101 on VBC

Term Description
Fee-for-service Negotiated or pre-specified unit prices for services, without any regard to quality or value.
Value-based payment Payment (fee-for-service or otherwise) with some linkage to quality, value, or infrastructure.
Alternative payment models (APMs) Advanced forms of value-based payment, in which providers take on substantial financial risk to deliver high-quality care at lower cost.
Accountable Care Organizations (ACOs) An APM in which groups of doctors, hospitals, and other health care providers are responsible for total cost of care for a population of Medicare beneficiaries. If total spending is below a pre-set benchmark and quality remains stable, providers share in the savings. In some tracks, ACOs may pay losses to Medicare if spending exceeds benchmarks.
Types of Risk In VBC, different types of risk include financial risk (cost of care responsibility), clinical risk (quality of care responsibility), and operational risk (efficiency and processes involved with delivering care).
Upside Risk The potential for a healthcare provider to earn additional revenue if they exceed cost and quality targets established in a VBC arrangement.
Downside Risk The possibility of a healthcare provider facing financial losses if they fail to meet the cost and quality targets outlined in a VBC arrangement.
Full Risk In a VBC model, this means the provider assumes complete financial responsibility for both the cost and quality of care for a defined population of patients.
Benchmarking The process of comparing a provider's performance (in areas like cost and quality) to established standards, often based on industry averages or best practices.
Quality Metrics Specific, measurable indicators that track and assess the quality of healthcare services provided.
Time Measurement An essential aspect of VBC tracking performance over time to measure improvement, adherence to care plans, and identify potential areas for intervention.
Risk Adjustment A methodology that accounts for the varying health conditions and needs of patients, ensuring fair comparisons and compensation in a VBC model.
Capitation A fixed, per-member, per-month payment model used in VBC, where providers receive a set payment to cover the care of a patient regardless of the actual services the patient needs.
Resource Description
Patient Must Come First in Value Based Care Dr. Eric Bricker talks on the most important point of VBC.

Source: BHM Healthcare Solutions

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Term Description
ACO REACH The Accountable Care Organization Realizing Equity, Access, and Community Health (ACO REACH) model is a value-based care initiative from CMS focused on improving care for Medicare beneficiaries and promoting health equity.
Comprehensive Payment for Primary Care A primary care APM in which practices receive care management fees, performance-based incentive payments, and, in some cases, lump sum quarterly payments for total allowed charges.
MSSP The Medicare Shared Savings Program (MSSP) is a value-based care program that incentivizes Accountable Care Organizations (ACOs) to provide coordinated, high-quality care to Medicare patients while controlling costs.
Medicaid Managed Care A healthcare delivery system where Medicaid beneficiaries receive their health benefits through contracted managed care plans.
Medicare Advantage Medicare Advantage (Part C) plans are an alternative to Original Medicare (Parts A and B), offered by private insurance companies and providing additional benefits like vision, dental, and prescription drug coverage.
Resource Description
Analyzing the Expanded Landscape of Value-Based Entities Implications and opportunities of enablers for the CMS Innovation Center and the broader value movement. This report has really great figures.
Taking On Risk

Jacob Effron writes about how risk-based healthcare businesses are gaining momentum due to their potential to improve patient outcomes, lower costs, and attract investment, with success most likely for companies that focus on high-cost patients and long-term care relationships.

Key Points
  • Risk-based business models are gaining popularity: Startups offering higher-touch care models that better manage chronic conditions are increasingly interested in taking on financial risk, as opposed to traditional fee-for-service payment models.
  • Drivers of risk-based model adoption: The success of existing examples, favorable government policies, increasing interest from private payers, and strong public market valuations are fueling growth in the risk-based healthcare space.
  • Factors that influence success in risk-based models: Businesses focused on high-cost patients (like those with chronic kidney disease), and those who can maintain long-term patient relationships are more likely to succeed, especially if they have a strong primary care presence for the patient.
Value Based Payment Models - a cure-all?

Health Tech Stack goes through challenges providers may face when introducing value based payment models.

Key Points
  • Value-based payment models aim to shift the focus from quantity of care to quality of care, but may not always reduce administrative burdens for providers.
  • Successful implementation of value-based payments requires upfront investments in IT infrastructure and analytics to effectively track patient outcomes and design cost-saving interventions.
  • Value-based care models may be less attractive to hospitals and specialists who rely on revenue from high-cost procedures and emergency services.
Value-Based Care: The Devil is in the Details

Maitreyee Joshi talks about how value based care models aim to shift healthcare focus from volume of services to quality of patient outcomes, but their success hinges on careful design to ensure accurate metrics, prevent unintended consequences, and avoid providers gaming the system.

