Why Now: Transitioning from Traditional Fee-For-Service to Value-Based Care (Part 3)

This month, we’re bringing you the final installment of our three-part series on the alternative health care payment models in Medicare. Part 1 introduced the different payment models, Part 2 covered the pros and cons of each, and this post will focus on the transition to value-based care, sometimes referred to as a “bundled payments” model. 

The U.S. is moving to value-based health care payment models because older ones don’t emphasize quality

As discussed in Part 2, the transition from Fee-For-Service started because its reliance on fees is considered unsustainable. This is because Fee-For-Service compensates doctors based mostly on office visits for individual health services and not on overall patient outcomes. This means Fee-For-Service also does not promote preventive health or better-quality care.

“There is evidence to support that value-based care and related alternative payment models are effective for both providers and patients. Medicare is continuing to test the waters with their Bundled Payments for Care Improvement (BPCI) Initiative,” said Dr. Anton Piskac, Medical Director for StrategicHealthSolutions, LLC (Strategic). Piskac noted that while many factors are at play in determining outcomes for providers and patients, value-based payment methods are part of the equation for achieving those results on a broad scale going forward.

The most recent report from the Centers for Medicare & Medicaid Services (CMS) Innovation Center suggests bundled payments may have reduced costs while maintaining quality in cardiovascular and orthopedic care, although more study is needed. And, according to Piskac, the U.S. has seen improvements in patient outcomes in recent years, such as:

  • A decrease in heart attack hospital mortality rates
  • A decrease in hospital readmission rates
  • Identification of breast cancers at an earlier (and more treatable) stage
  • A decrease in the rate of deep venous thrombosis and pulmonary embolism associated with hospital stays

The keys to transitioning from a Fee-For-Service to value-based care model

Bundled and value-based payment models are designed to operate within the framework of an Accountable Care Organization (ACO). According to Piskac, the steps for a successful transition include:

  • Creating organized groups of providers linked by common electronic health records
  • Linking provider credentialing with quality and efficiency
  • Adopting evidence-based treatment guidelines and measuring provider compliance
  • Having provider groups take on a reasonable share of risk for financial outcomes
  • Care coordination to guide patients
  • Having a strong financial partner invest large sums to fund startup costs

Advice for providers as they are make the transition to an Accountable Care Organization

“Most Accountable Care Organizations have chosen care management as their first priority. This involves creating a system that guides sick patients through diagnosis and treatment—thus avoiding delays, missed appointments, duplication of testing, unnecessary consultations, and follow through on key recommendations,” Piskac said.

While these systems of support are needed to prevent unnecessary health care dollars spent on those who require large amounts of health care, Piskac said, the cost savings—while considerable—are miniscule compared to what can be saved by eliminating unnecessary services.

And although some ACOs have struggled in recent years, Piskac noted there are steps they can take to improve performance. “What separates these organizations from those that are facing difficulties is strong leadership; physician members who are actively engaged in and dedicated to the mission; and sophisticated IT systems that support virtually real-time measurement of the provider’s compliance with evidence-based medicine practice,” he said.

Piskac also mentioned the Choosing Wisely website as a resource for finding examples of waste in the health care system. The website was created to inform providers and patients of common medical practices that do not benefit patients.

Adjusting payments and better auditing can reduce problems in value-based payment

Could providers avoid high-risk or disadvantaged patients or ignore some areas of care to improve their performance scores in a value-based model? “I have seen it happen,” Piskac stated. “I know of one large group of physicians that [released] all their non-compliant and difficult diabetic patients to improve their ratings on diabetic care,” he said. Some institutions are not completely honest in reporting complications that are part of the value-based purchasing measures. Consequently, Piskac explained, those who report honestly sometimes appear to provide worse care.

Piskac described two solutions to this issue: adjusting payments for high-risk patients to ensure physicians properly report complications, and more efficient auditing practices to track physician reporting.

What’s Next: Join the Conversation

Health care payment models in the U.S. are changing to place more emphasis on quality services and patient outcomes. There are steps providers can take so their transition to bundled or value-based payment is smoother. And while these newer models are not perfect, solutions exist that can reduce problems and protect patients.

We hope you’ve enjoyed our series on the transition in health care payment models. Let us know your thoughts in the comments below.

Are you ready to help solve our nation’s biggest health care challenge?

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About the author:

Photo of Dr. Tony PiskacDr. Anton Piskac

Dr. Piskac practiced internal medicine in a private practice for 25 years. An additional 20 years of his career were spent in peer-review organizations and hospital settings, identifying and improving provider performance to achieve better patient outcomes. He retired for 3 months before concluding that he wasn’t well-suited for retirement. He is an asset to StrategicHealthSolutions, LLC (Strategic) and in helping fellow providers. His skills have been used to improve processes and efficiencies within Strategic, and to provide oversight for Centers for Medicare & Medicaid Services (CMS) contracts.

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