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Medicare is Driving Value-Based Care Transitions: What You Need to Know

The Centers for Medicare and Medicaid Services (CMS) is implementing a series of value-based programs to improve value in the delivery of healthcare services.
August 14, 2022

What You Need to Know during the Medicare Transition to Value-Based Care Transitions

How we got here: A brief history of value-based care

In the early 2000s, CMS began paying for quality, not just quantity, of care under the Medicare Modernization Act (MMA). This was a big shift from the fee-for-service (FFS) model that had been in place since 1965.

CMS started linking payments to quality metrics with the Hospital Quality Incentive Demonstration (HQID) project in 2003. HQID measured 30 clinical conditions and procedures across 5 different hospital settings. Hospitals were given bonuses or penalties based on their performance on these measures.

The Affordable Care Act (ACA) continued this trend by creating new value-based payment models, including the Hospital Value-Based Purchasing Program (HVBP) and the Hospital Readmissions Reduction Program (HRRP). The ACA also established Accountable Care Organizations (ACOs), which are groups of providers that work together to provide coordinated, high-quality care to Medicare beneficiaries.

Since then, CMS has continued to develop new value-based payment models. In 2018, they launched the Comprehensive Care for Joint Replacement Model (CJR), which bundled payments for hip and knee replacements across hospitals and post-acute care providers. And in 2019, they launched the Patient-Driven Groupings Model (PDGM), which bundled payments for home health care.

The trend is clear: CMS is moving away from FFS and towards value-based care. This shift is being driven by a desire to improve the quality of care while also reducing costs.

What does this value-based care transition mean for you?

If you’re a patient, you should be looking for providers already participating in value-based care models. These providers are more likely to provide coordinated, high-quality care.

If you’re a provider, you must be prepared for this shift. You need to start thinking about how you can provide high-quality, coordinated care. You also need to be aware of the different value-based payment models that are available, and which ones might be a good fit for your practice.

What is the difference between value-based care and traditional fee-for-service care?

The difference between value-based care and traditional fee-for-service care is that value-based care reimburses healthcare providers based on the quality of care they provide, while fee-for-service care reimburses healthcare providers based on the number of services they provide.

Value-based care incentivizes healthcare providers to focus on quality over quantity, which leads to better patient outcomes and lower healthcare costs. In contrast, fee-for-service care incentivizes healthcare providers to order more tests and procedures, even if they are unnecessary because they are paid for each service they provide.

Medicare is driving the transition from fee-for-service to value-based care by linking provider reimbursement to quality measures such as hospital readmission rates and patient satisfaction scores. By moving towards a value-based payment model, Medicare hopes to improve patient outcomes while reducing healthcare costs.

What are the benefits of value-based care?

Value-based care is a type of healthcare delivery model that focuses on providing quality care to patients while also reducing costs. This model has many benefits, including:

  1. improved patient outcomes: When providers are paid based on quality measures, they are more likely to focus on improving the health of their patients. This can lead to better outcomes for patients, including fewer hospital readmissions and lower mortality rates.
  2. reduced healthcare costs: One of the goals of value-based care is to reduce unnecessary tests and procedures. This can help lower the overall cost of healthcare for both patients and payers.
  3. improved provider satisfaction: Providers who are paid based on quality measures often report higher levels of satisfaction than those who are not. This is because they feel like they are making a difference in the lives of their patients.

How is Medicare driving the transition to value-based care?

There are several ways in which Medicare is driving the transition to value-based care. One way is by providing financial incentives for hospitals and other providers to move to value-based care models. For example, the Hospital Value-Based Purchasing program rewards hospitals that provide high-quality, cost-effective care.

Another way Medicare is driving the transition to value-based care is by making more data available to providers and patients. This data can help inform decision-making about treatments and care transitions. For example, Medicare’s Hospital Compare website provides information on hospital quality measures, including measures related to transitions of care.

Medicare is also experimenting with new payment models that incentivize providers to improve the quality and coordination of care transitions. For example, the Bundled Payments for Care Improvement Advanced program rewards hospitals and other providers for achieving certain quality targets related to transitions of care.

All of these initiatives are helping to drive the transition to value-based care in the U.S.

What’s the timeline for these value-based programs?

The Centers for Medicare & Medicaid Services (CMS) had set a goal of having 50% of traditional fee-for-service (FFS) payments tied to quality or value by the end of 2018, and 85% by 2023. To achieve this, CMS has been steadily moving towards value-based care and away from traditional fee-for-service models.  While slightly behind schedule, the focus has also now grown to 100% by 2023.

A recent transition is a move from the CMS Value Modifier Program (VM) to the Merit-based Incentive Payment System (MIPS). The VM program was created in 2012 and used quality measures and cost data to adjust Medicare FFS payments up or down. The MIPS program was created in 2015 as part of the Quality Payment Program (QPP), and it builds upon the VM program by adding additional measures, including clinical practice improvement activities, patient experience, and the use of certified EHR technology. Under MIPS, Medicare FFS payments will be adjusted up or down based on a composite score that takes into account all four performance categories.

CMS has also created new payment models, such as accountable care organizations (ACOs), bundled payment arrangements, and medical home models, that provide financial incentives for providers to deliver high-quality, cost-effective care. Recent examples are Kidney Care Choices and the Enhancing Oncology Models.  These new payment models are moving CMS closer to its goal of having 100% of traditional Medicare FFS payments tied to quality or value by the end of 2023.

What are the challenges of transitioning to value-based care?

Several challenges come with transitioning to value-based care. One of the biggest is making sure that all members of the care team are on board with the change. This can be a challenge because it requires everyone to change the way they work and think about patient care.

Another challenge is finding the right mix of incentives for providers. To encourage them to transition to value-based care, there needs to be a financial incentive for them to do so. However, these incentives mustn’t be so high that they create a conflict of interest between the provider and the patient.

