How Value-Based Care Is Changing Reimbursement

By September 7, 2018Reimbursements

How Value-Based Care Is Changing Reimbursement

Healthcare is in the process of a major shift in how patient care will be delivered, and how it will be reimbursed. The old fee-for-service (FFS) model, in which providers are paid per person, per visit is giving way to value-based care (VBC), in which providers are paid by how well they meet performance criteria that promotes the overall health of their patient population, or through shared risk models, where both payer and patient share the cost of patient care. (1)

In the FFS model, patients were more likely to wait to be sick to get care, and providers had less ability to know the health risks of their patients. In the VBC model, there is motivation to improve all patients’ health.(1)

According to a 2017 study in the journal NEJM Catalyst, “Under value-based care agreements, providers are rewarded for helping patients improve their health, reduce the effects and incidence of chronic disease, and live healthier lives in an evidence-based way.” (2)

While any change in how healthcare is delivered and measured can cause trepidation in providers, VBC is already beginning to shift the landscape of reimbursement and is the direction of the future for healthcare. According to a 2018 HealthLeaders Media “Annual Industry Outlook Survey,” net patient revenue is currently about 19% value-based and 74% fee-for-service, but experts expect to see value-based reimbursement increase to 39% of net income by 2021. (3)

Not all changes are bad. According to the NEJM study, there are numerous benefits of this shift: (2)

  • Patients will spend less money for better health. The VBC approach is designed to help patients avoid chronic disease through proactive measures and recover from their illnesses more quickly through more concerted provider oversight.
  • Providers will focus more on quality of care. Providers will spend less of their time managing chronic diseases and more time focused on quality patient engagement measures.
  • Risk is reduced across a larger patient population. A larger population of healthier patients is less of a drain on the premium pool.
  • Society becomes healthier. Overall, proactive care for chronic disease and less money and energy spent managing such illnesses could translate to a healthier society.

While the transition may be challenging for some providers, here are some ways for providers to make the shift with as much ease as possible: (4)

  • Make patient data widely available. A necessary key to surviving the transition to VBC will be to make data available across as many platforms as possible, rather than keeping it “locked and guarded,” according to an article in Health Catalyst. This will also mean using analytics systems to track and measure performance and improvements based on “targeted quality interventions.”
  • Share and learn with other providers. Health Catalyst urges that providers not isolate and try to figure out their strategies on their own, but reach out to peers for strategies and tips to meet quality care benchmarks.
  • Assess the best strategy for your practice. Similarly, practices should not wait and simply see how the shift to VBC goes, but begin to put together a five-year-plan to actively make the shift. This includes assessing the current quality of care, areas of strengths and weaknesses, and plans to “overcome the deficiencies.”

Ultimately, making this switch from FFS to VBC will take time and challenges and obstacles are part of that process. However, according to NEJM Catalyst, “[VBC] has been embraced as the best method for lowering healthcare costs while increasing quality care and helping people lead healthier lives.” (2)


  1. National Institute of Diabetes and Digestive and Kidney Diseases. 2018. Changing Landscape: From Fee-for-Service to Value-Based Reimbursement.
  2. NEJM Catalyst. January 1, 2017. What is Value-Based Healthcare?
  3. HealthLeaders Media. Jan/Feb 2018. Annual Industry Outlook: Exploring Investments and ROI.
  4. Brown, Bobbi. Health Catalyst. 2016. Why You Need to Understand Value-Based Reimbursement and How to Survive it.