Realizing the potential of value-based care
In the United States, healthcare spending remains high, despite poor population health outcomes.1 The traditional “fee-for-service” reimbursement system, which prioritizes paying providers based on the quantity of care they deliver, has borne the brunt of critiques of these unsustainable market dynamics.
Value-based care (VBC) is framed as the path to a more financially sustainable, equitable, and efficient healthcare system, where providers are incentivized to focus on the quality of care they deliver. This concept continues to gain traction across the industry as the most viable solution to the nation’s healthcare woes. The Centers for Medicare and Medicaid Services (CMS) - historically, a trendsetter for US healthcare - has doubled down on the concept of VBC. CMS has committed to shifting all Medicare beneficiaries to a care relationship with accountability for quality and total cost of care by 2030.2
Triple aim of value-based care. Many healthcare providers have innovated on the patient experience and are improving on both clinical outcomes as well as total cost of care savings but they may lack the data or expertise to demonstrate cost reduction.
Under the VBC framework, the magnitude of a provider’s compensation (or lack thereof) is linked to both health outcomes and the total cost of care (TCOC) attributed to the patients they treat. Essentially, VBC places financial accountability on providers, shifting some of the healthcare spending risk that has traditionally been held by insurance companies, employers and government payers (e.g., Medicare, Medicaid, VA) to providers. As a result, value-based contracts require that payments to providers be contingent on patient outcomes and a reduction in TCOC, and also afford providers the opportunity for upside gain.
Unfortunately, the industry has yet to realize the promise of VBC despite years of visibility and investment. What has largely been overlooked is that implementing VBC is both operationally complex and costly, as it requires healthcare stakeholders (i.e., providers and payers) to have access to a sophisticated set of risk management processes that only actuaries and underwriters have been equipped to perform. In addition to managing risk, providers must be able to connect the impact of their services to a reduction in patient total-cost-of-care, a task so challenging that it frankly feels impossible.
The result? An uneven playing field when it comes to bearing risk and assessing financial impact. With large insurance companies staffing multi-million dollar actuarial departments, the rest of the market struggles to keep up. If this gap goes unaddressed, providers, from health systems to digital and specialty health companies, will fail when attempting to evaluate, design, implement, and measure VBC arrangements.
Challenges in adopting VBC arrangements. Within each phase of a value-based contract life cycle, there are challenges difficult to solve and scale without the use of technology and actuarial expertise.
At Accorded, we believe all healthcare stakeholders should have access to reliable risk management capabilities in order to accelerate the shift to VBC and usher in the next generation of care delivery. For providers, employers, and payers, the Accorded Platform translates powerful actuarial methodologies to user-friendly tools that accurately predict financial risk and measure performance in real-time.
Leveraging our best-in-class data assets and models, our platform empowers all participants in the healthcare industry to
- Forecast the true savings potential of healthcare solutions across varying populations
- Design innovative pricing and contracting arrangements
- Dynamically assess performance, validate impact, and identify intervention opportunities
While a value-based arrangement may appear to be a challenging path to walk, it ultimately brings providers and payers together to provide patients with higher quality of care and access to healthcare innovations. And the right tools promise a smoother journey.
Wherever you are on your VBC journey, we can help. Let’s achieve the potential of value-based care together.
1Papanicolas, I., Woskie, L. R., & Jha, A. K. (2018). Health Care Spending in the United States and other high-income countries. JAMA, 319(10), 1024. https://doi.org/10.1001/jama.2018.11502Centers for Medicare & Medicaid Services. (2022, May 2). Strategic direction: Background on the CMS Innovation Center 2021 Strategy Refresh – Putting All Patients at the Center of Care. Innovation Center. Retrieved June 22, 2022, from https://innovation.cms.gov/strategic-direction