Can Value-Based Care Bring Down the Cost of Healthcare?

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Value-based healthcare is not a new idea. However, it is an innovative healthcare model that many health insurers, pharmaceutical and service providers, and even the government are trying to implement as a way to reduce health costs and improve patient health.

Value-based care (VBC) bases the provider's payment on the outcome of care, not on the number of visits or procedures completed. It is a proactive approach to medicine rather than a reactive treatment of disease.

Many health plans may already include elements of value-based care in their preventative services packages. Value-based care is a focal point of trying to save money on health costs.

What is Value-Based Care?

Value-based care is about the quality of care instead of the quantity of care. It can be defined as a healthcare model based on compensation for outcomes. This system differs from the traditional fee-for-service (FFS) or "quantity of care" system. With the traditional systems, medical providers are on a "pay per use" type of compensation structure.

In value-based care, the overall wellness of the patient and the outcome is key to being compensated.

The Centers for Medicare and Medicaid Services (CMS) already uses value-based care in several programs. Those programs include the End-Stage Renal Disease Quality Incentive Program (ESRD-QIP) and the Hospital Readmission Reduction Program (HRRP). Other programs are designed to reduce the cost of skilled nursing facilities and home health programs.

How "Value" Is Determined

There are two ways value-based care can increase the overall wellness of patients while saving money on health insurance costs:

  • It decreases the cost of services—possibly by changing the approach to offering those services—while still providing the same outcome
  • It increases the outcome of well-being without increasing the cost of care

Programs base payment on the healthcare provider giving patients the power and information to take better care of their health and reduce the incidence of the patient having chronic health conditions.

This may sound complicated, but with proper analysis of current treatment plans and review of where the health industry is spending money, providers can redesign services to provide this value.

Value is essentially getting more for less. Not all organizations have shifted to value-based care models, but many are learning from existing organizations using this model already. Many organizations and states are exploring the available options and feasibility of shifting to this more effective and cost-efficient form of care in the near future.

Saving Money With Proactive Care

Value-based care takes the approach of proactive, preventative, and efficient care. It uses data and technology to understand emerging needs. Value-based care also creates a more integrated approach to managing people's wellness, instead of treating illness and disease as it occurs.

Preventative screenings take into account the person's psychological needs as well as their physical ones. Also, proactive communication with patients and medical teams is an important aspect of value-based care.

Many employers have started using value-based benefit designs where their employees benefit from reductions in cost-sharing or lower premiums when they take preventative or proactive measures to increase wellness by obtaining higher quality care or actively work on managing chronic conditions.

Value-Based Care Strategies

The value-based healthcare model may include adding more resources and education for patients. These resources can include:

  • Medical decision support and second opinions
  • Easier access to medical services, such as onsite health centers offered by employers
  • Help to assess and make dietary changes
  • Help to make realistic lifestyle changes
  • Exercise suggestions and plans, including the use of technology, such as wearables
  • Psychological and/or emotional support

Value-based care uses data and technology to enable greater communication between patients and doctors, as well as within the medical teams serving patients.

Physicians, in value-based care, will use a team approach. Team members can include outreach and referral coordinators, nurse educators, and certified medical assistants (CMAs). These members help communicate with and educate patients in managing their healthcare conditions.

How VBC Can Save Money on Health Care

When patients are being regularly followed by medical teams who know their history and situation, medical teams are better able to help counsel patients on how to make positive changes in their lives to increase health or better deal with existing health issues or illnesses. This can reduce the cost of healthcare by saving the patient and service providers money by:

  • Preventing unnecessary emergency visits
  • Preventing diseases from causing deterioration in a patient's health, by discussing proper management strategies
  • Standardizing processes for cost-effectiveness
  • Reducing readmissions or excessive medical tests
  • Eliminating unnecessary administrative procedures or tests by using data to analyze and create best practices and "care paths". Technology in healthcare will be the key to addressing this.
  • Creating stronger alliances, communication, and evaluation of the regulations for drug companies, so that costs associated with drugs are directly related to outcomes or how effective the drug is.
  • Allowing employers to offer employees value-based care benefit programs. This saves money by increasing the health and wellness of their employees, which directly impacts productivity and decreasing absenteeism.
  • Providing better coordination of medical teams and access to services

Coordinated care from medical teams reduces the health care costs involved due to the fact that there is a reduced chance of duplication of medical services or unnecessary medical tests and errors.

Simplicity lies in enabling teams to review medical charts together or by creating opportunities for patients to access their doctors, dietitians, pharmacists or other medical professionals to prevent illness or escalation of symptoms.

Example of Value-Based Care

Many organizations are actively working on shifting to value-based care models. Medicare's preventative services is an example of the move toward a wellness-focused health system, where diagnosing and preventing illness and managing a person's wellbeing to prevent medical issues is just as important as the treatment in emergencies.

The concept is that if an illness, or likelihood of it, is diagnosed and managed with preventative treatment prescribed—such as reducing the prevalence of diabetes by monitoring, education, and support—then healthcare costs related to the illness around the country will be reduced.

Article Sources

  1. Center for Medicare and Medicaid Services. "What Are the Value-Based Programs?" Accessed Feb. 6, 2020.

  2. Change Healthcare. "Value-Based Care in America: State-By-State." Accessed Feb. 6, 2020.