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Healthcare 2020: A Detailed Report on the Clinical and Financial Aspects of Emerging Value-Based Payment Models


Innovaccer, a healthcare data activation company, released its state of the union report, which provides an analysis of multiple payment modes speculating care delivery for the 2020s and discusses trends in value-based payment models.

The prioritization of alternative payment models (APMs) or value-based care (VBC) has risen in the past half decade, with 34% of healthcare dollars spent in 2017, up from 23% in 2015, being attributed to these variables. To assist stakeholders in navigating through the complexities of these models, Innovaccer, a healthcare data activation company, released its state of the union report, which provides an analysis of multiple payment models, speculates on care delivery for the 2020s and discusses trends in value-based payment models.

As APMs begin to integrate into the healthcare sphere, the authors noted that it is essential that stakeholders explore and understand emerging payment. The report analyzed the clinical aspects and financial goals, as well as patient and provider satisfaction in APMs when determining their overall improvement to care delivery.

Transition From Fee-for-Service to VBC Payment Models

Fee-for-service (FFS) payment models, which reimburse providers for services provided, has become a major catalyst towards the oversaturation of healthcare costs in the United States. The transition from FFS to VBC payment models, however, will not render the former as a complete afterthought, noted the authors.

“Fee for service will be crucial to care organizations as a benchmark by which providers can assess alternative payment models,” said the authors. By obtaining the payment schedule from payers and comparing it to the organization’s FFS reimbursements from the same payer, providers can evaluate which specific APM would serve as financially advantageous to its operation.

VBC and Modern Payment Models

VBC, a type of payment model that rewards providers for delivering high-quality care at lower costs, has served at the forefront of driving the future of medical care in the United States. Pay for performance (P4P), bundled and episode-based payments, and accountable care programs model were 3 value-based payment models delineated by the authors with accompanying subprograms.

Pay-for-Performance Payment Model

In pay-for-performance (P4P) payment models, providers, care organizations, and other healthcare stakeholders are given incentives for achieving performance objectives. Programs within the model, also known as value-based purchasing, are supported by leading insurance providers in Medicare and Medicaid as it promotes a culture that rewards providers for efficiency and penalizes high costs, poor patient outcomes, and medical errors.

The authors noted that the biggest advantage of the P4P model is that it requires less information technology than other advanced models, which heightens its popularity amongst smaller and newer organizations. However, it does require establishing quality benchmarks and collecting, measuring, and reporting results on behalf of the organization. Another diminishing factor is its failure to address high prices, resulting in a potential burden on care providers in the case of negative outcomes. Improvement in outcomes and efficiency have failed to substantiate for an extended period of time with most P4P systems.

The report provided numerous incentive programs within the P4P model:

  • End-Stage Renal Disease Quality Incentive Program
  • Hospital Value-Based Purchasing Program
  • Hospital Readmission Reduction Program
  • Hospital-Acquired Condition Reduction Program
  • Skilled Nursing Facility Value-Based Program
  • Home Health Value-Based Purchasing Model

Bundled Payment and Episode-Based Payments

Bundled payments are a type of payment that covers multiple healthcare services, especially if those services had previously been paid for separately. Models utilizing this payment option are seen as a midway service between FFS and capitation payment models, in which all services from all providers for a given period in a single bundle can potentially lead to dramatic changes in what services are delivered, how they are delivered, and who delivers them.

Episode-based payments, a payment model related to bundled payments and developed by CMS in the Affordable Care Act (which is currently awaiting a decision on its constitutional legality), serves to improve patient care while decreasing costs to Medicare. The primary aim of these episode-based payment models is to eliminate the fluctuation of cost disparities found for the same procedure. Various models, such as the Bundled Payments for Care Improvement Advanced Model, Comprehensive Care for Joint Replacement Model, and Oncology Care Model all implement bundled payments into their models in distinguishable ways.

Accountable Care Programs Model

The accountable care payment model operates by rewarding providers who reduce total healthcare spending on their patients below an expected level set by the payer. These models, which often combine with existing payment models such as FFS, P4P, bundled payments, or capitation, additionally require those unable to achieve financial benchmarks to compensate the payer for at least some of the loss. This concept is represented as risk sharing, in which parties share the financial risk and create incentives to promote efficient, low-cost care. Both shared savings and shared risk programs are attributed to risk sharing.

In a shared savings program, there are no changes to how providers are paid for the services given, where billable services for reimbursements continue to be billed and paid for and those that cannot be billed for payment will not be reimbursed. Shared risk models, in contrast, serves as the next step in risk sharing, in which providers are both incentivized to create high quality, low cost networks and disincentivized to maximize services provided to receive greater reimbursements.

Accountable care payment models include the Medicare Shared Savings Program and Comprehensive Primary Care Plus.

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