Value Based Care is the New Health Care

Healthcare delivery in the United States is the one of the costliest affairs for the residents of the nation. To put things in perspective, U.S. healthcare costs over $3 trillion every year. 

According to the Centers for Medicare and Medicaid Services (CMS), "U.S. health care spending grew 5.8 percent in 2015, reaching $3.2 trillion or $9,990 per person. As a share of the nation's Gross Domestic Product, health spending accounted for 17.8 percent."

The healthcare costs account for almost 20% of the United States GDP which is significantly higher than other countries, and is not sustainable long-term.  Many people have been calling for urgent healthcare transition(reform) and Value-Based Care is a term that has been long awaited.  Make no mistake, the U.S. healthcare system has the most leading-edge care possible on the planet — the question is “Overall, is it efficient and as valuable as what is costs?”

The shift from volume-care to value-based care is no easier than accepting smart phones/tablets in replacement of the at-one-time-believed “irreplaceable” bulky PCs and laptops.  It takes time, it takes technology advances, and it takes culture and mindset shifts of both providers and consumers. There are many benefits of value-based care.

The Transition

This shift from the fee-for-service (i.e. volume-based care) payment models to value-based care compel health systems to blend operational, financial, clinical, and other data to improve quality, control costs and managing provider networks, and patient access. The U.S. Government is building a new payment landscape and creating a new paradigm which underscores the responsibility of coordinating complete episode care along with bearing the risks of costs and quality outcomes.

Value-based care has emerged as a successful model with the refinement of information technology and application of strategies to the traditional fee-for-service (i.e. volume-based) payment mechanism that ruled healthcare for the last several decades. Value-based Care is a highly integrated program and includes the medical Shared Savings Program, value based payments to the hospitals, and others. 

Reshaping the healthcare models, a multitude of new payment models have been established, out of which the most important is Value-based Reimbursement. The Obama Administration introduced and implemented multiple Value-based Reimbursement verticals including bundled payments, medical home models, variations of Accountable Care Organizations (ACOs) and special incentives to physicians for care coordination, giving way to many more innovations. 

MACRA’s sweeping payment reform provisions comprise of several steps to facilitate providers to participate in Alternative Payment Models (APMs) for initial bonus payments, exemption from Merit-Based Incentive Payment System (MIPS) requirements, and other potential conditional incentives. The healthcare providers participating in APMs are eligible for higher annual payment updates for their fee-for-service revenue stream beginning in 2026. Further, MACRA also establishes a 2-track system for identifying qualifying participants 

1) Beginning in 2019, if they receive a significant share of APM revenue in Medicare alone; or 

2) Beginning in 2021, if they receive a significant share of APM revenue through Medicare or a combination of Medicare and other payers.

The Department of Health & Human Services (HHS) aims for transitioning 30 percent of the fee-for-service Medicare payments to value based care models by the end of 2016 and expects 50 percent of traditional payments undergo this care transition by 2018.

Bundled Payments

Also called as episode based payments, this introduces a single payment for services provided under a complete episode of care. The Value-based Care initiatives are being appreciated by care-givers, payers, and other stakeholders.

• The Centers for Medicare and Medicaid Services (CMS) estimated a growth at the rate of $10 billion per year for medical reformation efforts like value-based care models.

• Aetna invested 15 percent of its spending towards Value-based Care efforts and announced to invest up to 45 percent by 2017.

• The Department of Health & Human Services aims at targeting 30 percent of their payments to value-based care payment models by the end of 2016 and would increase this to 50 percent by 2018.

Centers for Medicare and Medicaid Services (CMS) instituted the Comprehensive Care for Joint Replacement (CJR) Model for Medicare patient joint replacement treatments into basically a fixed-fee with incentives arrangement in which hospitals are accountable for both quality and financials.  There are many details on this program but it seems to be the start of the transition to a Value-based Care mindset for years to come.  This program alone is looking to save CMS over $340 million over 5 years.  MACRA extends and consolidates some of the those type of programs over the next 5- 10 years with incentives to providers along the path.  Many more procedures are in process for review and incentive payment models being determine.

Where There’s a Challenge — There is an Opportunity

And while it may seem daunting for providers as “lower costs” are coming, there is significant incentives upside to healthcare providers that can arrange their operations to manage and provide visibility of patients throughout the continuum of care in a value-based care model.  If a healthcare provider can do this well - there are opportunities to make more revenues than ever before. 

The challenge is that this patient and episode visibility has been virtually impossible historically — a patient has a procedure at a hospital, may have follow-up visits with the surgeon or specialist, may have a time period at Skilled Nursing Facility(SNF), next have some care from a Home Health agency care, and then finally have many visits with physical therapy as well.  Any healthcare provider - much less the hospital — historically has not had any cost effective way of attaining patient visibility and a view into real-time costs for an episode.

This is the single largest challenge to value-based care, or episode management, from a hospital or accountable provider point of view — if you cannot see what is happening in a patient’s episode in near real-time, you can’t really manage it effectively - and this is the problem.  

Currently - some hospitals are attacking this problem by hiring external services, or creating internal “Care Coordination” services which are basically adding cost to the episode.  These Care Coordination services which closely align to the extension of patient case management services, basically provide man-power to follow patients or attempt to follow patients.  From our perspective, this is a near-term patch solution that is not viable longer term — it is adding costs to the episode and healthcare system, where the goal is to decrease the costs of healthcare.  

The Bottom-Line:  Future is clear, how will you adapt? 

There are tons of details on the value-care programs, and even more acronyms flying around but the future is coming, and it is clear from our viewpoint.  The future is centered around a basic premise of providing a bundled set of healthcare services for a fixed-fee with provider incentives attached.  This provides more competition on the provider side, lower prices for patients and payers, and also provides incentives to keep the quality of care high.  The largest payer in the U.S. healthcare system (i.e. U.S. Government for Medicaid and Medicare) has initiated the transition to value-based care payment models, and now is the time for some real change in the healthcare spendings of the United States.  

Lifecycle Health’s primary focus has been on providing real-time episode and patient visibility with the ability to coordinate and collaborate across the multiple providers in the continuum of care.  We designed a healthcare care coordination software platform where all individuals (a patient and the care team of providers) involved in patient’s continuum of care (episode of care) can be coordinated, monitored, and collaborated throughout the treatment episode.  A provider can get real-time visibility into a patient’s episode across providers - quality of care, costs, and patient satisfaction with the Lifecycle Health platform.

The Lifecycle Health cloud platform engages and monitors patients, saves providers time and costs, and allows remote telehealth visits for patient convenience and better treatment adherence.  All of this leads to the Value Based Care goal — lower healthcare costs, but also allows providers to make more revenues through incentive bonuses, and increases the quality of care for the patient.

Learn more about the Lifecycle Health software platform at: www.lifecyclehealth.com.