A Short Examination of Value-Based Payment Models

With all the positive buzz surrounding value-based payment models in healthcare, moving away from volume-based or fee-for-service models seems like a no-brainer. After all, under the value-based payment system, patients will receive higher quality care, physicians will be rewarded for providing higher quality care, and overall healthcare costs will be reduced.

But there are still plenty of unanswered questions about the best ways to track and report a physician’s patient care services in order to accurately measure their value, as well as questions about the amount of time and effort required to transition from the current payment system to this new model.

Here’s a quick look at what’s involved in moving to a value-based model:

Moving Away from the Current Fee-for-Service Model

Under the fee-for-service model, physicians are paid based on the volume and complexity of procedures they perform, which ultimately contributes to escalating healthcare costs. Many physicians are committed to providing preventative care and management of chronic conditions—aspects of healthcare that improve patient health for the long term. But by helping patients get and stay healthy under the fee-for-service model, doctors aren’t always appropriately compensated. They’re not financially rewarded for providing the best type of care for their patients.

In March 2013, the National Commission on Physician Payment Reform published a report containing 12 recommendations for transitioning to a blended payment model, one that will rein in healthcare spending, improve the quality of healthcare, and change the way doctors are paid. The report advises a five-year transition period for practices to adopt a new payment model based on value and quality.

The American Academy of Family Physicians (AAFP) backed up many of the report’s statements in a letter it issued on April 15, 2013, supporting a blended payment model which would include a revised version of fee-for-service as a base, a per-member/per-month care management fee, and an incentive for achieving quality benchmarks. In addition, the AAFP calls into question the use of performance measures to assess quality improvement.

Understanding the Best Ways to Track and Measure Value

Much of the uncertainty surrounding value-based models involves how physicians will report quality of care and how Medicare and other private payers will measure success. In order to evaluate how a physician is supplying value to his or her patients and then deliver the appropriate incentives to that physician, Medicare is looking at three main measures—an assessment of the physician’s process, a measurement of patient satisfaction, and an examination of Medicare costs spent on the physician’s patients.

But for Medicare to accurately assess these measures, and in turn, reward doctors for providing value, practices must find a way to track and report value in a meaningful way. Those that are currently working toward a Physician Quality Reporting System (PQRS), Stage 1 or Stage 2 Meaningful Use of electronic health records (EHR), or Patient-Centered Medical Home may already be a few steps ahead on generating the necessary quality of care information. But for now, the best ways to track and measure value are still being worked out.

If you’re interested in finding out how your practice can transition to a value-based payment model, be sure you keep up to date on recent developments as far as requirements, incentives, and quality data reporting. New decisions and discussions are happening now, and many of the involved parties are weighing in on the best type of payment model and the best way to transition. It will likely take time to sort everything out and make the changes; but ultimately, payment based on value—rather than volume—should benefit physicians and patients alike.


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