Value-based care is all the rage in health care system transformation. Promising in concept, value-based care initiatives aim to reward value over volume, shifting our understanding and practice of delivery and payment reform. These efforts received governmental support in 2015 via the Medicare Access and CHIP Reauthorization Act (MACRA), which launched a myriad of quality improvement/clinical practice transformation efforts. MACRA fundamentally redefined how care is delivered and paid for (at least by Medicare). This schematic of delivery and payment reform challenged the prevailing fee-for-service structure. It directs a conversation about the broader notions of what we value in a value-based system of care.
Orientation to and prioritization of health outcomes are central themes of the discourse about value-based care. In an outcomes-based approach, more weight is placed on measuring the value of improved health outcomes as opposed to just output. This approach motivates the focus of payment innovation by stimulating progress in infrastructure, data integration, and policy that is more supportive of improvements in quality and effectiveness.
Even before MACRA, President Obama’s Office of Social Innovation responded to this gradual shift by supporting a more outcomes-driven government and social sector through the application of data and evidence to social policy to better understand what works (at scale) and to reconsider funding for programs that simply prioritize inputs or process compliance. For example, outcomes-focused principles would indicate the importance of measuring whether enrollees in a job training program actually gain stable employment rather than reporting program attendance. In this type of system, effectiveness determines investment. These services should be responsive to the unique needs of patients and communities and thus, adaptable in the organization, coordination, provision, and payment to address the multifaceted needs specific to patient populations. Determining “what works” will need to be aligned with local health needs to support a successful transition to outcomes-based healthcare.
The Medicare Quality Payment Program incentivizes participation in advanced alternative payment models. Such models organize payment for services based on performance and facilitate the delivery of care tailored to the needs, values, and culture of the patient population. Demonstrating improvements in health outcomes in an alternative payment system values a holistic orientation to care and accountability on behalf of providers through the practice of patient-centered care.
Delivery models such as the Patient-Centered Medical Home (PCMH) ushered in the development of corresponding payment reform in an alternative system. Given the diversity of patient needs, adopting such delivery models can restructure payment by facilitating collaboration with other partners that influence health beyond the clinical scope. The implementation of Delivery System Reform and Incentive Programs (DSRIP) in states across the nation prompted innovation in delivery system transformation. Subsequent reform to meet patient need under such transformative efforts led to the growth of Health Homes, Medical Homes, and Accountable Care Organizations (ACO). The collaborative delivery structure of these programs and organizations stimulates compensation models to produce the best value for their patients and achieve performance goals in these transformative delivery systems.
MACRA, DSRIP, PCMHs, and ACOs promote and incentivize better integration of community resources in coordinating care to meet program and system objectives, such as reducing avoidable emergency room and hospital utilization. Critical to determining the success of these efforts is understanding how to assess outcomes and restructure measurement to value evaluation and performance. Innovation in this area is predicated on the achievement of outcomes rather than compliance or audit activities. This thinking brings new ways of paying for achievement, such as pay-for-success models that align funding with services or programs that achieve better outcomes by actually making a difference in the lives of those who are served.
The contracting of pay-for-success models ties payment for service to demonstrable outcomes, steering a movement that ensures services are working for individuals and communities beyond the volume-based system of service rendering.
It is worth noting that this approach often takes a long time to show meaningful (and positive) change — longer than the typical time frame allocated by contractual arrangements between payers and service providers. Fully realizing the impacts on improved health outcomes might occur several years after the traditional fiscal year or insurance contract. Moreover, it will require a sustainable infrastructure with investments from non-traditional community leaders, affordable housing, real estate, community development financial institutions, banks, and others. Determining effectiveness will require an honest assessment of program or intervention performance. In this regard, the efficient use of dollars provokes dedication to meaningful progress in improving population health and not merely the provision of services, reinforcing the core motivations of this system.
The transition to value-based payment will prompt major system changes in the operational and financial capacity of organizations, along with a potential political commitment to outcomes-based accountability. The efforts thus far have been supported by policy and signal a shift in our thinking and valuation of health.
As we continue to make progress in this movement towards value-based care, the financing and delivery mechanisms that will be most conducive to improving health outcomes will value addressing the fundamental causes of illness. More often than not, these determinants are upstream and stem from social and environmental factors. Therefore, the value of an agenda that is supported by investment in social change will spur conversation and commitments to a population or system-level focus on improving health outcomes. This focus will increase in relevance as providers, insurers, and legislation recognize the influence of sectors beyond healthcare.
Further, delivering on improved health outcomes has the potential to incentivize addressing underlying causes of infirmity through collective impact, transcending the cost reduction objectives of the movement. I am hopeful that incremental reform will pave new insights for value-based care through a population lens with a strategic eye on how legislation will guide this transition to transformative change.
Nicole Pereira