Finally, there is the challenge of data collection and analysis. To make sure that value-based care is working, providers need access to data so they can track outcomes and improve their care delivery models. However, collecting this data can be challenging, and it can be difficult to ensure that it is accurate and complete.

How can providers prepare for the transition to value-based care?

There are a few key ways that providers can prepare for the transition to value-based care:

  1. Understand the difference between fee-for-service and value-based care.
  2. Educate yourself and your staff on the basics of value-based care models.
  3. Assess your readiness for making the switch to a value-based care model.
  4. Develop a communication plan for explaining the transition to patients and other stakeholders.
  5. Create a detailed implementation plan for making the switch to a value-based care model.
  6. Make sure you have the right data collection and analysis tools in place.
  7. Partner with other organizations that are making the switch to value-based care models.
  8. Continuously monitor and evaluate your progress as you make the transition to value-based care

What are the key elements of a successful transition to value-based care?

There are a few key elements of a successful transition to value-based care:

  • Establishing clear and attainable goals
  • Defining roles and responsibilities
  • Implementing change management processes
  • Measuring progress and outcomes

Let’s look at each of these elements in a bit more detail.

Establishing clear and attainable goals is essential for any transition, but it’s key when transitioning to value-based care. You need to know what you want to achieve and why you’re making the transition in the first place. Without clear goals, it will be difficult to measure your progress or gauge whether or not the transition is successful.

Defining roles and responsibilities is also crucial. Everyone involved in the transition needs to know their role and what is expected of them. This will help ensure that everyone is on the same page and working towards the same goal.

Implementing change management processes can help make sure that the transition goes smoothly. Change can be difficult, so having a plan in place to manage it can make all the difference. There are many different change management models out there, so find one that works best for your organization and your goals. Finally, measuring progress and outcomes is essential for any transition. You need to be able to track your progress and see if you’re meeting your goals. This will help you adjust your strategy as needed and make sure that the transition is successful.

What are the potential pitfalls of transitioning to value-based care?

The potential pitfalls of transitioning to value-based care include:

  • Not having a clear understanding of what “value” means to your organization.
  • Failing to engage all stakeholders in the transition process.
  • Not having a clear plan for how you will operationalize value-based care.
  • Not having the right data and analytics infrastructure in place to support value-based care.
  • Failing to align incentives across the organization.

Value-based care is a complex transition that requires careful planning and execution. Without a clear understanding of what “value” means to your organization, it will be difficult to set goals and measure progress. Additionally, failing to engage all stakeholders in the transition process can lead to resistance and pushback from those who are invested in the status quo.

It is also important to have a clear plan for how you will operationalize value-based care, as well as the right data and analytics infrastructure in place to support it. Finally, failing to align incentives across the organization can lead to silos and misaligned incentives that undermine the success of the transition.

What are the long-term implications of the transition to value-based care?

The long-term implications of the transition to value-based care are far-reaching. This shift will affect how care is delivered, how providers are reimbursed, and how patients receive care.

In the short term, the transition to value-based care may cause some disruptions. For example, providers may need to make changes to their clinical processes and explore technologies that enable these changes. Patients may also experience changes in the types of services covered by their insurance plans.

In the long term, however, the move to value-based care is expected to improve patient outcomes and lower healthcare costs. Providers will be incentivized to deliver high-quality care that meets patients’ needs. And because value-based contracts tie payments to specific outcomes, payers will have a financial incentive to invest in initiatives that improve population health.

eVigils Blog – Value-Based Care

How fast will the next seven years pass for you?  Your answer likely has a basis related to personal life events like graduations, relationships, employment, travels, and more.

These personal experiences can help us absorb the speed at which the next seven years will culminate in 100% of all Medicare recipients becoming part of an accountable care model.

This fundamental change in how healthcare is delivered will very likely impact you or your family member because 34.8 million people – the combined populations of New York state and Pennsylvania – are transitioning to receive care from providers newly incented to coordinate high-quality patient care and no longer be reimbursed under fee-for-service.

It’s easy to lose track that Medicare started in 1965 as a fee-for-service model (i.e., doctors and other health care providers are paid for each service performed).  It was 1983 when the first perspective payment model was implemented: DRGs or Diagnostic Related Groups.  DRGs were the first attempt to move away from the fee-for-service model.

It has taken thirty-nine years for just 45% of Medicare recipients to move away from the costly original Medicare reimbursement model.  CMMI aims to complete the transition of an additional 34.8 million beneficiaries over the next seven years.

Today’s Medicare recipients and their families are clamoring for this change as they desire a care model that looks out for them as well as is responsive to their immediate needs.  Maybe that includes you.

Most providers and care organizations are both nervous and excited.  Nervous because their care delivery models require adjustment and excited because better planned and delivered patient care will result in higher compensation.

In a short seven years – about the same time the average person buys and keeps a new car – you may be joining me as a Medicare beneficiary impacted by the massive shift.  Coincidentally I started my career in 1983 helping hospitals implement DRGs and I will end my career as one of the newer Medicare beneficiaries receiving quality-over-cost patient care.

eVigils exists to help improve care coordination under accountable care models that measure and reward the quality of care provided to its recipients.  This is a very exciting segment of the healthcare technology market, and I will be posting on timely topics that affect each of us as patients, caregivers, and participants in healthcare delivery, and impact our nation’s financial stability.

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Value-Based Care
Accountable Care Organization
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AndrewRittler - Chief Executive Officer

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Andrew Rittler

Andrew Rittler, Chief Executive Officer, joined MITEM Corporation in 2013 to bring the eVigils platform to market and lead product direction. Andrew has a 35-year history in healthcare technology leading consulting, sales, and service operations.

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