Value-based care: What it will take to be ready for downside risk by 2025

The pandemic is accelerating healthcare providers’ move from fee-for-service to value-based care. These 5 capabilities will be required for success.

By and Jacqueline Matthews, RN, MS | 4 minute read | August 9, 2021

Pediatrician seated on exam table talking to boy next to her

From telehealth to care management to where care is provided – healthcare delivery changed rapidly in response to the pandemic. Many health systems learned that reliance on traditional fee-for-service left them vulnerable to dramatic volatility and drastic shifts in volume and demand.

U.S. officials have made it clear that they will continue to link healthcare payments to value-based care. It is expected that the Centers for Medicare & Medicaid Services (CMS) wants all providers to take some downside financial risk by 2025. The U.S. government also wants half of Medicaid and commercial payer contracts to follow value-based care models by 2025.These changes to delivery models and reimbursement models are feasible, but require planning, technology infrastructure and stakeholder support.

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5 capabilities healthcare providers need to succeed with value-based care

Creating targeted initiatives that align value-based care with operations, physician groups, and care delivery can be transformative for patient care and financial outcomes. Here are five capabilities healthcare organizations need so they can adjust their care strategies towards value-based payment models effectively:

1. Assess risks to help deliver the right and equitable care to your population

According to an IBM Watson Health PULSE Health Poll during the pandemic, one in three respondents said they had delayed or canceled healthcare services.2 There are many potential drivers for delayed care, such as a lack of transportation. Understanding the needs of communities will help organizations address specific needs and improve overall access to care. Understanding the needs of communities will help the health care system address specific needs and engage in care coordination.

2. Engage health consumers to support their wellness and health

During the pandemic, many healthcare organizations quickly pivoted to telehealth options to meet the needs of their patients and mitigate risk. But it would be a mistake to think of telehealth visits as merely a replacement for in-office visits. Instead, the digital options that have blossomed may be engaging patients who would not normally seek care.

In fact, a survey found that 83% of patients indicate a desire to continue using telemedicine after the pandemic.3 Telehealth is one tool healthcare organizations can use for population health management and patient satisfaction. It can help engage patients in a setting that makes them feel comfortable and enables greater access to care, which helps organizations better serve communities and grow market share.

Learn how IBM Watson Health can support patient engagement

3. Capture social determinants of health, and link to consumer groups and community services

Healthcare providers can continue to grow their brand and services by leveraging data and metrics insights into their target communities to offer services exactly where there are needs. For example, based on localized estimates, one client moved an outpatient care center to a new market to better serve their population. As a result, the organization saw a two-fold increase in care and retail pharmacy use because of increased convenience for the population. This amounted to USD 2.8M net revenue including ancillary services – far exceeding the clinicians’ three-year budget projections.

Read more: 5 examples of using social determinants of health to improve population health

4. Collaborate with others within the healthcare ecosystem

As health systems coordinated care for COVID-19 patients, they worked closely with others in the healthcare delivery system to ensure beds were available for patients who needed them most. Working with post-acute care providers is critical to a hospital’s ability to maintain quality care and meet post-acute care needs tied to patient outcomes, as well as prevent costly readmissions and emergency department visits. Engaging with primary care providers in the community can help care teams provide more cohesive care coordination for patients.

5. Develop a more advanced information management strategy

Health systems looking to enter or expand their value-based care footprints will need to have a platform that provides a near real-time view of performance and can also track health outcomes. Often these platforms integrate with electronic health records (EHR). In additional to driving performance, and planning for community needs, data insights can help healthcare providers negotiate competitive rates with payers.

Working with one client, we evaluated reimbursement for major joint replacements with five of their top commercial payers. We found the total cost of engagement to the client, which they used to develop a target for future negotiations for reimbursement benchmarks with their major health plans.

The resourcefulness and drive that fueled organizations during the pandemic can advance their progress toward value-based care too. Where there is risk and apprehension, there is also hope and opportunity. From overcoming the concerns of taking on downside risk to dramatic changes to contracts and clinical practice, figuring out the successful transition from fee-for-service to shared risk, the long-term rewards for all stakeholders are clear

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Updated November 11, 2021

  1. See guidance from CMS to state Medicaid Directors, page 4, Sept. 15, 2020
  2. 3,004 survey participants interviewed from Dec. 1 – 13, 2020 with a margin of error +/- 1.8%
  3. Telemedicine today: Patient adoption and preferences during COVID-19 and beyond. June 2020 survey