Like nearly everything else, the health care industry experienced a wide array of challenges and changes due to the COVID-19 pandemic. Some physician practices shuttered and many saw marked declines in revenue; hospitals and health systems postponed many types of elective procedures; overworked doctors and nurses in overwhelmed urgent care and intensive care units switched gears to treat coronavirus patients; and telehealth rapidly became a primary source of care.
Besides all of these disruptions, the pandemic also seems to have halted – or at least delayed – progress in the transition to value-based care, the pay-for-performance model that aims to improve quality and outcomes for patients.
Many health care industry experts in the United States are unsure when revenue levels, patient volume and operational efficiency will return to pre-pandemic levels and allow for value-based care efforts to recommence. Nearly half of respondents to the 2020 Value-Based Care Assessment report believe it will take a year for patient volume and operational performance to stabilize.
Even before the COVID-19 outbreak, physician compensation continued to emphasize volume over value. In 2020, 97% of U.S. doctors relied on fee-for-service and/or salary for their compensation, while 36% also drew compensation from value-based payments. Similarly, the proportion of physicians (23%) who receive performance bonuses of more than 5% also hasn’t changed over the past few years.
Improved provider performance
Why is the move to value-based care so important for the U.S. health care industry? It’s designed to improve financial and clinical performance by paying providers for value instead of volume, offering incentives to providers for meeting quality and performance measures. The shift is possible and achievable in part because of the influx of data from electronic health record (EHR) systems and the emergence of other technology tools.
Although the goal of the Centers for Medicare & Medicaid Services is to move 100% of Medicare providers into two-sided risk arrangements and half of its Medicaid and commercial contracts into value-based models by 2025, less than 20% of Medicare spending is currently value-based. The key drivers of the transition to value-based care include a rise of consumerism in health care, the emergence of new technologies, importance of achieving the Quadruple Aim and emphasizing preventive care while reducing unsustainable health care costs.
Complex financial challenges
Health care providers that participate in value-based payment models and identify alternative payment opportunities experience a smoother transition to value-based incentives, but there are obstacles to attaining this objective. The top four solutions to overcoming barriers to value-based care are yielding better data from EHRs, better aligning managed care executives with physicians, developing quality metrics, and co-investing in health information technology.
Another hindrance for providers and other health care organizations is dealing with revenue cycle efficiencies. Approximately fifteen cents of every U.S. health care dollar goes toward these inefficiencies, resulting in an increased number of billing errors, slower payment, lost revenue and unnecessary administrative time and expense. Combined, these problems put even more financial strain on providers striving to achieve value-based care in an already tight market.
To realize the benefits of value-based care, providers must understand the value-based programs they are pursuing, the risk of loss, and their ability to operate within the one they select. It’s imperative that they utilize one that best fits their organizational workflow and goals. Not every health care provider has the capabilities necessary to make value-based care payments work smoothly, and some will adapt more quickly than others.
Overall, value-based care encourages providers to better manage disease, improve the health of patients with chronic conditions through evidence-based medicine, and reduce costly readmissions. It promotes reduced duplication of services and increased focus on population health management and evidence-based clinical decisions. Plus, health care providers who are able to deliver care efficiently and perform well against quality outcome measures have an opportunity to notably increase their revenue through performance-related bonus payments.
On another level, providers can use value-based care to give feedback on technology such as patient portals and encourage shared decision-making with patients on end-of-life care and treatments, which might otherwise be risky. This communication stimulates engagement between providers and patients, and individuals who are fully engaged in their care are more likely to maintain treatment plans, track their health, and ask their providers questions.
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