Historically, the compensation model for physicians and other health care providers has been similar to the one for window washers, mechanics and other labor-intensive activity: The more they do, the more they get paid. But skyrocketing national health care costs – which grew 9.7% in 2020, reaching $4.1 trillion or nearly 20% of the nation’s Gross Domestic Product, according to the latest federal data – has spurred the rise of value-based health care, a model where hospitals, physicians and other providers are paid based on patient health outcomes.
Valley Health System has been advancing its strategy since 2018, according to Nisha Sikder, vice president, Payer Strategies. “We started our value-based strategy with the development of a Population Health team, which consists of care coordinators and population health specialists who utilize predictive analytics and HIPAA [Health Insurance Portability and Accountability Act] compliant data to determine which at-risk patients may require follow up communication to ensure their needs are addressed and care is optimized,” she explained. “Our physician-led clinically integrated network, or CIN, and Population Health department, in addition to Valley Health System’s value-based assets, which reside in its three entities – The Valley Hospital, Valley Medical Group and Valley Home Care – have enabled Valley to robustly engage with a variety of payers impacting more than 90,000 patient lives through 12 distinctive value-based programs.”
Sikder
Still, quantifying the savings and identifying the direct impact of the value-based model is a challenge, Sikder said. “Over the past several years we have seen a vast improvement in the data that we are able to get from various resources but there are still several limitations. One of which is the lack of standardization in the way that value-based care is being measured and the variation in data fields that each payer shares with providers engaged in these initiatives. Another challenge in measuring the impact of change that results from a value-based initiative is the lack of real-time information. Most of the data is dependent on a provider submitting a claim, and a payer processing the claim and then reporting it back to the provider. This process can take close to six months to complete.”
But “the growth in the number and scope of value-based programs that Valley participates in is a positive sign in our adoption of value-based care transformation,” she added. “Additionally, the growth in the percentage of value-based revenue for the health system over the past five years is another metric that demonstrates Valley’s commitment to value-based care. Finally, I would point to our improvement in quality scores from Medicare [where] Valley had the highest score in New Jersey for 2021.”
A number of health care providers are taking the long view. “Value based care is not a program, it’s a transformation,” according to Dr. Jack Feltz, who has a clinical practice in Morristown and is chief medical executive officer at Unified Women’s Healthcare and president at the U.S. Women’s Health Alliance. “In addition to health care providers, employers need to get involved, and advocate for value-based health models that promote better patient outcomes, improve affordability, reduce wasteful spending, and improve patient experience.”
Feltz
Unified Women’s Health care operates, affiliates, and invests in health care practices and businesses across the country, supporting OB-GYN practices with physician management and payor contracting services. “We work with partners to implement programs like Maternal Episodes-of-Care, a bundling approach that optimizes early prenatal care, provides clinically appropriate mode of delivery in the right facilities, provides postpartum healing care and nurturing early child development,” he noted. “This approach encourages a more preventative and patient-centered maternal care experience, where patient outcomes are the measure of success and health care providers are accountable for the results.”
To support this, Feltz leads a central “Value Team” at Unified and works with practices and others to improve analytics and develop best-practice protocols. “We have teams of transformation managers to help members see how they’re doing and help them improve,” he added. “These efforts have helped to reduce cesarean sections in New Jersey alone by more than 15%, or several thousand operations, and our teams have helped to drive millions of dollars in savings in 2022. Some of these savings will be shared with individual doctors and some will be reinvested, but most importantly they will help families have more affordable care.”
Beginning the journey
But more needs to be done. “Many health plans are working toward value-based models but are lagging in adopting models designed to help the specific care needs of women, especially during pregnancy,” Feltz cautioned. “But we continue to gather data to show them the opportunities that a value-based approach can offer. I am optimistic, but we are facing deadlines because the current health care system is not sustainable — it is failing society, so we need wide-scale changes, and [we need them] now.”
For Dr. Thomas McCarrick – chief medical officer and chief informatics officer at Verona-based Vanguard Medical Group – implementing a value-based health care model “starts with the general concept of improving quality outcomes and patient experience, while managing cost, and then implementing it with a series of tactical actions.”
One of the tools is data, he added. “We utilize analytics platforms, information from payors like Horizon Blue Cross Blue Shield of New Jersey, Medicare, and our own data to try to identify high-quality specialists who also share our commitment to providing value-based care. We then use this data as part of our referral management process. It’s important, particularly in a state like New Jersey where the cost of medical care is high.”
