Not All VBC Models Are Created Equal: Seek Out the Most Advanced

A recent article in HealthPayer Intelligence reports on a comparative study between Medicare Advantage beneficiaries and traditional Medicare beneficiaries. Medicare Advantage is a value-based care (VBC) program, while Traditional Medicare is a fee-for-service program.

Those conducting the study surmised that beneficiaries covered by the Advantage plan would experience better outcomes at lower cost than those covered by the traditional plan … but they didn’t anticipate just how stark those differences would be.

Brian Powers, MD, an assistant professor of medicine at Tufts University of Medicine, an internal medicine physician at Newton-Wellesley Hospital, and the deputy chief medical officer at Humana, was instrumental in studying the differences between the two groups of beneficiaries. Dr. Powers’ point-of-view is unique in that he brings both a provider and payer perspective to the table.

When the study was complete, Dr. Powers and his colleagues were not fully prepared for the level of difference between fee-for-service and value-based care.

Looking at the care provided to those enrolled in the Medicare Advantage program revealed a stark difference when compared to the care received by those in the Traditional Medicare program. The study showed that care to the two groups was being delivered differently: Patients in the VBC group with chronic diseases are being managed more effectively. These patients, the study showed, are far more likely to be engaged before they end up in the emergency department or end up in the hospital.

Dr. Powers noted in the article: “We had a sense that it would go that way, but maybe not quite as stark as it was.”

Not All VBC Programs Are Created Equal

The key takeaway by Dr. Powers and his colleagues is that there is a spectrum of value-based care programs out there. Understanding the differences—and aligning with the most advanced models—is necessary to bringing the promise of VBC to life.

So what makes one VBC model better than another? The most advanced VBC models have what Dr. Powers calls two-sided risk contracts in place. Two-sided risk contracts are those that provide incentives for high-quality care and impose penalties for low-quality care.

In the study described above, a portion of patient participants were covered under upside-only risk payment models, and another portion were covered under two-sided risk models. In two-sided risk models providers share in the savings (an incentive). They also are responsible for losses if spending is above a benchmark. The data in this study and others reveal that the best patient results are achieved within models that work both ways.

In short, two-sided risk models represent a more advanced population health management infrastructure—and they result in a better track record when it comes to managing chronic disease.

When It Comes to Advancing VBC, Where Do We Go From Here?

Everyone agrees that the current state of healthcare is complex and chaotic. Providers, payers, patients—even employers—are fed up with the status quo. A volume-centric system characterized by out-of-control costs needs to become a thing of the past.

While the move toward outcomes-based value-based care is the answer, it’s important to be aware that not all VBC programs are created equal. Why? VBC is a continuum. To move the needle and truly make a difference takes a focus on the most advanced models out there, and the support of every party involved.


How Payers Can Move Providers Along Value-Based Care Continuum

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