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Spring 2022 - Safety

Putting Patients First

Value-based healthcare prioritizes positive outcomes and positions patients at the center of future healthcare systems.

VALUE-BASED HEALTHCARE is a model that essentially puts patient outcomes front and center, and it’s an approach that has been gaining momentum for years. In fact, value-based care now accounts for approximately 50 percent of all healthcare payments. In simple terms, value-based healthcare rewards healthcare providers for providing quality care to patients that results in improved outcomes. Under this approach, providers seek to achieve the triple aim of providing better care for patients and better health for populations at a lower cost.

Value-based care focuses on care coordination that ensures patients are given the right care by the right provider at the right time. Using this approach, physicians are tasked with collaborating on care decisions, rather than operating in silos that lead to care gaps or redundancies. The New England Journal of Medicine (NEJM) defines value-based healthcare as a “delivery model in which providers, including hospitals and physicians, are paid based on patient health outcomes.”1 In other words, providers should be rewarded for helping patients achieve the health outcomes that matter most to them.

In many ways, value-based care is at the forefront of future medical regulations and treatments. For example, the U.S. government is using this approach to transition toward medical activities that treat the overall health of a patient rather than reacting to symptoms once a person becomes sick.

“We will not achieve value-based care until we put the patient at the center of our healthcare system,” said Seema Verma, the administrator of the U.S. Centers for Medicare and Medicaid Services (CMS).2

The Essential Role of Primary Care

A value-based healthcare model incentivizes healthcare providers to get and keep their patients healthy, which can in turn lower healthcare costs. In many cases, this begins with the primary care physician. For many patients, the primary care physician is their first point of contact with the healthcare system. Research indicates that when incentives for primary care providers are structured to reward high-caliber care, the quality and cost effectiveness of patient care improves.3

In an effort to promote primary care as part of the national shift to value-based care, CMS launched payment models meant to shift more primary care providers to outcomes-based reimbursement. Dubbed the CMS Primary Cares Initiative, the program aims to reduce administrative burden for providers, while incentivizing clinicians to spend more time with patients and focus on preventive care. “As we seek to unleash innovation in our healthcare system, we recognize that the road to value must have as many lanes as possible,” said Verma. “Our Primary Cares Initiative is designed to give clinicians different options that advance our goal to deliver better care at a lower cost, while allowing clinicians to focus on what they do best: treating patients.”3

While all the payment models are voluntary, the agency estimates the Primary Cares Initiative could shift nearly 11 million traditional Medicare beneficiaries into value-based payment relationships. The range of programs are meant to give clinicians an option for how much risk to assume over their Medicare population.

CMS officials say to help independent practices make the jump to value-based care, the organization is building improved reporting and feedback systems that can provide clinicians insight into their month-to-month performance. Using this model, doctors earning $200,000 could earn up to $300,000 if they effectively keep their patients healthy.

CMS is also developing a Direct Contracting payment model based on geography through which entities will bear 100 percent of total risk for beneficiaries in a target region. These entities will be selected through a competitive application process and are required to commit to provide CMS a specified discount amount off of the total cost of care. “CMS Primary Cares is a clear effort to shift one quarter of our Medicare population to outcomes-based payments,” said Adam Bohler, the director of the CMS Innovation Institute. “It’s time to dismantle the old broken fee-for-service system and replace it with one that is focused on outcomes and quality.”3

Accountability is also a factor; value-based reimbursements are calculated by using numerous measures of quality and determining the overall health of populations. Unlike the traditional model, value-based care is driven by data because providers must report to payers on specific metrics and demonstrate improvement. For instance, providers may have to track and report on hospital readmissions, adverse events, population health, patient engagement and more.

When it comes to reimbursement, value-based care ties payments for care delivery to the quality of care provided and rewards providers for both efficiency and effectiveness. In this way, it may offer an alternative — and potential replacement — for fee-for-service reimbursement, which pays providers retrospectively for services delivered based on bill charges or annual fee schedules. Fee-for-service encourages many providers to order more tests and procedures, as well as manage more patients to get paid more.

