Understanding Value-Based Care
VBC is a different way of providing and paying for health care than fee-for-service. VBC encourages an enhanced focus on prevention and more proactive and coordinated care to improve health outcomes and experience of care, and to help control costs. In VBC arrangements, health care providers are accountable for the quality and cost of care provided, which impacts how much they are paid. For more information, click here:
Why Value-Based Care Matters
The United States spends far more per capita on health care than any other country, even though it does not guarantee universal coverage for Americans. We also perform poorly on overall indicators of population health compared with other developed countries, and our health disparities are profound. Our fee-for-service system rewards doing more, not better; focuses on sickness rather than health and prevention; has led to fragmentation of care; and is provider-centric, not consumer- or patient-centric. VBC, if done correctly, holds significant promise for improvement across five main areas: better experience of care, better health of populations, smarter spending, improved health equity and optimization, and enhanced provider accountability, support, and satisfaction.
How Prevalent is Value-Based Care?
According to the America’s Health Insurance Plans (AHIP), “In 2024, across all lines of business (LOBs), 44.9% of U.S. health care payments flowed through an APM contract (Categories 3-4) and 28.7% flowed through a downside risk APM contract.” To access the full report, click here:
Benefits and Limitations of Value-Based Care
Benefits
Limitations
VBC is still relatively new and continues to evolve to incorporate learnings from existing models, whether pilots, demonstrations, or permanent programs. As long as fee-for-service remains the predominant payment mechanism, health care providers may find it challenging to make the changes necessary to succeed in VBC arrangements.
Accountable Care Organizations (ACOs) are one of the most common types of VBC arrangements; here is a link to a summary of one study that captured what health care team members identified as areas for improvement:
Also, VBC is one tool to address the cost of unnecessary and inefficient care, however, VBC does not address the price of services and other costs that are outside the control of these organizations that include an aging population, health care consolidation, new technologies, the complexity of a fragmented health care system, etc. Below are some resources that discuss the contributors to rising costs:
Types of Value-Based Care Models
See the Health Care Payment Learning & Action Network (HCP LAN or LAN) framework [link to pdf of HCP LAN framework or embed on webpage]. The HCP LAN is an active group of public and private health care leaders dedicated to providing thought leadership, strategic direction, and ongoing support to accelerate our care system’s adoption of alternative payment models (APMs). For more information, click here: