2] Dartmouth Atlas Project

[3] Dartmouth Atlas Project

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