Additionally, under fee-for-service models, cost variations for procedures and tests increased, and the healthcare industry was spending more to treat patients, even though patient outcomes were not necessarily improving. The model also challenged provider workflows because physicians were seeing more patients and each claim had to be processed in a fragmented network.

According to a State Health Care Cost Containment Committee report, “The opportunity exists to transform how healthcare is delivered. The goal is straightforward but ambitious: Replace the nation’s reliance on fragmented, fee-for-service care with comprehensive, coordinated care using payment models that hold organizations accountable for cost control and quality gains.”4

The Influence of Emerging Technology

To bring value-based healthcare to life over the past few years, industry leaders have recognized the need for a “new generation of enabling information technology.” A report by NEJM Catalyst notes, “New systems are needed to facilitate dramatic improvements in patient outcomes and efficiency and, importantly, to end an era in which health IT has entrenched the status quo, perpetuated silos and blocked reimbursement reform.”5

Traditional healthcare technology systems evolved within a fee-for-service environment, which means tracking patient care and payments occur within specialty silos like anesthesiology, critical care and radiology. These systems were primarily designed to track meaningful use criteria — computerized order entry, electronic prescribing and electronic messaging with patients — and improve billing speed and accuracy for siloed services. The question then is: What would healthcare delivery look like if it applied customer experience data (similar to other industries like retail or banking)? In this case, patients and payers could expect:

• Records that are immediately updated and accessible across all system touchpoints

• Patient and family preferences that are a central part of the care planning process

• Stakeholders who are informed about each other’s activities in real-time

• Prices and total costs visible to all participants

• Errors promptly identified and corrected

• Results routinely captured and analyzed for continuous improvement

A shift to value-based healthcare requires healthcare systems to create a patient-centered, condition-focused model of care that incorporates payment for a bundle of services resulting in improved health or a return to wellness. To be successful with this model, healthcare systems must follow patients from diagnosis to care outcomes, which should also be linked to cost.6

Of course, making a full transition to value-based healthcare will not be without hurdles. The current U.S. healthcare system structure is complex and inefficient when it comes to data sharing. In addition, the healthcare industry hasn’t invested significantly in technology, partly because it hasn’t been necessary to remain competitive. According to Harvard Business School Institute for Strategy and Competitiveness, “Per capita investment in health IT has lagged behind other industries. Although the recent emphasis on ‘meaningful use’ of IT has expanded the health IT industry, its functionality has been limited to being excellent revenue cycle tools in a fee-for-service-based delivery system. The transformation to a value-based system requires the support of condition-based care through data sharing, outcomes, cost measurement and reporting enabled by information technology, and technical support of new value-based payment methods.”7

Despite the challenges, the evolution of value-based healthcare is likely to accelerate, given CMS’s goal to advance the model to lower costs while improving care. Currently the federal government — acting as a single-payer — accounts for 25.9 percent of national health expenditures, making the federal government the largest single payer of healthcare in the U.S. With COVID-19-induced losses in the nation’s hospitals and healthcare systems reaching $323 billion in 2020 alone, value-based healthcare’s promise of lowering costs and improving care quality is well-positioned to accelerate change.6

“Standardized outcomes, transparently reported by condition, are essential for both care improvement and for making informed choices by patients, payers and other provider organizations. Outcomes represent the ultimate measure of quality,” says Harvard Business School.7

A Pandemic-Driven Shift

The COVID-19 pandemic undoubtedly put the healthcare system to the test, and it affected performance across the board. Inpatient numbers increased, quality of care declined, preventive care for children and adults lapsed, and people delayed cancer screenings. But it also catapulted the healthcare system forward with an ability to deliver on value-based care in several ways:

• Telemedicine became a permanent tool for many practices.

• Remote patient monitoring is more widely available and a part of care delivery.

• American Medical Association (AMA) medical updates for coding and documentation guidelines improved.

In addition, healthcare practitioners learned to be more flexible and perceived the need to create a quality dashboard that contains what the quality measure should be, how to adjust the measure for things like pandemics and how to make adjustments as needed.

