Wednesday, 24 April, 2024

Value-Based Care

Reading Time: 11 minutes


(The following is an excerpt from the book How to Avoid Being a Victim of the American Healthcare System by Dr. David Wilcox with minor changes to reflect the current state of affairs)

We are a nation of consumers and when we buy something, we judge the quality of the goods we are buying, or at least we should. No one wants to buy a car that they continually have to take back to the dealership for service. So why shouldn’t health care operate in the same fashion? After all, you can’t take back a nasty scar after a botched appendectomy operation. You need to do your work on the front end.

As health care costs continue to climb, experts have realized that fee-for-service isn’t going to be a sustainable model. There has to be an essential shift in health care, and that essential shift is quality outcomes. A quality outcome is the measure of the impact of a health care service, such as how many patients contract or receive an infection while in the hospital or die due to complications from surgery. The American Healthcare System is heavily regulated by various regulatory bodies who often cite organizations for inadequate care and often decrease or stop reimbursement payments for health care organizations lacking in positive quality outcomes. Value-based care incentivizes health care organizations to provide quality care at a decreased cost. This is important for you to understand because this is how care is going to be delivered in the future.

Value-based care focuses on all aspects of care coordination. In the fee-for-service model, your medical care is frequently provided in silos, meaning your doctor isn’t speaking to other members of your health care team. Communication with the entire health care team would enable everyone to see your complete health care picture together. Value-based care incentivizes the health care team to communicate to keep you out of the hospital. If done correctly, this will reduce the costs, improve the quality of your care and provide greater incentives to the health care team when they can meet the goal.


The Business Case for Value-Based Care

Let’s explore the business model for a minute. In the fee-for-service model, the doctor or health care organization doesn’t get paid unless you present with a symptomatic illness. They make their money treating sickness in a reactive manner. The medical staff gets paid according to the volume of patients they see, not necessarily on how well the patients do. In value-based care, they are incentivized to keep you healthy and out of the hospital. That means if the health care organization or doctor’s office is collecting $1,000 a month per head for each patient from the insurance company payor, the health care organization or doctor’s office gets to keep the profit if they can keep you out of the hospital. When you show up at the hospital with an illness, you’re costing your provider part of their incentive. Instead of bringing the health care organization or doctor’s office in revenue in a fee-for-service model, you are costing the health care organization or doctor’s office revenue. This should result in the health care team keeping you as healthy as possible to remain profitable. Everyone wins. You remain healthier with a team focused on keeping you as healthy as possible, and they profit from keeping you healthy. It’s a radical shift from getting paid for treating your illness. This model incentivizes the health care team to collaborate on your care, which has been difficult to accomplish in a fee-forservice payment structure. Value-based care is administered through Accountable Care Organizations (ACOs) using bundled payments, which is proactive care as it causes your care team to set up and maintain a line of communication about your care.

Value-based care has the potential to shift us from a siloed or isolated provider-based payment model to one that is patient focused. This holistic look at your health care means greater responsibility by the health care team and the patient to be a part of the process. Remember in the old day’s providers knew best and patients were expected to accept their opinion. In value-based care, the patient and the health care team must work together to obtain the greatest quality outcomes. In 2018 Seema Verma the administrator of the Centers for Medicare and Medicaid Services (CMS) said “We will not achieve value-based care until we put the patient at the center of our healthcare system.” Here is an interesting story about value-based care and bundled payments.

Bundled payments refer to one procedure, in this case, a hip surgery, in which many different health care players receive reimbursement based on the outcome of the patient. The surgeon, nurses, lab technicians, anesthesiologist, the rehabilitation group, and possibly home care are included in this bundle. My brother-in-law had a hip replacement at his local hospital and did fine. He was discharged to home relatively soon after the procedure. While at home he began to develop heart palpitations and chest pain. My sister rushed him to the emergency department, fearing that he was having a heart attack. In the emergency department, they were able to figure out that my brother-in-law’s illness was a reaction to the opioid pain medication that he was on and not necessarily anything cardiac related. My brother-in-law never consumes alcohol, let alone had taken opioid pain medication before. They changed his pain medication and discharged him back home and instructed him about what to do if his symptoms occurred again.

The next day my sister was contacted by the group who did the hip surgery. They wanted to send a nurse out to check on my brother-inlaw and schedule a time for a couple of days later where they could come back out and check on my brother-in-law again. My sister and I discussed what occurred and she said to me, “Oh it’s so wonderful that they would come out and check on him and it’s all free! These nurses come out to make sure he’s doing OK, take his vital signs and they don’t charge us anything.”

