Value-based care was thrust into the spotlight as Kaiser Permanente closed its acquisition of Geisinger Health, solidifying plans for a new network that will focus on creating more value for patients.
Kaiser will fold Geisinger into a nonprofit entity it created called Risant Health, and there are plans to add several other health systems to the network within the next five years.
Related: Kaiser closes Geisinger Health acquisition, forming Risant Health
Despite buy-in from one of the nation's largest health systems, value-based care remains an elusive concept for many providers and patients. The term, coined decades ago, has yet to unseat fee-for-service as the primary care model in the U.S.
Here's a look at who is pushing value-based care and why more providers aren't jumping on board.
What is value-based care?
Value-based care is a business model that focuses on care quality and the patient experience. Clinicians and other medical professionals work together to coordinate care based on a patient's overall health, including physical, mental and social factors, and determine options that help keep the patient out of the hospital.
How is the payment structure different?
Providers implementing value-based models are rewarded for high-quality, coordinated and efficient care that results in better patient outcomes. Payers typically give a lump sum up front to cover healthcare services for a given time period, which incentivizes providers to keep costs low. Contracts can incorporate upside risk, where providers get more revenue if they exceed certain targets, and downside risk, where providers lose revenue if they don't meet the targets. Targets could range from lower readmission rates to improved patient experience scores.
In contrast, the traditional fee-for-service model reimburses providers for each service provided, potentially incentivizing providers to increase service volume even if it doesn't necessarily lead to better patient outcomes.
What providers are pushing the value-based model?
Oakland, California-based Kaiser describes its integrated prepaid model as "one of the nation’s only truly value-based care environments." Its Risant venture is a way to partner with multiple payers and providers to expand value-based care.
"Physicians want to focus on prevention. Physicians want to prevent disease. But we've been living in a system that rewards disease instead of rewards prevention," Dr. Maria Ansari, CEO and executive director of the Permanente Medical Group, said during a recent interview with the American Medical Association.
In October, AdventHealth, in Altamonte Springs, Florida, announced a partnership with Wellvana, a company that helps physicians transition into value-based contracting models, to support the health system's primary care network.
Charlotte, North Carolina-based Advocate Health is another big proponent of value-based arrangements. Advocate, which merged with Atrium Health more than a year ago, estimates its accountable care organizations generated about $761 million in savings since 2012 through the Medicare Shared Savings Program, as an example. An accountable care organization is a group of providers that comes together to offer coordinated care for a designated patient population.
Retail disruptors such as CVS and Walgreens also are looking to attract patients, particularly seniors, with value-based care options.
Who benefits from value-based care?
Value-based care is billed as a cost-saving arrangement that benefits payers, providers and patients. Payers shoulder fewer medical costs, providers keep patients in the most appropriate care setting and patients avoid expensive stays at the hospital.
Results vary depending on the situation. "The answer to whether [value-based care] 'works' depends on who you ask. The physician whose clinic has taken on the work — and the financial risk — of providing care under the new models? The policymaker responsible for saving Medicare dollars? The patient who got the cancer screening and treatment they needed, ideally without having to be aware of how their physician was paid?" stated a 2023 report published by the Association of American Medical Colleges.
Why aren't more providers buying in?
Change is hard. Most of the U.S. healthcare system still operates on a fee-for-service model, despite efforts to make "value-based care" a hot-button issue.
Many providers aren't willing to take the risk. If doctors don't meet standards set for quality and patient outcomes, it could mean thousands of dollars in lost revenue for provider groups, hospitals and health systems. Taking on that level of risk could also dissuade smaller practices from implementing value-based arrangements.
In many cases, value-based payments do not cover the shortfall between fee-for-service payments and the costs of providing higher-quality care.
Implementing value-based care could require upfront investments in services and staff to improve quality, and establishing new performance measures could add to providers' costs. Value-based measures are often subjective and could be influenced by factors outside of a physician's control, such as whether a patient adheres to a care plan.