The evolving changes driven by the pandemic may become the springboard to successfully handling healthcare issues stemming from recent (as of this writing) spikes in COVID-19 cases to handling the expected surge of patients who resume healthcare after putting it on hold. This may require healthcare delivery to evolve into a hybrid of different platforms such as home-based testing, point-of-care testing, more preventive care, more outbound mobile centers and community-based centers, and community health workers connecting with people who are hard to reach to bring them into the care system. “When the world shut down in April and May of 2020, fee-for-service models ceased,” says David Snow, chairman and CEO of Cedar Gate Technologies, a value-based healthcare information technology company. “However, providers in value-based care payment arrangements such as capitation continued forward — taking care of patients and generating revenue.”

Value-based payment models were not only good for business during the pandemic, but they also ushered in a wide acceptance of telemedicine. Snow is also the chair of a telemedicine organization and recalls how difficult it was to drive adoption pre-pandemic. “Virtual care was deemed to be lower quality in comparison to an in-person visit,” says Snow. “It took COVID to dispel this preconceived notion. It is clear now that telemedicine delivers enormous clinical quality, financial value and efficiencies. Sometimes it takes an earth-changing event to reorient things.”

Preexisting conditions became newly challenging during the pandemic, as chronic diseases such as diabetes and hypertension risked being untreated. Many patients fell behind on care, which added significant risks to those with preexisting conditions. Thankfully, that trend has shifted. “Patient volumes dropped dramatically in the spring of 2020 but have come roaring back,” adds Snow. “The challenge is that some people incurred harm and detrimental consequences from the disruption — particularly in the gap between the initial weeks of the pandemic and the full adoption of telemedicine. Motivated by patient outcomes, value-based providers were driven to quickly adapt to telemedicine to avoid disruptions to patient care.”8

Snow noted that in value-based models, wellness and the avoidance of expensive and invasive treatments becomes the incentive, as opposed to the illness itself. These models offer improved analytics that are precise about performance improvement opportunities and reduced cost of care, giving practitioners the ability to use technology to solve issues as they arise.

From Fringe Idea to a Mainstream Framework

Through adoption and integration of innovative solutions in care management, payers and providers can benefit from the explosive innovations driven by COVID-19 — many of which were already under development but are now being accelerated. In many ways, healthcare technology that offers multifaceted solutions to drive preventive and proactive patient care is actually within reach. “COVID’s impact resulted in dramatic change and is now part of our healthcare framework. We’re not going back to the old way,” explains Snow. “It’s a positive change. There’s no doubt in my mind value-based care will be the dominant theme in the next 10 years for reimbursement — it’s going mainstream.”8


1. Cohen A and Reifsnyder C. How Value-Based Care Benefits Patients, Providers, Payers, and Society. Veradigm, March 26, 2021. Accessed at

2. Holman T. Value Based Healthcare. Accessed at

3. Truong K. CMS Launches New Value-Based Payment Models for Primary Care in 2020. MedCity News, April 22, 2019. Accessed at

4. Mcaskill R. Examining the Fee-for-Service v. Value-Based Payment Models. RevCycle Intelligence, Oct. 21, 2014. Accessed at

5. Feeley TW, Landman Z, and Porter ME. The Agenda for the Next Generation of Health Care Information Technology. NEJM Catalyst, Vol. 1 No. 3, April 15, 2020. Accessed at,%20Landman,%20Porter.%20Value%20enabled%20IT%20NEJM%20Cat%204.15.2020_29cefa30-75eb-47ed-9dc7-b68f86029d01.pdf.

6. Clausen K, Elgin C, Kapasi S, and Stiling M. The Drive Toward Value-Based Healthcare Systems Is Fueled by IntegratedTechnology Platforms. Nerdery, Feb. 11, 2021. Accessed at

7. Harvard Business School Institute for Strategy and Competitiveness. Information Technology. Accessed at

8. Phillion M. Value-Based Care: How It Expanded During COVID-19. Patient Safety & Quality Healthcare, Aug. 9, 2021. Accessed at

Trudie Mitschang
Trudie Mitschang is a contributing writer for BioSupply Trends Quarterly magazine.