The advent of value-based care, based on the Institute for Healthcare Improvement “Triple AIM” framework — improving the health of populations, reducing the per capita cost of care and improving the individual experience of care — has motivated providers to shift their focus from volume to value. And, as providers shift to value-based activities, their reimbursement model is also more in alignment with payers. Like payers, providers now benefit from a fundamental understanding of and ability to manage risk.
Managing the total cost of care is essential. This includes investment in information technology (digital tools), analytics and select personnel, e.g., care coordinators. The chronic-disease life cycle is typically progressive, subject to acute, intermittent events and best managed by a team-based integrated care approach. In this article, we propose a value-based care operating model within the context of organizational maturity.
Medicare: Approaching a tipping point
Value-based initiatives are being driven by Medicare. The Centers for Medicare & Medicaid Services (“CMS”) estimated that, in 2022, 64.0 million Medicare beneficiaries incurred total expenditures of $991.9 billion, or $15,508 per enrollee. Because of a rapidly aging population and increased condition severity, Medicare expenditures are forecast to reach $1,669.9 billion in 2030, with spending per enrollee reaching $21,977. Medicare’s focus on value-based reimbursement will gain urgency as the population ages and costs rise.
The Medicare Advantage market is projected to increase from a 48% market share in 2022 to 60% in 2030; it currently accounts for 55% of Medicare expenditures. The growth in Medicare Advantage enrollment (5.2% compound annual growth rate) is far surpassed by the increase in expenditures (9.8% CAGR). Medicare Advantage represents an entrée for providers to capitate payments.