The value-based care trend is forging ahead with many passionate backers. Moving away from the old fee-for-service healthcare model to a value-based system isn’t just about enhancing outcomes, it’s also a way to rein in rising healthcare costs and put the patient at the center of their care, health leaders say.
This spring, a consortium of CEOs from Kaiser Permanente, Medtronic, Novartis and others, as well as the Netherlands’ health minister, the head of England’s National Health Service and Harvard economics professor Michael Porter, called for a new approach to healthcare that embraces patient-centered care and focuses on outcomes.
The health leaders’ announcement dovetailed with release of a World Economic Forum and Boston Consulting Group report titled Value in Healthcare: Laying the Foundation for Health-System Transformation. At its core are three key principles: measuring outcomes and costs; focusing on specific populations; and customizing interventions for those populations. First up is a pilot project for heart disease patients in Atlanta that includes payers, providers, medical supply companies and government organizations.
Unnecessary tests and treatments cost health systems between $40 million and $50 million for every $1 billion of net revenue, says John Johnston, national partner and senior vice president for consulting at The Advisory Board Company. And many health system executives believe the costs are much higher, he adds.
But value-based care has its challenges. Value is in the eye of the beholder, and that differs for patients, providers and employers/purchasers. It also requires metrics to measure care quality and compare it across health systems and payers. And organizations need to be able to measure cost, which can be tricky as well.
In January, CMS and HHS’ Office of the National Coordinator for Health IT (ONC) issued a roadmap for the continued shift to value-based care. Key to that goal is “21st century information technology” that allows secure data access and sharing, the agencies said. The recently enacted 21st Century Cures Act also includes provisions to advance interoperability and bar EHR vendors from blocking information.
So far there are no blockbuster results to point to, but those who continue to support value-based methods say more time is needed to truly know their effectiveness.
While there is clear momentum to move to value-based care, is there any data showing it makes a difference in patient engagement, outcomes and costs?
“The data are showing mixed results,” says Christina Boccuti, associate director of the Program on Medicare Policy at The Henry J. Kaiser Family Foundation. “Some initiatives are returning positive savings and positive quality results and others are more mixed."
Holly Martin, senior manager at Top Tier Consulting, agrees. “Part of the challenge is people are changing and innovating and seeing results in quality and cost, and Medicare is seeing some reduced payments, but the accumulated learning experience is hard to consolidate nationally,” she tells Healthcare Dive. “CMS is pleased with the trend and the progress, but the actual dollar amounts that are being saved are not huge compared to the healthcare spend overall.”
One positive result is the Hospital Readmission Reduction Program, which has been lowering hospital readmissions and returning savings to Medicare. The success of the program, which penalizes hospitals with high 30-day readmission rates for certain conditions, may also reflect value-based initiatives from other programs, notes Boccuti. For example, accountable care organizations (ACOs), in trying to reduce total spending, have an indirect incentive to reduce hospital readmissions.
Other programs, like the medical home model and ACOs are lowering use by reducing duplicative services and readmissions, but not cutting costs. “On net, the payment incentives are exceeding the savings that are garnered from lower use,” Boccuti tells Healthcare Dive.
And while quality of care has stayed the same or improved across alternative payment models, they can’t be considered a success unless they cut costs, she adds. The goal in these models is to lower cost without lowering quality or maintain cost and improve quality. The key is to embrace those models that are working and abandon or tweak those that aren’t, Boccuti says.
Benefits accrue with experience
It’s also important to consider experience, says James Landman, director of healthcare finance policy at the Healthcare Financial Management Association. “It you look at the data for the Medicare Shared Savings Program, which is the biggest of the ACO programs under CMS, there is a correlation between time spent in the program and the ability to generate savings.”
Some of the organizations with the most success under value-based care programs have spent years developing clinically integrated networks or working with physician practices and dealing with capitated global payment contracts, Landman tells Healthcare Dive. “Those capabilities take a lot of time to develop,” he says. “When they do, you start seeing traction and improvements in both quality and efficiency of care.”
He cites, for example, CMS’ Comprehensive Primary Care program. During year one of the program, physician practices struggled to just get their arms around the program, but by years two and three they were seeing positive impact on emergency department utilization and other metrics. At the same time, care management teams hired by the practices were challenged to develop long-term relationships with patients and drive behavior modification.
Strategies to increase value-based care results
Despite numerous challenges, there are steps organizations can take to increase the benefits of value-based care. Figuring out how to stratify patients by risk and analyze and evaluate the data can lead to reductions in costly ED use and stabilization or improvement of underlying chronic conditions — savings that will be long-term, according to Landman. “Organizations that have really focused on this have achieved demonstrable results both in improvement of the patients’ conditions and in reducing the costs of their care,” he tells Healthcare Dive.
But to do that requires investment in an IT infrastructure that enables data collection and predictive modeling, as well as in care management professions — none of which were traditionally paid for, at least in a holistic manner, Landman points out. With those resources now becoming available under alternative payment models, organizations can start to make the necessary investments and start doing interventions that translate to quality and cost gains for the patient population.
Organizations also need to make structural adjustments in terms of partnering and collaborating on patient care across the care continuum, and they need to understand their costs and which of those are fixed or variable, says Martin. Any fixed payment or at-risk arrangement will require close management of margins.
With the current uncertainty about reimbursement models and funding, the Advisory Board Company encourages providers to go after “no regrets” improvement initiatives like reducing cost structure, improving access, reducing inefficiencies and variability in care and better aligning with medical staff. One area where health systems can make a difference and see results is reducing unnecessary utilization.
“Even in hospitals that are heavily paid on a fee-for-service basis, eliminating unnecessary utilization positively impacts outcomes and the bottom line,” Johnston tells Healthcare Dive. “So our clients are heavily focused on understanding the drivers of variation across the entire episode of care, including pre- and post-acute, and organizing their physicians and clinical leaders to determine the right protocols and processes to eliminate variability and optimize outcomes.”
Focusing on specific disease states is also key, Johnston notes, as well as getting major stakeholders across the health system to the table to discuss and implement change.
Moving the needle
Despite growing interest in value-based payment models, they still account for a small percentage of overall healthcare costs. Most organizations remain largely fee-for-service, although many are experimenting with value-based care and building the capabilities they will need as more payers — government and commercial — reward evidence-based care and lower costs.
“We’re at a point where I don’t think we have necessarily the depth of penetration of value-based payment that’s really going to turn the ship,” says Landman. “But there are a log of organizations working very hard to develop what they think they’re going to need to have in place when the ship does turn.”
"What providers need to realize is that value-based initiatives are in the commercial market as well as in Medicare,” says Boccuti. The challenge is to see where they can achieve alignment on payers, and how those align with Medicare.