A Guide to Value-Based Care and Managed Care's Role in it for Healthcare Providers

Value-based care is a healthcare delivery model that represents a significant shift from the traditional fee-for-service approach, where providers were reimbursed based on the volume of services delivered. Under value-based care, the focus transitions to rewarding providers for delivering high-quality care that improves patient outcomes and reduces overall healthcare costs. This model incentivizes providers to invest in preventative care, chronic disease management, and ensuring patients receive the most appropriate treatment for their conditions rather than simply focusing on the quantity of services rendered.

According to the tenth annual Value-Based Care Report released by Humana, value-based care is a smarter healthcare approach that reduces costs and keeps Medicare Advantage members healthier. The report shows that value-based care patients were less likely to spend time in the hospital, with 30.1% fewer inpatient admissions compared to Original Medicare beneficiaries in 2022^[1]. By emphasizing preventative care, healthcare providers can identify and address potential health issues early on, often before they become more serious and expensive to treat. This proactive approach not only improves patient health but also reduces the overall financial burden on the healthcare system.

Additionally, value-based care models often reward providers for achieving specific quality benchmarks, such as reducing hospital readmissions, improving patient satisfaction scores, or keeping a patient’s blood pressure under control. This financial incentive structure encourages providers to prioritize patient well-being and deliver care that is both effective and efficient.

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How Does Value-Based Care Work?

While the adoption of VBC is a global trend, certain foundational principles are crucial for ensuring the success of initiatives undertaken in the Middle East.  These principles include:

• Patient-Centered Approach:  The cornerstone of VBC lies in placing the patient at the center of care.  This necessitates a comprehensive understanding of individual patient needs, preferences, and goals.  A holistic view of the patient's care journey fosters improved outcomes, minimizes hospital readmissions, enhances chronic disease management, and ultimately leads to better overall health and well-being.
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• Care Coordination:  Effective collaboration between providers, insurers, and patients is vital within the VBC model.  Seamless coordination is essential during pre-visit planning, patient encounters, and post-discharge follow-up.  Prior to visits, streamlined coordination ensures care managers are well-prepared to engage with patients.  During inpatient care, meticulous recording of every care episode and information sharing across teams exemplifies effective coordination.  Post-discharge, delivering coordinated services fosters medication adherence, reduces readmission risks, and elevates the overall patient experience.
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• Emphasis on Prevention and Early Intervention: A core tenet of VBC is keeping patients healthy.  The model compels providers to adopt a proactive approach, emphasizing preventative measures and early intervention strategies.  This proactive stance aims to prevent costly and avoidable complications that can disrupt a patient's care journey.
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• Data-Driven Care:  Data plays a central role in various aspects, from tracking and measurement to auditing, projections, and beyond.  VBC emphasizes heavily on data analytics to identify trends, patterns, and areas for improvement.  This analysis leverages comprehensive patient data across multiple levels, offering insights that can be scaled from the population level down to individual patients.
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• Results-Driven Care:  This core principle links provider compensation to achieving positive patient outcomes at sustainable costs.  Patient outcomes encompass factors such as ease of access to health data, overall experience with the provider, and other aspects that contribute to patient value.

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Different types of Payment Models used in Value-Based Care:

1. Accountable Care Organizations (ACOs): These are provider-led groups focused on primary care that take responsibility for the quality and cost of care for a patient population. They sign agreements with CMS or private payers to meet specific quality, cost, and patient experience benchmarks, aiming to achieve quality, cost, and patient experience (The Triple Aim).
   ACOs foster collaboration among practitioners to improve population health through patient-centered care, care coordination, and risk-based patient engagement. By promoting team-based care and reducing care variations, ACOs aim to minimize duplication and errors, enhancing overall care quality.
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2. Bundled payments: These consolidate all services provided to a patient within a specific episode of care into a single payment. This approach defines a period during which a patient receives treatment for a particular health condition or need. Providers receive a predetermined price based on historical costs; they bear responsibility for costs exceeding this amount and benefit from savings below it. The aim is to standardize care practices across patients in the same episode, reducing variation and improving coordination and efficiency. Bundled payments, seen in initiatives like CMS's Comprehensive Care for Joint Replacement and Bundled Payments for Care Improvement, demonstrate the potential for enhancing healthcare quality and outcomes while containing costs. Monitoring quality remains crucial to ensure optimal care standards are maintained.
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3. The Patient-Centered Medical Home (PCMH): It is a value-based care model where a primary care physician coordinates comprehensive care in a centralized setting tailored to patient needs. This model emphasizes personalized, relationship-based care, integrating medical and environmental factors into treatment decisions.
   Key characteristics of the PCMH include comprehensive care, patient-centeredness, care coordination across the healthcare system, accessible healthcare services, and a focus on quality and patient safety. 
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4. Capitation: This is a payment model where healthcare providers receive a predetermined amount per patient over a specific period, regardless of the services provided. This fixed payment, set in advance based on past spending patterns (prospective capitation), remains constant throughout the contract. Providers keep any savings but also bear the full financial risk, making it one of the riskier forms of value-based care.
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5. ‍Shared risk models: Also known as two-sided risk models, involve payment agreements where providers share in both savings and losses. In shared savings plans, providers earn bonuses if they meet quality and spending targets, sharing savings with payers without facing penalties for exceeding spending goals. Shared risk plans offer potential for greater financial rewards but also entail the risk of significant financial losses. Success in these models requires providers to understand and manage care costs effectively, leveraging data and engaged physician teams to drive decisions. Organizations with experience in other payment models can use this foundation to establish a robust infrastructure for managing risk effectively in two-sided risk models.

