The fee-for-service payment model has dominated medical practices for as long as anyone can remember. But a relatively new trend – value-based payment – may be on the verge of replacing fee-for-service across the nation.
The fee-for-service model emphasizes payment based on the volume of services provided to the patient, regardless of outcomes and patient experience. In contrast, value-based payment is based not only on the services provided, but also on the patient’s experience and meeting any desired outcomes. This includes all face-to-face services, as well as anything that occurs inside or outside of the office – in effect paying providers for all the care they provide.
This is in a bid to allow payment to better reflect what happens as a result of the treatment, instead of charging and billing without considering outcomes or the patient’s experience.
The Move to Value-Based Payment
In January 2015, CMS announced a new goal of connecting 30% of fee-for-service Medicare payments to alternate models involving value and quality by the end of 2016.
By the end of 2018, as much as 50% of all payments will be tied to patient care quality in some way.
HHS Secretary Sylvia M. Burwell said, “Whether you are a patient, a provider, a business, a health plan, or a taxpayer, it is in our common interest to build a healthcare system that delivers better care, spends healthcare dollars more wisely, and results in healthier people.” CMS in particular is determined to set a new course toward value-based payment, and that is perhaps the biggest reason that it will eventually come to pass.
Adjusting to the New Model
How can providers adjust?
Understanding the nuances of value-based payment for providers is important, but not always intuitive. The industry is still figuring out how to apply value to services and bill according to patient quality and other alternative standards.
Nearly 20% of all practices said a shift in payment methods would be positive for their practice, and 23% said it would be bad. But more importantly, 44% said they weren’t sure yet – meaning there is a lot of uncertainty about how this methodology will impact practices.
Those who embrace value-based payment first and cultivate a culture of adhering to its principles stand a better chance of succeeding during the transition. Providers who focus on total care for the patient – inside and outside of the office – and pay attention to outcomes will have more success, and higher payments, than those who do not.
It’s only a matter of time until this new paradigm is in place for most providers. Adopting early can be the difference between a smooth transition and a burdensome one.
