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Value-based Payment | Shifting from Volume to Value

Value-based payment vs fee-for-service

Fee-for-service is a model where health care providers are reimbursed for services rendered to the patient. This traditional payment model reimburses the provider for each treatment or test provided to the patient. This method has been criticized as rewarding providers for quantity of care versus focusing on quality of care. Providers are incentivized to order more tests and provide more procedures.

Value-based payment is a newer approach aimed at controlling the rising cost of health care and focusing on the quality of care provided to the patient. Where fee-for-service reimburses provides for each health care service provided, value-based care zeros in on the positive outcome of the patient’s treatment. Increased coordination between different providers reduced costly duplication of service and ensures that patient receive the highest quality of care.

The transition to value-based-payment

Currently, the majority of payments to a provider occur in a fee-for-service environment—only a small portion of reimbursements are value-based. The shift to value-based payment is needed to address the unsustainable increase in health care costs. This strategy is being adopted by public and private payers alike and will continue to become the approach of choice. Hospitals will need to think outside of the traditional walls of inpatient care and focus on the entire continuum of care for a population.

Forging the path from volume to value

HAP continues to ensure that the move to a value-based payment approach improves patient care in a sustainable and efficient manner. In 2015, HAP hosted the first annual Payment Reform Summit. This forum brought together hospital leaders from across the state in addition to government officials and industry experts. During the summit, three reoccurring themes were identified as priorities in the shift to value-based care:

  1. Promote changes to existing regulations and policies that prohibit hospitals and providers from taking steps to implement value-based purchasing and otherwise innovate in ways that will allow providers to implement novel programs and assume risk
  2. Promote timely access and transparency to information
  3. Work with the state and federal governments and commercial payers to develop a common platform of metrics, as well as consistency in reporting requirements, areas of clinical focus and value-based program design

Value-based care delivery models

As hospitals and other health care providers begin the shift to value-based care, there are several delivery models that have been developed.

Bundled Payment/Episode of Care is a strategy where hospitals and care providers are reimbursed a predetermined amount based on the procedure performed on the condition diagnosed. This approach provides financial incentives to hospitals to improve efficiency in treatments and reducing unnecessary episodes of care. Bundled payments promotes price transparency, allowing the patient to know how much a procedure may cost upfront instead of waiting until after the produce is complete.

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Resources

Pennsylvania's Use of Value-Based Payment 2017
HAP’s first value-based payment (VBP) survey report provides insight into how hospitals and health systems in Pennsylvania are transforming to VBP models.

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