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Managed Care and its Role in Value-Based Care:

Managed care plans are health insurance arrangements that emphasize cost control while maintaining quality care.  They achieve this by establishing networks of contracted healthcare providers and facilities who agree to deliver services to plan members at pre-negotiated rates. The extent of coverage provided by the plan depends on the specific rules and guidelines established by the network.  In essence, one benefits from potentially lower costs by utilizing providers within the plan's network. Within Medicaid programs, states leverage contracts with Managed Care Organizations (MCOs) to deliver healthcare benefits alongside additional services to Medicaid beneficiaries.  These MCOs provide enrollees with access to their established provider networks and facilitate care coordination, ensuring a streamlined experience for patients.

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Value-Based Care Integration:

MCOs typically adopt a value-based care approach, often employing capitation models within their contracts.  Under this model, MCOs receive a fixed monthly payment to address the healthcare needs of their assigned beneficiaries.  Similar to other value-based care arrangements, states assess MCOs based on quality metrics and patient outcomes achieved.

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Advantages of Managed Care:

Compared to traditional fee-for-service Medicaid plans, managed care offers several benefits:

• Population Health Focus:  Managed care plans incorporate population health initiatives, specifically addressing chronic disease management needs within the beneficiary population.
• Quality Incentives:  The financial structure of managed care incentivizes MCOs to deliver high-quality care, as their compensation is directly linked to positive patient outcomes.
• Value-Based Approach:  The integration of value-based care principles ensures that MCOs prioritize cost-effective healthcare delivery while maintaining quality standards.

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Benefits of Value-Based Care:

1. Patients achieve better health outcomes at reduced costs: Value-based care models aim to cut patient healthcare costs while boosting health outcomes, particularly for managing chronic diseases like cancer, diabetes, hypertension, COPD, and obesity. They emphasize quick recovery and prevention, leading to fewer appointments, tests, procedures, and lower spending on prescriptions as patient health improves over time.
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2. Providers achieve streamlined operations and enhanced patient satisfaction: Providers allocate more time to preventive patient services under value-based care, reducing their focus on chronic disease management. This shift enhances quality and patient engagement metrics by prioritizing value over volume. Unlike capitated payment systems, providers avoid financial risks. Even for-profit providers can benefit from generating higher value per care episode within this model.
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3. Payers manage costs and mitigate risk: Payers manage costs and reduce risk by spreading it across a larger patient base. A healthier population with fewer claims reduces strain on premium pools and investments. Value-based payments enhance efficiency through bundled payments that cover the entire care cycle or extended periods for chronic conditions.
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4. Suppliers adjust pricing based on patient outcomes: Suppliers gain from aligning products with improved patient outcomes and lower costs, a significant advantage amid rising national healthcare spending on prescription drugs. Stakeholders in the healthcare industry urge drug manufacturers to link prices directly to the value they provide to patients, facilitated by advancements in personalized therapies.

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Conclusion

Value-Based Care represents a transformative shift in healthcare delivery, focusing on improving patient outcomes while controlling costs. By emphasizing preventive care, chronic disease management, and aligning provider incentives with patient health outcomes, these models enhance efficiency and quality across the healthcare system. Managed care organizations play a crucial role in implementing these models, fostering coordination and prioritizing population health. Meanwhile, suppliers are encouraged to innovate and align their products with positive patient outcomes, driving further advancements in personalized therapies. As stakeholders continue to advocate for pricing models tied to patient value, the future of healthcare promises greater sustainability, improved patient satisfaction, and better overall health outcomes for all.

If you are a healthcare provider and wish to learn more about Value-Based Care and the role of Managed Care in it, feel free to write to us at partnerships@homrcm.com.

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^[1]https://press.humana.com/news/news-details/2023/

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