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What is Value-Based Care?

Payment for medical services can be complex without a guide. That's why we've collected all you need to know about the value-based care (VBC) model of handling healthcare costs.

In a quickly evolving healthcare landscape, positive patient outcomes are becoming the driving focus of every interaction with the healthcare system. That's where value-based care comes in. VBC rewards healthcare providers for quality of care. This payment system encourages high-quality patient care from clinicians and healthcare organizations. It's being introduced as an alternative to and/or a replacement of fee-for-service reimbursement, which puts a higher emphasis on quantity over better care.

What Is Value-Based Care For Patients?

So what changes for patients with value-based care? First, VBC centers on care delivery and patient engagement, which means better outcomes for patients. A high-quality care team should provide more preventative care, reduce the rate of hospital readmissions, and lower cost of care for both you and the healthcare industry.

VBC looks at the details of each visit to determine what works and what doesn't in order to adjust the care delivery model accordingly. For example, patients with chronic conditions receive health plans that include proactive health management options. They're meant to reduce complications and hospitalization due to your condition and lower the potential risks associated with chronic disease.

There's also a focus on wellness and general health. VBC seeks to lower financial risk and healthcare spending by targeting risk factors and unhealthy behaviors before they develop into larger problems. Babylon Value-Based Care increases patient care quality through availability. We strive to provide services at your convenience, so you can access care whenever you need it. Our service is open for over 3x the number of hours vs. standard US or UK physician offices, so you can seek help at any time.

What Is Value-Based Care For Providers?

In terms of providers, a value-based care model works with keeping hospital readmissions low, improving preventative care, bolstering general population health, working with better health technology, and generally focusing on positive health outcomes for patients. Much of VBC care is focused on primary care providers as the first line of defense against health issues spiraling.

Care coordination, which includes communication between providers, is a must. Increase the efficiency of care for each payment through clear, standardized lines of communication between doctors, professionals, and experts. This fosters more cooperation between providers to give their patients the best care.

VBC increases the accountability of healthcare providers for their quality of care. This payment model offers incentive payments for care that's better and more efficient for patients and systems. Babylon offers plenty of Healthcare Provider Solutions to make providing high-quality care simple. Learn how to get more information and get in touch here.

How does the value-based care model work?

With any payment model, it's important to recognize the stakeholders. In a VBC model, that's the healthcare provider, the patient, and the payer. The healthcare provider is your doctor or hospital and the patient is you. The payer (or payor) is the company that actually pays for the medical services rendered, most likely your insurance company.

In value-based care, the healthcare provider sees the patient and orders the procedures needed to care for the patient. This can range anywhere from recommending lifestyle changes to writing prescriptions to referring patients to a specialist. With VBC, the healthcare provider also has to prove to the payer that the care provided was used to improve patient outcomes. They must provide certain metrics and data to determine the quality of care in order to be reimbursed by the payer. Our Healthcare Payor Solutions offer more information on cutting healthcare costs.

How Is Value-Based Care Different From Fee-for-Service Models?

Fee-for-service models were the standard payment model for lots of healthcare providers for a long time. They were payment plans based on the number of services provided. This added incentives for doctors to order more tests and encourage a larger number of procedures which may not have drastically increased their patients' health. VBC prioritizes patient care and positive health outcomes, making it more worthwhile to provide the BEST care for each patient instead of the MOST care.

Why Does Value-Based Care Matter?

Value-based care, at its core, is about promoting patient health above all else. It encourages providers to offer care based on need rather than ordering unnecessary tests to drive up a bill. Increased communication allows healthcare workers to offer more efficient, individual care delivery. Lowered costs allow hospitals to focus their resources where they matter and allow individuals wider access to care.

Pros and cons of value-based care

What are the benefits of value-based care?

Value-based care is intended to drive down medical costs through prevention. Digital medical records, lower rates of hospital readmission, emphasis on preventative care, and fewer unnecessary acute care measures all help reduce the cost of each medical bill. Providers are also encouraged to communicate with each other more clearly and efficiently, resulting in less wasted time and a more transparent experience for a patient.

The other obvious benefit is that a focus on quality care leads to better health for both individual patients and the community as a whole. When doctors have more incentive to make sure a patient gets well, rather than having to return for just one more test, they're more likely to find permanent solutions rather than pushing temporary measures.

VBC also helps prevent overcrowding in hospitals and ERs. Preventative care means that fewer severe complications develop. Fewer severe complications mean less time spent in hospitals and less money spent on care.

What are the cons of, and barriers to, value-based care?

"Quality" can be a very difficult and subjective thing to prove, especially and on an individual level. A hospital might be penalized for failing to provide number-based evidence of their care quality, even if their patients are healthy and satisfied. However, this is combated by the evolving nature of the VBC system. It’s designed to respond to feedback in order to be more useful for providers and patients.

