Finding Equilibrium in Fee-for-Service and Value-Based Care

Est. Reading Time: 6 Minutes

“We’re at a really critical juncture in the path to value-based care,” according to Elizabeth Fowler, Director of the Center for Medicare and Medicaid Innovation (CMMI). “Payments for the sake of payments may not generate the transformation that we’re seeking.”

As healthcare, the economy, and the world rebound from the COVID-19 pandemic, now is the time to consider how we can advance value-based care. The pandemic highlighted the importance and viability of value-based payments. Brian York, Vice President of Value-Based Care at Coverys, noted that “during the first COVID-19 surge, many providers who transitioned to value-based [care] fared better than those who leaned entirely on fee-for-service models. For those providers, revenue remained consistent during lockdowns while elective procedures were delayed and canceled, further underscoring its value to providers.”

However, data from Deloitte tells us that 98 percent of providers rely on revenue from fee-for-service payments.

So which model is best: value-based care or fee-for-service?

Break Out of Black-and-White Thinking

An either-or mindset may be naive and misleading. Providers know that the situation is nuanced; there is no “on/off switch” to take you from one world to the other. For example, you may have a contract in “value-based care,” but is the contract a global risk or a basic pay-for-performance contract? While both contracts are value-based, they may have vastly different requirements and criteria. This variety between payers extends to their beneficiaries: your patients. Therefore, the ability to understand and satisfy various value-based contracts is critical to caring for your diverse patient base.

The idea that reimbursement models automatically change overnight and across all payers and lines of business is simplistic and ignores the realities of practicing medicine and serving our communities.

We believe there is another way. A way that allows you to take a thoughtful, methodical approach to switching from fee-for-service to value-based care without flipping your business on its head. A way that aims for equilibrium as we progress through this transformative change.

Step 1: Solidify the Base of Your Practice Management

Before you embark on revising your care delivery model to fit the new value-based world, you need to get your house in order. You can do this by implementing tools to optimize care delivery and everyday operations. Fortifying your fundamentals can give you a solid foundation to build upon.

Your foundation should start with the basics of running an efficient practice, including your:

  • Electronic health record (EHR) and patient portal;
  • Revenue cycle management, billing, and coding;
  • Practice management and financial reporting; and
  • Fee-for-service contracts.

If your core elements are unstable, if you are worried about meeting your payroll, if your day-to-day workflows are out of control, if your practice’s services or technology aren’t serving you, then you will have a hard time reshaping your clinical care model to succeed in value-based care. Improvements such as efficient EHR use can not only help reduce clinician burden and burnout, but they may also improve performance in both fee-for-service and value-based models.

Step 2: Upgrade Your Patient Experience

Regardless of whether we operate in a fee-for-service or value-based care world (or somewhere in between), we must excel at attracting, retaining, and engaging patients. Patients today are demanding a level of convenience and access that most traditional healthcare organizations are not equipped to serve.

What are the key elements of an upgraded patient experience?

  • “Digital front door,” including practice websites and digital marketing
  • Direct online scheduling (not just “requesting appointments”)
  • Telehealth and 24/7 virtual access
  • Automated patient outreach to send reminders and close care gaps
  • Patient satisfaction monitoring

In a value-based world, if you want to close a patient’s quality gap, how will you contact them without advanced capabilities? If you want to increase access for patients so they avoid more expensive sites of care, you must ensure they can easily get a hold of you and fit into your appointment schedule. If your patients’ experience now determines part of your financial remuneration — such as through the annual CAHPS survey — how can you gauge your patients’ satisfaction and where you need to focus your improvement efforts?

These capabilities improve patient care in a fee-for-service world as well as enhance value-based care performance.

Step 3: Implement the Fundamentals of Value-Based Care

Once your practice is in order and you have enhanced your patient experience, you are ready for the block-and-tackling of value-based care. Some may advocate for jumping into the deep end and “doing it all” from the start, however we recommend you get the fundamentals right before you advance to the next step.

So what are the fundamentals of value-based care?

  • Understanding your patient’s attribution to value-based contracts
  • Creating access to care for patients
  • Improving the clinical quality and documentation of your patients
  • Reviewing population health data
  • Creating a process of continuous performance improvement

Don’t try to accomplish everything from the start. Some of this may even seem basic, and your enthusiasm may spur you to go further. You’ll get there, but it is important to understand that progress takes time. Just like creating a habit or strengthening a muscle, you must develop new ways of doing things progressively over time, building upon each milestone.

Step 4: Take Greater Responsibility for the Totality of Your Patients’ Care — and Costs

Start thinking more comprehensively about your patients. Not just the ones calling or requesting an appointment, but also the ones who aren’t calling and those who may be seeking care elsewhere (and often not telling you so).

This step requires you to begin managing your patients in new ways, such as:

  • Managing the network of specialists and facilities where your patients go for care
  • Managing transitions in care, such as when a patient is discharged from a hospital
  • Managing chronic conditions through new techniques of care coordination
  • Appreciating the behavioral health of our patients
  • Understanding the non-clinical social determinants of health impacting patient care

To manage these elements, you must upgrade your accountability. Shift from reactive to proactive care; from understanding the average patient to understanding each individual patient; from facing the problems in front of you to problems you’re not yet aware of.

Step 5: Move Into Advanced Risk Models

Great job making it this far. You are now ready for advanced value-based models. You are ready to handle downside risk. You are ready to take on more delegated services from payers. You are ready to get creative in developing contracts with downstream risk partners.

Risk is not for the faint of heart; this level of value-based care is called “risk” for a reason. But with the proper infrastructure, supporting cast, and mastery of the previous steps, you should be ready to take that leap confidently, without fear or hesitation.

This process, while difficult and complicated, becomes more manageable and sustainable when accomplished in a thoughtful, methodological way. No more “black-and-white thinking” or hoping that jumping from one extreme to the other will just automatically work out.

We all know that healthcare is complicated, and the shift to value-based care, while over-hyped, can be equally confusing. We recommend that rather than choosing fee-for-service or value-based care, you instead seek an equilibrium between the two as you step forward on the journey.

To achieve equilibrium, you may need a partner. Practices of all sizes stand to benefit from increased bandwidth a partner can provide since lack of resources or expertise is a frequent obstacle to implementing value-based care. As Sam Starbuck, Vice President of Privia Quality Network, noted: “The key is to find a partner that deeply understands the pillars of value-based care.”

The tools, processes, and partnerships discussed above can help improve practices’ performance in both fee-for-service and value-based care. Don’t settle with one or the other. With CMS looking to mandate more participation in risk-based models, practices should consider taking proactive measures. These crucial steps can ease the “volume-to-value” transition and position practices to deliver high-quality, cost-effective care to patients and help heal our healthcare system.

Subscribe to inforMD to stay updated on healthcare’s latest news and find tips and tricks to optimize your practice!

Are you interested in finding out more about PRIVIA+?