Kimberly Westrich, MA, vice president of health services research at the National Pharmaceutical Council, discusses the shift to a value-based system from a fee-for-service one and how the health care system can incentivize high-value care.
Value-based payment and value-based benefit are 2 ways the health care system can incentivize high-value care when shifting away from fee-for-service (FFS) care, said Kimberly Westrich, MA, vice president of health services research at the National Pharmaceutical Council.
Westrich recently participated in a panel discussion at the National Alliance 2021 Annual Forum titled, “Building Better Benefits: Rethinking Value-based Benefit Design.”
Can you speak on the evolution of value-based benefit design in recent years? How has benefit design changed to incentivize value-based care?
I think it's helpful to start with a definition of what value-based benefit design is and how it fits into the broader ecosystem of value-based care. So, our health system has been evolving from an FFS system to a value-based system for a number of years now. And what is that?
In an FFS system, you get paid by service. So, a doctor, for example, will be paid by the number of surgeries that are being performed, with no consideration for the outcome of the surgeries per se. So that incentivizes more surgeries.
In a value-based system, we would also be looking at the outcome of the surgeries. Did the patient have the expected outcome? Did they get better? That's high-value care. Did the patient not have the expected outcome? Maybe they had an adverse reaction or a complication. In that case, that could be low-value care.
Now, we don't always know ahead of time what patients are going to have a positive outcome or a negative outcome, but sometimes we do. And when we are able to predict what's high-value care and what's low-value care, that's when we can effectively start moving away from FFS and toward value-based care.
When we can identify what high-value care looks like, then we can start building incentives into the system to help nudge us in the direction of high-value care. There's 2 ways that we can do that.
One way is value-based payment. Value-based payment might look like an accountable care organization, where you have a group of providers who are paid based on their cost and quality outcomes. Or it might look like a value-based agreement, where reimbursement for a medicine or a service is based on an agreed upon outcome. That's value-based payment.
There's also value-based benefit design. In value-based benefit design, you can put incentives into the benefit structure to help nudge us in the direction of high-value care. So, for example, preventive services that are covered with no co-pay, like an annual wellness exam, that's a benefit design that nudges us towards high value. Another example is generic medications, which have a lower co-payment than their equivalent brand medication.
So, as we're moving toward value-based care, if we can all agree on what constitutes high value, what quality metrics can be used to assess that value, then we can effectively design both benefits and payment mechanisms to move us toward that world of value-based care.