Buying a Ticket on the VBC Train?
By Mariana Nicolaides, Former Associate Editor at Arizona Physician and
Anna Hartman, MPH Candidate 2022 at University of Arizona
Improvements in medicine and public health efforts have increased life expectancy over the last decade, meaning on average people are living longer, and leaving more than 50% of adults in the U.S. with at least one chronic illness (Boersma et al., 2020). With chronic illness so prevalent in the adult population, many have questioned how healthcare delivery can be improved, so patients not only can better maintain their conditions, but live longer and more fulfilling lives. This is where value-based care (VBC) comes in. Value-based care is a healthcare reimbursement model that focuses on quality over quantity, and rewards providers for performance and effectiveness.
In a VBC model, integrated healthcare teams work with patients to provide an individualized treatment option, instead of the patient receiving care separately at several different institutions. VBC is rapidly gaining popularity in hospital networks and small medical practices, as it works to enhance patients’ experience of care, improve health outcomes of populations, and minimize the per capita cost.
Value-based care was started by the Centers for Medicare & Medicaid Services (CMS) to reduce long-term federal spending on healthcare. It differs from the common fee for service (FFS) model because it does not focus on volume of care. As time goes on, an increase of access to data, treatment advancements, and the use of increasingly powerful technology will only continue to individualize medicine and create a space for healthcare providers to more easily collaborate and provide better care.
“This is the future,” according to Dr. Denis Cortese, Professor and Director of ASU Center for Healthcare Delivery and Policy, and Emeritus President and CEO of the Mayo Clinic. Dr. Cortese says, “Physicians will have to start working together. Does that mean physicians have to be owned by hospitals? Absolutely not. Does that mean physicians have to become integrated and work among themselves? Absolutely.
The Impact of An Aging Population
An aging population presents the U.S. healthcare system with a significant problem. By 2034, it is expected that adults over 65 years of age will exceed the number of children under 18 for the first time in modern American history (see Figure 1). A recent estimate in 2020 by the Kaiser Family Foundation showed 62 million people are eligible for Medicare coverage in the United States. The value-based care payment model addresses the needs of all ages, but it will directly impact U.S. federal funding of the population 65 and older through Medicare. In 2018, Medicare spending reached $583 billion. The increase in the older population and higher healthcare prices will contribute to more Medicare spending, likely amassing to nearly $1,260 billion in 2028. This foreseeable increase in healthcare cost for the older population gives healthcare providers a greater incentive to implement value-based care, and the shift towards patient empowerment has been leading patients to search not only for the best quality healthcare but the best quality with the best possible value.
Is A VBC Model for Every Physician?
Launching a VBC model is not simple, and some physicians may struggle more than others. Many physicians may question the barriers of transitioning to this model, and whether the change will truly benefit their practice and improve the value of healthcare delivery. Hurdles in transitioning to a VBC model include a lack of system integration, outdated workflows, limited internal resources, and inaccessible clinical data (Bartlett, 2021).
Organizations which lack these abilities may find it extremely difficult to reach VBC objectives, leaving physicians with substantial financial penalties due to negative outcomes (DECO, 2020). Barriers and financial penalties are not the only reason a physician may shy away from this model. Additional strain may also be put on physicians, as many may feel they would be responsible for wellness issues beyond their common practice.
When asked what changes physicians may see when transitioning to this payment model, Dr. Cortese opined the main compromise physicians may experience is “...Giving up a degree of autonomy.” Physicians should be practicing based on science within the evidence-based medicine framework. Meanwhile, he says, “[Doctors] should have autonomy on how to deliver the best thing [care] in partnerships with their patients.”
So, can a VBC model ultimately benefit both the patient and physician? Dr. Cortese believes so, stating, “Payment models that have been the most successful in resulting in highest value care and have worked the best have been the full capitation models and bundled payments.” Bundled payments are episode based, meaning that patients pay a single price for an episode of care. If a physician can save money and provide an effective course of treatment, then they can keep the savings. On the downside, if the cost is higher than intended, the physician must cover the cost. Since a physician can either keep the savings, or otherwise cover the cost, this model then incentivizes the physician to search for better, more efficient ways to provide quality care. (DECO, 2020). In a capitation model, a physician is paid in advance through a fixed amount of money per patient per unit of time. Capitation payments control use of health care resources by putting the physician at financial risk for services provided to the patients (Alguire, n.a.).
While this idea may be ideal to some physicians, ultimately a VBC system may not be for everyone. In his experience, Dr. Cortese predicts, “Physicians are going to have to practice in a learning system environment so they can stay current.” Value-based care is building momentum. Some physicians in Arizona may need to get on board or risk the VBC train passing them by.
Alguire, P. (n.d.). Understanding capitation. ACP. Retrieved from https://www.acponline.org/about-acp/about-internal-medicine/career-paths/residency-career-counseling/guidance/understanding-capitation.
Bartlett , W. (2021, May 5). 7 barriers to value-based care and how to overcome them. 7 Barriers to Value-Based Care and How to Overcome Them. Retrieved from https://info.intelichart.com/blog/barriers-to-value-based-care-and-how-to-overcome-them.
Boersma, P., Black, L., & Ward, B. (2020, September 17). Prevalence of multiple chronic conditions among US adults, 2018. Centers for Disease Control and Prevention. Retrieved from https://www.cdc.gov/pcd/issues/2020/20_0130.htm.
Bureau, U. S. C. (2021, October 8). An aging nation: Projected number of children and older adults. Census.gov. Retrieved from https://www.census.gov/library/visualizations/2018/comm/historic-first.html.
Cortese, D. (2021, September 7). Value Based Care.
Deco. (2020, November 30). The basics of value-based care. DECO. Retrieved from https://www.decorm.com/the-basics-of-value-based-care/.
Freed, M., Damico, A., & Neuman, T. (2021, January 13). A dozen facts about Medicare Advantage in 2020. KFF. Retrieved from https://www.kff.org/medicare/issue-brief/a-dozen-facts-about-medicare-advantage-in-2020/.
Kaiser Family Foundations. (2013, March 12). Projected change in Medicare enrollment, 2000-2050. KFF. Retrieved from https://www.kff.org/projected-change-in-enrollment-2000-2050-medicare/.