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

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

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.

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

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