Value-Based Care is kind of a vogue term, one that I encounter quite often. I also have used it when speaking or writing and know most people have no idea what it means or how it can be developed and/or applied.
Value-based care is not a new concept. Medicare tried a foray into it back in the mid-2010s (2o15, 2016, etc.) with bundled payments, primarily for certain orthopedic procedures (hip and knee replacements) and for certain cardiac procedures. The rudimentary concept is one payment for a complete episode of care. Simplified, (just an example), $10,000 for a knee replacement that included the costs of the site, the surgeon, the joint, the drugs and supplies and then, the rehab at home via home health or inpatient at a SNF or IRF (inpatient rehab facility).
Bundled payment programs were set as demonstration projects for Medicare and never really took off. I wrote a series of posts on bundled payment programs, the process, the policy, etc. They are available via search on the site for “bundled payment”.
Value-based care conceptually, is a payment that is tied to quality outcomes. Quality is defined as efficiency (spend less) and deliver care that produces a positive health outcome and a positive patient experience. It is different than the predominant Medicare model of fee-for-service (outpatient) or, payment tied to each element of care (e.g., payment for the hospital, payment for the physician, etc.). It also is different than the Medicare capitated or PPS payment in that, those payments are still based on the cost of providing care at varying levels, regardless of the actual cost and the patient outcome.
The most common applications today for value-based care are programs that focus on disease states (typically, chronic diseases) and programs that fall under the Medicare tag of “value-based purchasing” (VBP). VBP seeks to eliminate or reduce processes that create additional cost and additional potentially negative outcomes. For example, repeat hospitalizations. Another is fall and infection reduction. The overall methodology is to reward positive outcomes via incentives and to punish poor performance by payment reduction (carrot and a stick).
Chronic disease and community-based programs (value-based) are capitated programs akin to C-SNP (chronic, special needs plan), I-SNP (institutional, special needs plan), Accountable Care Organizations, Pace programs, and/or Medical Homes.
In these programs, a group of providers is formed to focus on a specific population of patients meeting either a broad criterion of eligibility (to be in the program) such as dual eligibility (Medicare and Medicaid) residents in a congregate or skilled care setting (I-SNP) or a more defined criterion such as having diabetes (C-SNP). Community based programs such as Pace can combine group elements such as dual eligibility and chronic diseases.
Payment is capitated or per-capita in so much that a lump amount is paid based on the number of enrollees, location (Medicare region), and the program specifics. Success is achieved if the provider group meets cost and quality measures/outcomes such that savings occurs, and the group may reap the benefit of those dollars. The risk share however, is also present such that overages in cost and/or poor-quality outcomes can come with losses to the program and potential penalties. A good value-based care primer, printed in a New England Journal of Medicine publication is available here: https://catalyst.nejm.org/doi/full/10.1056/CAT.17.0558
For post-acute care providers (SNFs, IRFs, Home Health, Hospice), value-based care presents a number of different opportunities. Most large metro and surrounding metro areas (suburbs, exurbs), etc., will have programs and Medicare Advantage plans that can be logical partners for a value-based initiative. There is also opportunity for post-acute providers and senior living organizations to develop their own value-based care option such as an I-SNP or a C-SNP. Typically, as this process is daunting, the approach in developing a new program is best served via a partnership with an insurer familiar with Medicare Advantage.
While official Medicare bundled payment programs never took shape, the concept still works in application with a Medicare Advantage plan. In this approach, an SNF or logically, an SNF and a Home Health agency, develop a relationship with the Med Advantage plan such that certain diagnostic categories of patients will be accepted on referral and a pre-set payment amount will be attached, based on an algorithm of care. Combining the inpatient and the outpatient or home-based stay is advantageous to the patient (pre-determined location, etc.) and to the Med Advantage plan in terms of costs and ideally, improved quality.
Below is a typical approach that I have advised providers to implement, if they wish to pursue value-based care partnerships with a Medicare Advantage plan.
- Identify the market needs and what portions of the market you wish to serve (broad or narrow). The larger the market to serve, the more partners will be needed unless your organization has multiple owned outlets.
- Pick a unique patient need/diagnostic condition or two to address.
- Create an algorithm/pathway to address this need from hospital/surgery center discharge to return to home and full release from care. An example is here: Hip Arthroplasty pathway
- Refine the pathway or pathways with all partners and medical staff (physicians, pharmacists) to assure that it is complete.
- Cost the pathway in terms of Medicare fee-for-service reimbursement or PPS reimbursement for SNF inpatient and Home Health episode(s). Create a price advantage formula that incorporates shorter lengths of stay, improved quality, more efficient care (fewer drugs, fewer complications, etc.). Analyze: Can the care in the pathway be delivered safely and efficiently at this discounted price point? Remember: It’s not about per-each, but about over a series of patient encounters.
- Approach the Med Advantage plan with a proposal based on certain pathways and price levels. Refine and create your value-based partnership!
There are a number of tools, etc. on this site and a few presentations that may be helpful, tactically.