The stakes are high in healthcare with rising demands for transparency and quality, challenging the traditional fee-for-service (FFS) model like never before. This environment is ripe with opportunities to deliver value-based care (VBC).
For nearly two decades, healthcare systems have shifted from FFS to VBC, aiming to reduce costs while improving patient health. This transition is driven by the need to address the shortcomings of FFS, which often result in fragmented care, higher costs, and limited accountability for patient outcomes.
In a value-based care model, providers are rewarded for delivering better care, reducing unnecessary services, and achieving better patient outcomes. Yet, transitioning to a VBC approach comes with challenges.
Where We’ve Been in the Shift to Value-Based Care
The Centers for Medicare & Medicaid Services (CMS) has been a key driver of this shift through the promotion of Advanced Alternative Payment Models (APMs), which link payment incentives to performance. Over the years, healthcare organizations have progressed under these models, which reward hospitals and healthcare providers for the value they deliver.
Today, most organizations function within hybrid payment models—a transitional space that combines capitated payment models with value-based contracts in alternative payment approaches, such as Shared Savings and Downside Risk agreements.
CMS pushed for all providers to take some downside financial risk by 2025, and states have increasingly followed suit by implementing VBC payment models. Adapting to VBC is an economic imperative.
Indeed, the era of simply billing for services rendered is giving way to a more nuanced approach where outcomes and patient satisfaction take center stage. This transition poses both challenges and opportunities for healthcare organizations across the nation.