When combined with shared savings or bundled payment models, VBC can become difficult for providers—especially small providers—to start up. If providers can't treat a patient within the allotted budget, they miss out on some of their pay. This can sometimes be an incentive to push cheaper options over better healthcare, though Babylon focuses on quality care for all patients.

How Does Value-Based Care Work With Medicaid?

The Centers for Medicare & Medicaid Services (CMS) are rolling out a range of VBC options, including many listed below. You can find out which options you have available to you through your Medicaid plan.

How Does Value-Based Care Work With Medicare?

Medicare & the Affordable Care Act (ACA) are pushing for value-based care, including rolling out new VBC plans and options. Learn more about what's available to you through CMS in the details of your Medicare plan.

What Value-Based Care Models Are Available?

Accountable Care Organizations

Accountable Care Organizations or ACOs are cooperative, Medicare-based networks of providers. They're usually made up of hospitals, physicians, and other medical professionals who work to provide care for patients who receive Medicare benefits. They're meant to increase provider communication, improve the efficiency of patient care, and reduce redundant or unnecessary visits and procedures. Providers volunteer to be part of an ACO and often assume significant financial risk when they join. While providers can get a lot of rewards for quality care, they can also take a lot of losses from failures to provide or prove quality care.

Bundled Payments

With bundled payments, the payer provides one single payment for an entire episode of care. Rather than paying each individual care provider separately, the payer will send payment to everyone involved as one lump sum. The amount paid is based on payment history rather than each individual patient, meaning a standardized payment for each type of visit or procedure. If a provider can offer care for less cost than the estimated payment, they get to keep the extra funds. However, if the cost is unexpectedly high, they must cover the difference themselves.

Patient-Centered Medical Homes

Patient-Centered Medical Homes (PCMHs) work by centralizing patient care with primary care physicians. The PCMH is meant to manage all the patient needs through care coordination, rather than with a wide network of different specialists and experts. Patients using a PCMH are likely to develop a more personal relationship with their physician(s), as they'll be seeing the same one(s) for most of their needs. PCMHs have a lot of responsibilities, including:

providing patient-centered care
population health management
personal care management
care coordination and teamwork
offering consistent, quality care

They rely on communication and sharing electronic medical records to provide team-based care.

Hospital Value-Based Purchasing

Focused on acute care, or short-term care, Hospital Value-Based Purchasing (VBP) programs are paid based on the quality of care provided. This reimbursement model focuses heavily on positive patient outcomes and incentivizes high-quality, safe healthcare. They encourage providers to reduce adverse events and errors, offer transparent care, improve patient experiences, and adjust standards and protocols to offer the best care to the most patients.

Is Value-Based Care Effective?

Value-based care has been shown to reduce long-term costs for healthcare systems and for individual patients. It's also been shown to lower the number of hospitalizations and help prevent complications due to chronic conditions.

Babylon boasts a number of cost reductions based on VBC services. Using historical data, it is estimated that usage of digital appointments instead of unnecessarily visiting ER or Urgent Care results in $459K - $580K savings per 1000 users per year. This works out as an estimated "savings per member per month" for our US services of $38-$48.

How Does Value-Based Care Reduce Costs?

Doctors are incentivized to order only necessary tests and procedures. The emphasis on wellness and preventative care also keeps more patients out of hospitals and lowers the risk of hospital readmissions. Overall, VBC supports a healthier population by providing the best, most essential care and streamlining the medical process.

How Popular Are Value-Based Care Models?

Currently, value-based care models are not offered by many providers. Many healthcare organizations can't afford to take on the risks associated with VBC. However, many payers are pushing for alternative payment models, including value-based care. The popularity of value-based care may continue to rise as the CMS spreads eligibility to more patients and providers.

Babylon Health and Value-Based Care

Babylon is proud to support value-based care, so we can give our patients comprehensive care delivery. We support a number of Healthcare Partnerships that focus on increasing the quality of care for patients and offering healthcare providers the support they need. In the UK, 95% of patients rate the service 4-5 stars, with a 4.8 user rating on the App Store.

With 33% of Babylon users in the US saying that they would have gone to the ER or urgent care without Babylon virtual appointments, it's not hard to see how we're already making a difference.

What Is The Future Of Value-Based Healthcare?

As more and more data is made available by VBC providers, value-based care will continue to improve and develop. VBC programs are designed to react to information and adjust to patient needs. The transition from fee-for-service models will take time, especially as it's possible for providers to take an initial financial hit when they switch to VBC. However, the long-term benefits for patients and providers are likely to persuade more healthcare systems to switch to fee-for-value reimbursement models.

At Babylon, we are creating better health for everyone. To learn more about our digital-first value-based care or to partner with us click here.