How Value-Based Care Accelerates Healthcare Innovation

Over the course of this series, we explored the origins of value-based healthcare, examined the impact of value-based care on cost and quality of healthcare, and pondered how value-based care can solve healthcare inequities. In this last installment, we will look at its role in innovation.

Value-based care is becoming the dominant approach in healthcare and will be here for a long time to come. However, there’s some concern that value-based care might stifle innovation; that by shifting risk to providers and away from insurance companies, providers will become more hesitant to try out new, innovative ways to address care.

Some of these concerns are valid. If a program focuses purely on checking the box on process quality measures, they may fail to focus on the outcome and the necessary prescription of how the care needs to be delivered. While there are instances where a focus on quality measures might be necessary, such as for certain disease states, many value-based programs are more concerned with the outcome of the care than how the care was performed. For example, until recently Centers for Medicare and Medicaid Services (CMS) stated that certain procedures, many in their Bundled Payments for Care Improvement Advanced (BPCIA), were only able to be performed in an inpatient setting. However, studies have shown that for a large portion of the population, that setting might not always be the best option. Ambulatory surgery centers are proving to have lower and potentially avoidable negative outcomes along with improved patient satisfaction for procedures such as knee replacements and angioplasties. In an attempt to ensure quality care for their patients by focusing on the process, CMS inadvertently prevented providers from making a different, and better choice for their patients.

Fee-For-Service Limits Innovation

Limits on technologies such as telehealth and cancer genetic testing reimbursement through the fee-for-service model has the same effect on limiting innovation in healthcare. Payers are slow to adopt new technology in a fee-for-service realm because they have seen how it can be abused. A major reason why prior authorizations exist is to slow the course of care to ensure that it is actually necessary for the patient. This, in part, is because of the poor incentives in play with fee-for-service. However, when risk is shifted to the provider, the need for these types of checks become moot. This frees up providers to do what they think is best for the patient, with the focus on ensuring a positive outcome.

Value-based care, on the other hand, encourages precision care advancements as the fastest way to ensure the desired outcome. For example, let’s assume a $1,000 test can successfully determine the right approach to a cancer treatment, while the “standard” approach will only have a 40% initial success rate. Navigating patients through the standard approach would ensure that many of them will cycle through several different expensive medications and approaches before landing on the right match. If these patients had simply received the more expensive test to begin with, it would have saved time, money, and effort for all involved. Under a fee-for-service approach, though, that test is viewed as an additional cost since it has yet to be proven in the data to lower the overall cost. As a result, despite the quite substantial benefit to the patient, payers might be slow to pay for such a procedure. The focus in this scenario is the financial aspect – the upfront cost of the test is significant. But for a physician who is trying to ensure the best outcome for their patient in a cost-effective manner, they might read the initial literature and be willing to partner with the test company to try this approach. The physician can negotiate outside the standard insurance realm, freeing the test company from performing additional administrative billing outside of standard invoicing, with the test results being sent to the physician. This process allows the physician to improve their quality scores, lower their overall total episode cost, and improve patient satisfaction. There are companies out there helping physicians do exactly this, specifically in relation to cancer treatment. This innovation is driven by both giving control to the provider to manage their patient’s care in a real way, while avoiding the downsides of the fee-for-service world.

Value-Based Care Data Exchange Provides Real Insights

Value-based care is also extremely innovative in that it encourages open communication. This sounds like it should be the standard across care, but it has not been the norm in the industry; in fact, data sharing has been problematic. Let’s remember that a law had to be put into place to allow patients access to their own records and to allow sharing with other providers. Add to this that Electronic Health Records (EHRs) are very proprietary and highly customized, which causes data sharing to be both difficult and complex. Value-based care makes it crucial to focus on solutions to address these complexities. As new technologies look to allow EHR data to be shared across platforms, using formats such as HL7 and FHIR, near real-time communication becomes possible with not only providers but also payers. Value-based care encourages payers to share all of a member’s claims records that are attributed to the provider, so they can see a full view of their patient. New companies have come about to help support this data exchange between providers and payers, allowing not just for a method to manage the data, but also the ability to provide real insights that can be quickly given to the attributed provider. This gives the provider real, actionable data to help ensure the best care for their patient.

Value-based care has had a short history in healthcare, with the vast majority of VBC methodologies really only existing during the last decade. However, value-based care has had a real impact on reimbursement and is becoming a force in the industry. We have seen how it can help address health care inequities by focusing on how to ensure the appropriate outcomes, in turn helping build new, innovative approaches to care in our country.


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