Value-Based Care, Bundled Payments, & Direct Contracting
What is Value-Based Care? The Shift from “Volume to Value”
At the 2018 Patient-Centered Primary Care Collaborative Annual Conference, Secretary of Health and Human Services (HHS) Alex Azar stressed that payment systems should reward outcomes and prevent or effectively cure diseases long before they cause unnecessary suffering and cost. This emphasizes the move to a value-based care system as a top priority for the current administration.
The concept of value-based care is that providers are rewarded financially for helping their patients stay healthy – instead of financially rewarded by increasing fee-for-service payments they prescribe when their patients get sick. As an example, providers should be paid more if the patient walks out of the hospital door, and less if the patient gets discharged in a wheelchair. In hopes of better outcomes at a lower cost, value-based shifts the care delivery focus from volume to value. The central goal in health care must be value for patients, not access, volume, or convenience.
What are Bundled Payments? Striking the Risk Balance
The Centers for Medicare & Medicaid Services (CMS) has recently introduced an array of value-based care models, such as the Medicare Shared Savings Program and Pioneer Accountable Care Organization (ACO) Model. Private Payers have in turn adopted similar models of accountable, value-based care.
Among different payment models, the “Bundled Payment” model appears to be most attractive as it strikes a balanced financial risk – not too risky for losses but has a better grasp of driving well-defined outcomes.
In contrast to traditional fee-for-service payments where providers are paid separately for each service, value-based Bundle (or episode-of-care based) payment covers all the care a patient receives during treatment for a specific illness, condition, or medical event. In this model, physicians must think about the entire patient experience among all care settings and between episodic visits.
From a cost perspective, the total cost of care encompasses all spending for the patient — grouped, benchmarked, and analyzed by condition. The unit analysis for creating and measuring value is the treatment of a patient’s “medical condition” over a complete “cycle of care.”
The Rise of “Direct-to-Employer Contracting”
“Direct-to-Employer Contracting” are Bundled Payments created directly by the Employer and Provider, bypassing any Payer/Insurer. Instead of waiting for Payers to embrace value-based care models, some employers are seeking out predictable multi-year agreements directly with providers (hospitals and health systems) that include bundles for episodes of care.
Direct-to-provider contract arrangements are attractive to employers given that their spending continues to rise even though patients are using less healthcare and adhering to treatment regimens.
In direct contracts, employers can define their own plans/bundles, and the emphasis is on a narrowly defined bundle offered to high-quality health systems that agree to take discounts. It allows employers to negotiate bundled case rates with provider organizations, which is a huge benefit for companies looking for ways to achieve healthcare savings.
Providers, likewise, revel in innovative partnerships with employers to operate more efficiently outside of a health insurance companies’ narrow rules. They get a guaranteed group of patients with known health risks and costs and able to share in savings if they end up delivering care at a cost lower than the employer budgeted bundles. Likewise, doctors revel in more flexibility administering care that they believe is necessary for a patient without fighting through red tape and prior authorization.
On the other hand, for direct contracts to thrive, employers need to have at least a few thousand employees concentrated in one area, and hospital systems need a large physician network and a breadth of ambulatory and specialty-care services. Providers need to be prudent in setting accurate benchmarks on both patient outcomes and bundled cost, or they’ll be exposed to financial risk.
Clinical Consulting and Technology Services
Shearwater Health, known for Clinical Process Outsourcing (CPO®), helps healthcare organizations with their “pain-areas” by deploying a team of highly skilled nurses to support wide-ranging services ranging from tedious administrative tasks to complex clinical processes. All Shearwater nurses have a background in bedside nursing with an active American healthcare professional credential.
Here are some “patient-outcome” improving programs our teams perform.
Shearwater Health understands the trenches of running a healthcare business with its complex processes along with the changing trends and regulatory standards. That’s why Shearwater developed business transformation services from project redesign, to bridging gaps, as well as deep-dive forecasting and controls, business analysis, assumption-based monitoring, and RPA intelligence, which can be customized independently or as complementary to CPO®.
If these sound like solutions that could help you address burden in your processes, call our team. We have a scalable, clinical, and cost-efficient solution that immediately gives you value.
Contact us now to see how Shearwater Health can help you achieve your desired outcomes.