Key Points
  • Defining quality metrics is key. How do we measure "value" in healthcare? Current metrics like readmission rates are important, but it's vital to find ones that directly measure quality of life improvements and aren't easily manipulated.
  • Overtreatment risk exists. Even in some value-based models like bundled payments, potential remains for providers to incentivize unnecessary procedures for financial gain. New quality metrics focused on "appropriate use" may be needed.
  • Value-based care can incentivize innovation. As providers take on more responsibility for patient outcomes, this model can fuel advancements in precision medicine, personalized treatments, and rethinking long-held medical practices to improve quality and reduce costs.
What Is Value-Based Care (VBC) and Why Does It Matter to Digital Health Startups? Halle Tecco, as always, provides an expert view of healthcare and in this case specifically VBC.
XPC Interview: Eric Bricker, MD - AHealthcareZ Dr. Kenneth Qiu sits with the legendary Dr. Eric Bricker in Dallas to discuss primary care.

VBC Blueprints

Resource Description
Elevating Quality, Outcomes, and Patient Experience Through Value-Based Care: CMS Innovation Center’s Quality Pathway

The CMS Innovation Center's Quality Pathway aims to improve healthcare delivery by prioritizing patient-focused quality outcomes, emphasizing patient-reported feedback, and strengthening evaluation methods to accurately assess quality-driven model success.

Key Points
  • Quality goals drive model design: The Quality Pathway will ensure models are designed to improve patient outcomes and experience, not just reduce spending.
  • Focus on patient-reported outcomes: The initiative will prioritize patient feedback through validated measures, and potentially invest in developing new ones, to assess model impact.
  • Improved evaluation for quality impact: Evaluation methods will be revamped to better assess quality improvements that go beyond cost savings, potentially using randomized or innovative quasi-experimental designs.
Mercy Virtual Care Center: A deep dive into a virtual hospital

Mercy Virtual Care Center's remote patient monitoring (RPM) program successfully manages complex chronic illnesses (CHF, COPD, etc.) by combining technology (biometric monitoring, surveys) with a high-touch care team. This approach reduces hospitalizations, increases patient satisfaction, and lowers costs.

Key Points
  • Personalized, proactive care: The program prioritizes daily communication and data-driven, individualized care plans for patients with complex chronic conditions.
  • Technology for efficiency:RPM tools like asynchronous messaging and risk-stratification models help staff scale the program, prioritize patients, and reduce unnecessary alerts.
  • Focus on patient experience:High patient satisfaction (NPS 86) reflects the program's emphasis on convenience and strong patient-provider relationships.
Risk Adjustment - the new Revenue Cycle Management?

The CMS Innovation Center is implementing a multi-pronged strategy to enhance specialty care integration within value-based care models, focusing on data transparency, condition-specific models, and incentives for specialist engagement with primary care and ACOs.

Key Points
  • Data Transparency for Informed Decision-Making:The Innovation Center is providing ACOs with “shadow bundles” data on specialty care patterns and costs, and primary care providers with performance profiles of specialists. This transparency aims to improve referral decisions and foster stronger primary-specialty care partnerships.
  • Focus on Acute Episode and Condition-Specific Models: The Innovation Center continues to develop and refine models that incentivize coordinated care for specific conditions and acute episodes of care (e.g., BPCI Advanced, GUIDE, EOM, and KCC models).
  • Integrating Specialists with Primary Care for Accountable Care: The Innovation Center is exploring ways to encourage specialist engagement within ACOs and primary care-focused models like MCP. This includes providing data, fostering partnerships through models, and developing specialist-focused value-based care initiatives.
The Future of Value-Based Payment: A Road Map to 2030

A white paper by folks at UPenn on the road map of VBC to 2030.

Key Points
  • A decade after the Affordable Care Act was passed, there has been partial realization of the vision to move the U.S. health care system from volume to value. This is because new value-based payment initiatives have been systematically reducing volume to value spending.
  • Although participation in value-based payments is growing, the adoption of advanced forms of value-based payment through alternative payment models is lagging behind the goals that were set by the Secretary of Health and Human Services in 2015.
  • The complexity of the current alternative payment models and the allure of traditional fee-for-service are preventing widespread adoption of full risk-bearing contracts.
Value-Based Care: Ochsner Health Has Real Hospital Success Dr. Eric Bricker on Ochsner Health's VBC success.

