Effective financial incentives drive value-based care (VBC) adoption

Posted by Michael Renzi, DO, FACP on Oct 18, 2016 11:22:00 AM

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For years, providers and payers have been at odds with each other. Arguments about reimbursement rates, network inclusion, and claims management created relationships that were, at best, adversarial. The move away from fee for service (FFS) to value-based care (VBC), however, is triggering a shift all its own—new lines of communication are opening between payers and providers. This change is helping control costs and improve how care is delivered.
No matter how you slice it, there’s one clear path to increasing payer satisfaction and provider satisfaction at the same time: increasing the percentage of physician revenue linked to value-based contracts. While there’s critical and wonderful benefits that come along with value based care, such as better quality and outcomes, lower costs, and higher patient satisfaction, the only thing that will make providers adopt new practices is if there’s a strong financial benefit to do so.

Payers should be providing every willing physician with per member per month (PMPM) payments and shared savings, and those PMPM dollars should fund positive innovation in people, technology, and operations. Yet, shared savings programs have two inherent flaws that limit their ability to keep providers focused on the goals of the program: uncertain revenue streams and limited financial potential in terms of FFS revenue. Even a highly successful shared savings program will only yield a few percentage points in top line revenue—meaning that more than 95 percent of revenue is still FFS. One way to motivate providers to drive more value based decision making into their day to day practice? Create a shorter shelf-life for shared savings programs and progress the payment model to include a large percentage of their total revenue and put some of the revenue at risk for based on the cost of care. Maybe it only takes 10 percent of top line revenue at risk to get the providers attention. A potential 10 percent penalty for poor value based care performance (not only quality, but the cost of care) with a 10 to 50 percent reward will drive the behaviors necessary for success.

No matter how attractive VBC initiatives seem, no matter how much they promise to deliver, the healthcare industry cannot simply hope that providers will stay interested in the initiatives without a clear financial benefit to doing so.

What can you do now? Get involved with a CMS, commercial, or Medicaid shared savings program that provides PMPM prepayment and a shared savings opportunity. Find a partner that can help progress your payment model as you learn the ropes of linking quality and cost of care to your revenue. The potential that VBC programs hold have the power to drive real change—don’t find yourself behind the curve when tomorrow comes. To learn more about the options available, download our whitepaper: The New Gold Standard in Quality Payment: Alternative Payment Models.

Michael_Renzi_DO.jpgMichael Renzi, DO, FACP

Dr. Renzi, the Chief Medical Officer for Continuum, is a leader in the value-based care world. He is instrumental in developing payer/provider relationships and enabling services across the healthcare spectrum. Dr. Renzi is the founder and developer of Continuum’s Population Health program, and currently leads a large clinical team. A sought-after speaker and educator, Dr. Renzi presents at several conferences across the country annually.



Topics: Value-Based Healthcare, Alternative Payment Models, payer contracts

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