I explained to my sister that this service was not free at all. Because my brother-in-law went to the emergency department and was part of a bundled payment reimbursement program, the bundle payment group had to absorb the cost of the visit. I explained to her that the nurses were serving the best interest of the accountable care organization who administered the bundled payment plan of my brother-in-law’s hip replacement, even though I would consider this response to be a patient-centric approach. It was interesting to see this from the patient’s perspective in response to the amount of attention that was given to them after his surgery and on their road to recovery.


Value-Based Care and Revenue

To understand why we need to drive this change, value-based care is more patient focused than the fee-for-service model. Let’s take a look at what occurred during the pandemic of 2020. A report by the American Hospital Association stated that healthcare systems and hospitals would lose 320 billion dollars in the year 2020. This makes sense as patients who were going to have elective surgeries didn’t want to be anywhere near a hospital where COVID-19 patients being treated, so they elected to reschedule those surgeries until later. In a fee-for-service model, where hospitals are reimbursed by the volume of patients they care for, this model can be devastating to their bottom line. As the volume decreases so does the revenue.

This revenue decrease did not occur in organizations using a value-based model. This is because their income isn’t dependent on the volume of patients that they see. They receive the same amount of money per patient regardless of whether that patient accessed the healthcare system. In the fee-for-service model, many hospitals had to furlough employees to cut costs and remain viable. While valuebased care can drive down costs and improve outcomes, it can also protect a health care organization during an economic downturn or a pandemic. This makes the approach much more palatable to organizations and insurance companies, so hopefully, the shift to value-based care will occur more rapidly.

While it looks promising, how do we know the value-based care model can drive down costs and improve health outcomes? Humana recently released a report which revealed 2.41 million Humana individual Medicare Advantage (MA) members that received care from primary care physicians in a value-based model experienced better health outcomes, lower costs, and more preventive care. An estimated $4 billion in covered medical expenses would have been incurred by these members if they had been under a fee-for-service model. They also found that these members in value-based care arrangements went to the emergency department 10.3 percent less (90,500 fewer visits) and had a 29.2 percent lower rate of hospital admission (165,000 fewer admissions).

The Chief Executive Officer (CEO) of Humana believes valuebased care models have a better impact on addressing physical health, behavioral health, and social health care related needs. This is certainly a more holistic approach to meeting the community member where they are.


Social Determinants of Health

Perhaps one of the greatest advantages of value-based care is the ability to deliver care equably. Too often it’s the dollar that counts in health care. If you have more money, then you receive better health care because you can afford to pay for high priced prescriptions or specialists. During the pandemic of 2020 life expectancy rates fell from 78.8 years to 77.8 years overall. This is significant because the last time a drop of this magnitude occurred was during World War II. But as we drill into these numbers we find an eight month drop for white Americans, a one year, nine month drop for Hispanic Americans, and a two year, seven month drop for Black Americans. Delivering health care equally across our society is the right thing to do. This has the potential to occur in a value-based care model.

Social determinants of health are the economic and social factors that impact individuals and groups of individuals. Simply put, these are health promoting factors found in your everyday life, where you work and live. Different groups of people have different risks. This is due to many factors, but usually, the biggest one is wealth. People who have more income tend to have better health outcomes. To be clear, we are not talking about genetic risk factors. Most often the distribution of health care is controlled by state or federal government policy, and little to no attention is paid to the effects of the policy on social determinants of health. The World Health Organization states, “This unequal distribution of health damaging experiences is not in any sense a ‘natural’ phenomenon but is the result of a toxic combination of poor social policies, unfair economic arrangements [where the already well-off and healthy become even richer and the poor who are already more likely to be ill become even poorer], and bad politics.”

Research shows us that only 10-20 percent of an individual’s health is attributed to medical care. The research estimates that 40 percent of health care is due to health behaviors such as making the right food choices, abstaining from illicit drugs, smoking, and alcohol, as well as increasing your physical activity level. Another 40 percent is attributed to social circumstances, such as housing, food insecurity, transportation, or other barriers, which can result in poor health outcomes and increased health care costs and utilization of the healthcare system.

Social determinants of health are a big focus as we move to a value-based model. This is because our society does not treat each member equally. A good example of that occurred during the COVID-19 crisis in which those people with a college education were shifted to working from home. Those in the service and hospitality industries still had to work out in the community to earn their wages, putting themselves at higher risk every day. Many other people were laid off from their jobs, which meant they were at risk of losing their employment based health care insurance.

