Recently, a marked change has been observed across the healthcare industry. While the healthcare industry has for years prioritized volume-based reimbursement structures, there now appears to be a movement away from this idea in favor of financing models designed to support high-quality, efficient healthcare systems that are about coordinating care around a patient.

Naturally, the Centers for Medicare & Medicaid Services (CMS) has responded to this shift by releasing a series of policy initiatives centered around this evolving landscape. Alongside CMS, insurance companies are also aligning their priorities with this new model, focusing on alternative payment systems, care coordination, and improved patient outcomes.

In this piece, we’ll lay out what this change means in the real world, as well as some prospective issues that could come along with this shift.

For background, we should define the current system in order to contrast it with the new one.

Historically, the U.S. healthcare system has operated on a fee-for-service (FFS) model, where providers are reimbursed based on the quantity of care delivered rather than the quality. While this makes sense in theory, in practice, some have claimed that this system incentivizes overutilization of services without necessarily improving patient outcomes.

In response, the industry appears to be moving towards a system of value-based care. Value-based care links reimbursement to the quality of care provided rather than the quantity, in turn rewarding providers for delivering effective, efficient, and patient-centered care.

CMS has been at the forefront of this shift, implementing a range of policies and programs designed to promote value-based care. In 2022, CMS articulated a Medicare value-based care strategy of alignment, growth, and equity. Then, earlier this year, CMS added its adult Universal Foundation quality measures into the primary care Merit-Based Incentive Payment System (MIPS) Value Pathway, and has sought comment on how to incorporate these measures into other areas. These initiatives aim to encourage healthcare providers to focus on patient outcomes, reduce unnecessary spending, and coordinate care across different settings.

CMS is not alone in this. Insurance companies have been quick to follow suit, with many making their own changes to promote value-based care. In a piece from earlier this year in Becker’s Payer Issues, 17 payer executives were asked about their top priorities for the 2nd half of 2024. Several specifically mentioned value-based care, while others simply emphasized the importance of measuring outcomes and looking for value across the entire healthcare system, rather than simply counting the amount of procedures performed.

Within that point is the importance of care coordination. As many patients require procedures or care from multiple providers, it’s important that patients can transition their care from one provider to another with ease. By streamlining the area of care coordination, insurers hope that they can avoid patients having to undergo unnecessary tests and procedures, alongside simply reducing redundancies.

Part of this involves getting patients more involved in their own healthcare, which is becoming a top priority for payers. While this could take many forms, some ideas include health coaching, access to digital health platforms, and even providing patients with personalized healthcare plans.

All of these ideas sound fairly positive. So, what’s the risk in transitioning to such a system?

The primary risk about value-based care concerns the first word: value. If one priotizes value above all else, they can risk not providing a patient with needed services. Furthermore, if one relies solely on care quality metrics to ensure they’re still providing high-quality care, they could be missing part of a bigger picture that could lead to worse health outcomes for their patients.

This is why, in order to correctly implement a value-based care system, one must carefully monitor patient outcomes, working with a patient to produce the best quality of care while doing away with any redundancies or obstructions that could worsen their healthcare experience.

If a system like this is implemented, and patient care and outcomes are kept at the forefront, the healthcare system can achieve the dual goals of improving quality and controlling costs, ultimately leading to a healthier population and a more sustainable healthcare system. However, the reality of this implementation has yet to be seen — and as this idea permeates the healthcare system, we will keep you up-to-date with all of its impacts.