As group health insurance costs continue rising every year, more employers are embracing a new plan model that aims to both cut costs and improve outcomes for patients.

This trend, known as value-based primary care, is a bit of an umbrella term for various models that involve direct financial relationships between individuals, employers, their insurers and primary care practitioners. Insurers are experimenting with different model hybrids to find better care delivery methods that reward quality outcomes and reduce costs.

This new approach was made possible by the Affordable Care Act and the Medicare Access and Child Health Plan Reauthorization Act. And as the future of the ACA remains in doubt, the enabling parts that allowed for this system of payment reform that rewards health care providers that produce better quality outcomes for lower costs will likely remain intact.

And now more health plans are adopting this model. The 2016 “Health Care Transformation Task Force Report” found that the share of its provider and health plan members’ business that used value-based payment arrangements had increased from 30% in 2014 to 41% at the end of 2015.

In a McKesson white paper, payers reported that 58% of their business has already shifted to some form of value-based reimbursement.

 

How does it work?

First, let’s look at what the value-based primary care model is not: it’s not a fee-for-service system, under which when doctors see a patient and deliver care, they then bill the insurer a fee that is directly tied to the service they provided.

Fee-for-service arrangements have a fee schedule that lists the usual and customary charges for thousands of different procedures. The payment amounts will vary also based on the

reimbursement rate negotiated between the insurer and health care provider.

The part of the equation that’s missing is that the there is no direct link between the payment and the outcomes of the care. The insurer does not look at if a person was cured or has recovered successfully. There is only a link between the service provided and the payment.

Many value-based models provide a payment bonus to doctors and hospitals that produce better quality outcomes, like if they have more patients who don’t relapse or who recover at a slower pace and require more doctor visits.

Providers of value-based primary care typically charge the health plan a monthly, quarterly or annual membership fee, which covers all or most primary care services, including acute and preventive care.

The main goal is to get away from the fee-for-service system which puts pressure on doctors to only provide very short primary care visits with their patients, who will often send the patient out for unnecessary high-margin services such as scans and specialists and/or write excessive prescriptions. By eliminating this billing structure, doctors are able to practice more proactive care, which can reduce or eliminate certain future health care costs.

But just because the model is patient-focused, it does not mean that costs are higher. Proponents of value-based care say the focus on patients, and focusing on preventative and forward looking care rather than reactive care, reduces overall costs, which should be reflected in premiums.

Some benefits to patients include:

  • More time with their doctor
  • Same-day appointments
  • Short or no wait times in the office
  • Better technology, e.g., e-mail, texting, video chats, and other digital-based interactions
  • 24/7 coverage by a professional with access to their electronic health record
  • More coordinated care.

 

Vale-based care also improves provider experience and professional satisfaction, which, in turn, is known to improve the quality of care.