December 17, 2020
Payment models in healthcare are actively shifting from traditional fee-for-service payments to value-based care models. This change represents a huge shift for most healthcare organizations which have financial and care models built around fee-for-service reimbursement.
The goal of value-based care models is to slow the rate of increase in total cost of care and ensure that care is being delivered in the right place, at the right time, and by the right caregivers. These goals are met by balancing quality, cost, and patient experience.
Payment models include:
- A regular monthly payment for coordinating patient care in addition to the regular fee-for-service payments.
- An agreement between the provider and the health plan to reduce the total cost of care while increasing quality. Any savings is shared at the end of the year.
- A bundled arrangement where the provider and health plan agree to a set price for a specific diagnosis or procedure, such as knee pain or a knee replacement. If the provider comes in under the set price, they make more money on the procedure. If the procedure is more expensive than the set price, the provider will not be reimbursed for the extra costs.
Value-based care models are impacting care across the continuum. This includes primary care, specialty care, and hospitals.
Examples of care models well-suited for value-based care include:
- Accountable Care Organizations (ACOs)
- Patient-Centered Medical Homes (PCMHs)
This article is first in a series dedicated to understanding value-based healthcare.