In the United States, the COVID-19 outbreak has revealed how fee-for-service (FFS) medicine makes both patients and providers vulnerable clinically and financially when the healthcare system bases care and payments on the volume of services provided. Specifically:
Two healthcare reimbursement experts share why shocking numbers like these will kick-start the shift from FFS medicine to value-based care and value-based reimbursement models – a transition that was sputtering to a crawl before the pandemic.
“Whenever a new concept like [value-based care] is announced, there is always an initial buzz and splash and predictions of a major shift,” says Dr. Ronald Silverman, chief medical officer for the Medical Solutions Division at 3M. “Then reality sets in after people start trying it, and they remember just how complex and complicated healthcare really is and how hard change really is.”
According to Silverman, barriers to the adoption of value-based care include aligning financial incentives across multiple industry sectors, changing ingrained practice patterns, learning how to use an electronic health record (EHR) system effectively, and collecting and reporting quality measures.
The biggest of these barriers has been data. Not the lack of it, but the overwhelming flood. Cherilyn Murer, J.D., president and CEO of CGM Advisory Group explains that hospitals, health systems and medical practices are drowning in data and struggling to convert it into actionable insights to improve outcomes and lower costs for patients.
In its most recent annual progress report (PDF, 404 KB) on value-based healthcare adoption, the Health Care Payment Learning and Action Network said the percentage of Medicare, Medicaid and commercial health plan payments that flowed to providers through alternative payment models, or APMs, crept up only two percentage points to 36 percent in 2018 from 34 percent in 2017. That’s after percentage point gains of five and six the previous two years.
According to both Silverman and Murer, if there’s one silver lining to the pandemic, COVID-19 will get the needle moving again to the benefit of patients.
One way – and perhaps the most urgent way – comes from the immediate need to lower operating expenses. With revenue down, the only way to maintain even a meagre profit margin and stay open is to cut costs. That will have hospitals, health systems and medical practices re-examining their supply chains, Silverman says.
He says he expects more providers to move to a clinically integrated supply chain and use value analysis committees to make medical supply and equipment purchasing decisions based on cost and outcomes.
“If you buy product A, which may cost a little more but prevent infections and dramatically lower your readmission rates, your long-term costs will be lower, and you’ll do well under value-based care,” Silverman explains. “Better outcomes and lower total cost of care are the definition of value.”
COVID-19 has sped up the movement already underway to launch and modify care delivery to more virtual models. It also has proven the immense value of remote monitoring. Providers are monitoring patients’ health status and behaviours via wireless apps and devices more often, rather than having them come in for an office visit. Not only is virtual care less expensive and more convenient, it flags changes in health status or behaviours in real time. The providers can address issues immediately rather than waiting for changes to escalate into costly visits to medical specialists or the emergency room.
Telemedicine, meanwhile, has gone mainstream virtually overnight because of the outbreak. A new report from Frost & Sullivan, a market research firm, says the demand for telemedicine services in the U.S. will surge 64.3% this year, largely because of the COVID-19 pandemic.
By comparison, patients’ use of telemedicine grew 12% from 2017 to 2018, according to a separate report from FAIR Health, a claims data analysis firm.
Other factors in addition to COVID-19 are fuelling telemedicine’s rapid ascent to an expected method of connecting patients with their providers:
Providers that are optimising their telemedicine capabilities during the pandemic are seeing the value in using telemedicine as a regular, expected and necessary part of their value-based healthcare models moving forward. Triaging patients remotely is less expensive than physical visits, and if the virtual care resolves a medical issue before it gets worse, the patient and the provider benefit from a better outcome for less money.
Murer points to another value-based care lesson that the COVID-19 outbreak is teaching both patient and provider: not all medical care and diagnostic tests are necessary or appropriate. Much of what’s not being done now is what experts call “low-value care,” or care that provides little or no therapeutic value to patients and, in fact, may actually harm them.
FFS payment models drive low-value care. If low-value care disappears, as it has during the pandemic, so does FFS revenue, as it has during the pandemic. A better model for both providers and patients in good times and in bad is value-based healthcare, which rewards providers for doing what’s best for their patients.
For that reason and the others cited above, both Silverman and Murer say they expect providers to push the accelerator to speed the adoption of value-based care models across the industry after the COVID-19 public health emergency ends.