Value-based healthcare differs significantly from traditional fee-for-service systems. Rather than paying for quantity of care, quality of care is the standard that payers reward when it comes to reimbursement.
In recent years, the movement towards values-based healthcare delivery practices has been greatly accelerated, with ever-increasing numbers of both government and private payers beginning to tie reimbursement to the quality of healthcare a patient receives. This shift — and its economic implications — also increases the importance of Medical Affairs departments because of the unique role they play in the healthcare system.
The Affordable Care Act Was a Catalyst for Change
The shift from quantity of healthcare to quality of healthcare was greatly accelerated by the passage of the Affordable Care Act (ACA) in 2010. It was under the directives of the ACA that the Center for Medicare and Medicaid (CMS) began to reimburse American hospitals for the quality of care that they gave their patients — for example, giving bonuses for low readmission rates but refusing to pay for issues like nosocomial infections. These measures were meant to give hospitals important incentives to pay attention to patient outcomes. The Physician Value-Based Payment Modifier Program — launched in 2015 and phased in over three years — expanded this value-based system to include not only hospitals but physicians as well.
The Economics of Quality Care
To create a strong economic incentive to deliver quality care, there is now a significant focus on reimbursement rates. Medical Economics reported in 2015 that in 2011, almost all of Medicare reimbursements were traditional fee-for-service payments. By 2014, however, nearly 24% of all payments to primary care providers and 40% of all in-network payments were linked to value-based performance or to waste reduction.
The Department of Health and Human Services (DHS) also took important steps in this direction when it instituted the National Quality Strategy in 2011. This initiative comprises over 300 organizations that represent all aspects of the healthcare industry and has continued to operate with three overall goals to improve the quality of healthcare in the United States:
- Better Care. Healthcare that puts a greater emphasis on patient-centeredness, accessibility, and reliability.
- Healthy People/Healthy Communities. Initiatives that help to address the underlying issues causing healthcare problems in vulnerable populations.
- Affordable Care. Reducing the costs of healthcare to all stakeholders.
To achieve these aims, The Centers for Medicare and Medicaid Services (CMS) developed what it has dubbed a “values-based rewards system” in order to provide financial incentives to providers for delivering high-quality care to their Medicare patients. Examples of specific values-based initiatives include the Hospital Value-Based Purchasing Program (HVBP) and the Hospital-Acquired Condition (HAC) Program.
Medical Economics notes that this increasing emphasis on quality is not just coming from the government but from the private sector as well. For example, in 2014 more than 24 million Blue Cross/Blue Shield patients received coverage under various value-based programs, such as patient-centered medical homes, accountable care organizations, and pay-for-performance programs.
How This Emphasis on Quality Care Impacts Medical Affairs
According to a McKinsey and Company report, Medical Affairs has an important role to play in this new, value-based environment, including:
- Facilitating patient access to medical services and treatments by educating patients and other stakeholders on the value of these treatments.
- Increasing the ease with which the various healthcare stakeholders communicate with one another and with the patient, forming a system that is truly patient-centered.
- Collecting and integrating data from a variety of sources to quantify and interpret the quality of the healthcare being provided.
The focus in the healthcare sector is shifting away from quantity of care to quality of care. This shift is reflected in both public and private reimbursement strategies that pay providers based on the outcomes of patients and other important metrics. Measurement of these outcomes is therefore of increasing economic importance. With its ability to help measure, collect, and interpret data for all stakeholders, Medical Affairs will play an increasingly important role.