McCarrick said Vanguard also follows an “evidenced-based” approach that seeks to manage costs by reducing unnecessary tests, “like routine EKGs for patients who don’t need them,” while still following sound medical care guidelines.
“We found that many patients with low back pain and other common musculoskeletal problems had more than double the expected number of physical therapy visits needed for them to recover,” he said. “We identified and worked with physical therapy providers who understood the importance of delivering value in their care and were committed to following established guidelines. With data and staff support we were able to significantly reduce physical therapy costs while maintaining the same quality outcomes for outpatients. But efforts like these involve a lot of moving parts, and we need to get buy-in from health care organizations, specialists, employers and providers to succeed.”
In 2020, Horizon Blue Cross Blue Shield of New Jersey reaffirmed its commitment to value-based health care, announcing that, “we’re moving to a value-based model of care that aligns our goals with those of physicians and health care systems. About 4,500 primary care physicians under our value-based reimbursement system are paid to provide more affordable costs for our members and reach certain quality targets. Using technology, we’re also able to provide analytic capabilities and data-driven insights to physicians on everything from helping them understand their patients at the population level to identifying cost-effective prescription medications at the point of care to simply scheduling appointments in a patient-friendly way.”
Reedy
Nonetheless, “Value-based health care is a phrase that is still frequently misunderstood by patients,” according to Horizon Chief Population Health Officer and Senior Vice President of Health Solutions Dr. Jamie Reedy. “Some think it just means ‘inexpensive,’ so the term can be puzzling.”
In fact, “Value-based health care refers to paying for outcomes,” she added. “The goal is to improve quality and patient experience, while reducing the total cost of care and increasing accountability for patient outcomes.”
Horizon has been offering alternative payment models since 2009, “before anyone else in the state,” she said, “we began working with health systems and our primary care provider network to move from a volume-based payment model to a value-based one. It involves incentivizing providers to see patients on a regular basis, administer appropriate preventive screenings, and address chronic conditions like diabetes to keep patients out of the ER and hospital.”
Horizon provides incentives with performance-based payments that include both an upside for meeting quality standards and cost targets and a downside for providers when outcomes fall below agreed upon standards. To get there, Horizon assists partner organizations with advance performance payments to facilitate investments in population health management resources like nurse care mangers and other professionals that “will ultimately lower the total cost of health care by addressing issues early on, and reducing ER visits, admissions, re-admissions and complications.”
The Newark-based insurer has also developed “episodes of care” programs, which cover all the care a patient receives for a specific illness, condition or medical event. “About a decade ago we began to collaborate with specialists to develop standards and incentives to deliver evidence-based care in the most appropriate site of care. For example, offering home-based care when appropriate instead of sending someone to a skilled nursing facility after a procedure. We have seen cost savings from all of our value-based payment models and, based on our HEDIS [Healthcare Effectiveness Data and Information Set] report, these efforts are yielding positive quality results for our patients as well.”
Parikh
Some health care providers applaud the move to the new model but acknowledge some hiccups along the way. “Until recently, health care providers were generally paid for how much care we delivered to our patients, not necessarily how good the outcomes were,” observed Dr. Ashish Parikh, chief quality officer at Summit Health, which has corporate offices in Berkeley Heights. “Fee-for-value, or value-based care, is designed to improve outcomes while reining in health care inflation by rewarding providers who deliver better health care in a more cost-effective manner.”
A big obstacle, though, has been “siloing, where different health care providers and institutions are isolated,” he said. “Instead, when care is connected among the primary care physician, therapists, specialists and hospitals across the wellness continuum – from birth to senior years – we see better outcomes. And when you add ancillary professionals like social workers, pharmacists, care navigators and care managers for education, you get a better patient experience with simpler navigation and reduced costs. So, the journey to value-based care is a complete effort.”
At Summit Health, which is active across five states with more than 2,800 providers, “we started the process with our primary care physicians, and measured clinical outcomes and the cost of care,” Parikh explained. “Over the last decade, through our connected care model, we’ve improved outcomes while reducing costs by millions of dollars a year. It’s still a work in progress, although the adoption of electronic medical records and ‘big data’ analytics continually improve our coordination and processes. Ultimately, we plan on aligning incentives and outcomes across disciplines and partners, which will result in better outcomes for everyone.”