Quality Metrics/Technology

Resource Description
CMS Innovation Models The CMS Innovation Center develops and implements payment and service delivery models (pilot programs) and conducts Congressionally-mandated demonstrations to support health care transformation and increase access to high-quality care.
EP359: Value-Based Payments—You Get What You Pay For, With Dan O’Neill In this episode of Relentless Health Value Podcast with Dan O’Neill, they go through where we’re at on the continuum of value-based payments and how those payments are impacting the care, value-based or otherwise, that is incentivized by those payments.
HEDIS measures for behavioral health: what are they and why clinicians should care

Eleos Health provides information about how HEDIS behavioral health measures are crucial as they standardize care quality, emphasize client follow-up for better outcomes, and influence funding decisions to support behavioral health services.

Key Points
  • HEDIS Measures Drive Standardization and Improvement: HEDIS measures set a benchmark for behavioral healthcare delivery, ensuring consistent quality for consumers across different healthcare systems.
  • Client-Focused Outcomes: Many HEDIS behavioral health measures track client follow-up and monitoring. This focus helps prevent individuals from "falling through the cracks" and ensures timely interventions.
  • HEDIS Drives Funding: Since HEDIS scores are publicly available, organizations demonstrating quality care are more likely to receive funding, supporting investments in behavioral health services.
Medicare Value-Based Payments Explained Dr. Eric Bricker goes through hospital Medicare payments.
Risk Adjustment - the new Revenue Cycle Management?

The Health Tech Stack talks about how risk adjustment is becoming increasingly important in healthcare as value-based payment models gain prominence, ensuring fair compensation for providers and mitigating market failures within these models.

Key Points
  • Risk Adjustment is Key for Value-Based Payment: Risk adjustment models are crucial for the success of value-based payment (VBP) models. They compensate providers fairly by considering the varying health risks and expected costs of their patients.
  • Mitigating Market Failure: Without risk adjustment, VBP models risk adverse selection where only high-risk patients remain in the system. Risk adjustment helps create balanced patient pools and ensures program viability.
  • The Rise of Risk Adjustment Expertise: As VBP gains traction, risk adjustment departments are becoming as important as revenue cycle management. Accurate risk scoring and reporting are now directly linked to provider profitability.
Why Quality Measures Don’t Measure Quality

The Center for Healthcare Quality and Payment Reform argues in this article that current healthcare quality measures are flawed, potentially harming patients and reducing care quality, and advocates for a patient-centered approach focusing on individualized care and outcomes that matter to patients.

Key Points
  • Current quality measures don't reflect good care: Measures like the HbA1c for diabetes focus on arbitrary thresholds, failing to consider if a patient received appropriate treatment or improved their health.
  • Quality measures worsen care, not improve it: These measures can steer patients to the wrong providers, reward lower-value care, and reduce access to care for those who need it most.
  • Solution: Patient-centered quality measurement: Focus on whether patients receive individualized, evidence-based care and if the services they receive address the outcomes *they* prioritize.

Contracting

Resource Description
How Value-Based Care Contracting Works with Accorded Out-Of-Pocket breaks down how Accorded streamlines value-based care contracting. They use actuaries & software in a 3-step process: quantify savings, propose arrangements, track performance. This empowers providers, but Accorded faces challenges like balancing tech vs. service, competing with big names, and the uncertain future of value-based care itself.
Payer Contracting Best Practices for Virtual Care Companies

Morgan Cheatman provides a roadmap for virtual care companies to successfully navigate payer contracting, emphasizing the need to validate their solution's impact, build strategic relationships with payers, and make data-driven pitches.

Key Points
  • Validate Your Solution's Impact: Before approaching payers, demonstrate the value of your solution using community engagement, actuarial studies, and by highlighting how it integrates with existing care models.
  • Get Your Foot in the Door: Build strong relationships with health plan executives through warm introductions, industry conferences, and by understanding payer priorities.
  • Pitch with Data: Lead with the effectiveness of your solution, backed by outcomes data (even if gathered from a cash-pay model), demonstrate a multi-state presence, and consider leveraging employer channels to gain a payer's attention.
Risk-based Contracting for Value-based Care

Justin Larkin and Julie Yoo at a16z highlights the importance of carefully deciding when to take risk, finding aligned partners, and scaling with data-driven insights for success in risk-based contracting.

Key Points
  • Deciding When to Take Risk: Founders should carefully consider the right amount of risk for their business model (fee-for-service, subcapitation, or global capitation). A phased "glide path" to risk is often wise, building a strong foundation of outcomes data before taking on greater financial responsibility.
  • Partnering for Success: Early success hinges on finding partners who share a long-term vision for value-based care and are aligned around clinical areas of impact. Building broad coalitions within partner organizations is key to navigating complex health plans.
  • Scaling with Data-Driven Insights: Define success metrics with partners upfront, focusing on what matters most to them (e.g., affordability, validated clinical measures). Even before final outcome data is available, establish upstream process and operational metrics to gauge progress and inform scaling decisions.