To move to a truly value-based care model, discrepancies such as socioeconomic status have to be addressed. Research from the National Research Council places the United States lowest in terms of life expectancy out of 17 high income countries. Health care disparities take part of the blame. The variation in life expectancy across the country is concerning.

To impact social determinants of health, you first have to understand what the problem is and where it’s occurring. Second, you have to be willing to make an impact on the issues you find. Insurance companies who are responsible for Medicaid populations have a vested interest in addressing that inequality. That inequality affects their bottom line. Sadly, this is not a humanity driven issue. The cold fact is the driving factor for most health care business models is money instead of health. As an example, an Institute of Healthcare Improvement (IHI) presentation noted a 10 year life expectancy increase for people who lived on the Upper East Side of Manhattan than those who lived five miles away in the South Bronx. Until these discrepancies are narrowed, there can be no equitable health care in this country.

Fortunately, several tools have been developed to help us discover issues that may be affecting the health care of a community. Blue Cross in California began developing a tool called the Neighborhood Health Dashboard. Coordinating multiple sources of data, it brings in data from the various sources to be used in determining the problem areas in a community. This data, which can be publicly accessed using the internet, is broken down by zip code to see what kind of social issues are affecting different communities.

Tools such as these should aid in advancing public health by creating transparent views of health care discrepancies. This tool is free to the general public and allows disparate organizations to look at the health outcomes and how to use preventative care. This helps hospitals, doctors, policymakers, and community leaders understand the needs of a community by enabling them to address their specific problems.

One way to use a dashboard to improve community health is addressing food insecurity. Say, you use the dashboard for a certain zip code, where you can see the majority of the population lives below the poverty line with children in a school system who are complaining of being hungry while at home. This allows community leaders and health care advocates to grasp the root cause of the problem and look at possible solutions to improve community health. Perhaps this is a good location for a food bank or farmers market that sells fresh vegetables at a subsidized price.

In another example of making data publicly available, if the community had a large flu outbreak the year before, a health care organization could set up a clinic and provide free flu shots to the members of the community as a preventative measure. There are many creative ways to use the data to address social determinants of health which should produce better health care outcomes.


Executing on a Plan to Address Social Determinants of Health

It’s not enough just to have the data. You have to be able to execute a plan that meets the community’s needs. The Centers for Medicaid and Medicare Services (CMS) are attempting to do that through the use of their Accountable Health Community model, which is being used to link clinicians with community concerns to produce better health care outcomes. This is a study of 29 organizations across 21 states running over a five year period.

The study showed the number one cause of social issues associated with health care outcomes was food insecurity. The recent pandemic exacerbated food insecurity issues as with much of the country becoming unemployed, having enough to eat became a major issue. It is amazing in the world’s richest country that we still have people who don’t know where their next meal is coming from. 750,000 people were screened for this study, which revealed 34 percent had food insecurity issues, 25 percent were concerned with housing, 23 percent had transportation problems, 15 percent had utility issues and 3 percent were concerned about safety. Once their concerns were identified, the community members were referred to Accountable Health Community navigators for interventions. The navigators identify and prioritize accessibility gaps in community services to develop a targeted, scalable project to make services easier to access.

In a fee-for-service model, community members are treated only when they are ill. Factors such as food insecurity, lack of transportation, and violence in the home were never really considered to be a part of their overall health care. In a value-based care model, these factors are very important to treating the individual community member holistically and setting them on a personal path to wellness. Using the vast amounts of data that we can generate to study the problem and models, such as the Accountable Health Community work that the CMS is doing, should drive down costs and increase health outcomes.

If you find yourself living in a poverty zone or experiencing any of these social determinants of health factors, you now know there are agencies within the community that can assist you. If you find yourself in the hospital or visit the emergency department, you can ask for a consult with a social worker who will be able to help get you pointed in the right direction. You can access a community resource by doing a quick internet search to see the options available in your community. It’s been a long time coming, but social determinants of health care must be considered when addressing a community member’s or communities’ overall health care outcomes.

Value-based care is a game changer. When you have a set amount of money on each life covered in a value-based care model, you are incentivizing your care team to be innovative in the way they keep you healthy and at home. Social determinants of health play a major factor in how you are cared for. This will force the health care team to look at your situation holistically and drive an individualized plan of care to meet your needs to keep you healthy. It’s a win-win for the payors, the health care team, and the patients.


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