Push back/Obstacles

Resource Description
Why Hasn’t Value-Based Care Delivered on Its Promise at Scale?

The article argues that value-based care has not achieved its goals at scale because it has a narrow definition of cost, ignores patient needs, and focuses on the wrong measures of quality.

Key Points
  • Incomplete cost definition: Value-based care only considers reducing medical expenses, neglecting administrative and patient-hidden costs.
  • Missing patient perspective: Current models overlook patient needs and incentives, hindering their participation in value-based care initiatives.
  • Quality illusion: Emphasizing process measures like completed screenings creates an illusion of improved quality; true quality should be measured by clinical outcomes.
Association of Primary Care Engagement in Value-Based Reform Programs With Health Services Outcomes Participation and Synergies

The authors of the article argue participation in healthcare reform programs offers some benefits, but limited overall impact on patient outcomes suggests a need for better alignment among program goals and requirements.

Key Points
  • Limited Synergies: While participation in multiple reform programs (such as Meaningful Use, Patient-Centered Medical Home, and Medicare Shared Savings Program) can produce some positive results, the overall impact on patient outcomes was limited.
  • Positive Impacts: Some benefits were observed. Reform program participation was linked to lower rates of ambulatory care sensitive hospitalization, improved diabetes care guideline adherence, and modest reductions in Medicare spending.
  • Need for Alignment: Greater synergy and impact on healthcare outcomes may be achievable by better aligning the goals and requirements of different reform programs.
Association of Primary Care Engagement in Value-Based Reform Programs With Health Services Outcomes Participation and Synergies

The authors of the article argue that despite a shift towards value-based payment models, physician compensation in health systems remains heavily focused on volume of services delivered rather than quality and cost.

Key Points
  • Volume vs. Value: Health systems are adopting value-based payment models from payers, but physician compensation within those systems still heavily emphasizes volume (number of services provided) over value (quality and cost).
  • Limited Value-Based Incentives: While quality and cost-related incentives are present in health system physician compensation plans, their impact on total compensation is relatively small.
  • Mismatched Incentives: Despite payer focus on value, physician compensation structures within health systems don't show the same shift, creating a potential misalignment of incentives that could hinder improvements in healthcare value.
The Obstacles To Value-Based Care

Out-Of-Pocket highlights that the shift towards value-based healthcare faces obstacles due to misaligned financial incentives, operational hurdles in implementation, and fundamental questions about how to define value and incentivize care for complex patients.

Key Points
  • Mismatched Incentives: Fee-for-service dominance hinders wider adoption of value-based models, despite industry focus on the latter.
  • Operational Hurdles: Implementing value-based care involves challenges like setting fair benchmarks, defining patient populations, and managing cross-provider data sharing.
  • Fundamental Questions: The industry needs to address issues like balancing incentives for sicker patients, prioritizing long-term prevention, and defining the core meaning of "value".
Value-Based Care: Business Case AGAINST It Dr. Eric Bricker talks about the misaligned incentive to bill FFS when it may benefit providers more than VBC payment.
Value based care – reality, promise or a myth? (Part 1)

Nadav Shimoni writes that value-based care models promise improved healthcare quality and cost reduction, but their widespread success faces challenges due to the dominance of fee-for-service models and difficulties in accurately defining and measuring "value."

Key Points
  • Value-Based Care: Promise vs. Reality

    Value-based care (VBC) intends to improve healthcare quality and reduce costs, but its success in widespread implementation is debated.

  • Fee-For-Service Still Prevails

    Despite focus on VBC, most healthcare payment models remain grounded in fee-for-service (FFS) with limited VBC components.

  • Challenges of Measuring 'Value'

    Defining and accurately measuring "value" in healthcare is a core obstacle for VBC. Focusing purely on reducing utilization may not guarantee better outcomes or cost savings.

Podcasts/Channels/Newsletters to Follow

Resource Description
AHealthcareZ AHealthcareZ is Healthcare Youtube videos finance explained with Eric Bricker, MD.
Friends of Project Healthcare Friends of Project Healthcare is a podcast that sheds light on the entire ecosystem of support available for founders and entrepreneurs reinventing great healthcare and health tech solutions with Eric Thrailkill.
Hospitalogy Hospitalogy is a newsletter with expert analysis on healthcare M&A, strategy, finance, and markets with Blake Madden.
Relentless Health Value Podcast The Relentless Health Value Podcast connects you with other healthcare leaders trying to achieve the quadruple aim of improving population health and patient and provider experience, while managing costs effectively with Stacey Richter.
The Heart of Healthcare The Heart of Healthcare podcast gets to the heart of our mission in digital health — to massively improve healthcare for all with Halle Tecco, MPH, MBA and Steve Kraus.