In the US, fee-for-service (FFS) is the most commonly used payment method for healthcare services. However, rather than providing the right and effective treatment, healthcare providers are keen on providing more volume of services to the patients. As a result, treatment costs skyrocket, with patients receiving high medical bills.
Fee-for-service Payment System: Costly, inefficient, and unable to meet patients’ needs.
The problem with unbundling or FFS model is that there needs to be a system or procedure to check whether the patient received the right treatment. The only parties to incentivize this are the care providers and payers. And it is the patient who gets hurt and bears the cost.
Unbundling or pay-per-service has long been used as a smokescreen to collect hefty amounts disguised as medical bills. This payment system led to a rise in medical fraud, depriving people of their right to basic healthcare. The unbundling model is becoming obsolete due to the lack of effective medical care and soaring healthcare costs.
US data confirm the transition to Value-based care. Medicare suggests reducing the number of Alternative Payment Models (APMs).
The US urgently needs to restructure and streamline its healthcare policies to focus on achieving equal and affordable care for all. The industry is gradually moving away from the FFS payment method.
In a yearly survey conducted by the Health Care Payment Learning and Action Network (HCP-LAN), the share of healthcare payments administered via alternative payment models (APM) increased from 23% in 2015 to 40.9% in 2020. This, among others, included bundled payments, shared savings, and population-based payment models.
Since 2010, more than 50 APMs have been developed by the Center for Medicare and Medicaid Innovation (CMMI) under the Patient Protection and Affordable Care Act (ACA). In 2021, CMMI announced that by 2030, they plan to embrace value-based care for all their recipients.
They also highlighted that the number of APMs available in the future should reduce drastically since only a few of these models generate substantial savings.
With such initiatives, US healthcare is bound to see a major overhaul as there is a pressing need for higher adoption of APMs to improve patients’ overall quality of care and reduce healthcare costs.
To improve the quality of healthcare provided, Centers for Medicare & Medicaid Services (CMS) already have a few value-based programs in place.
One of them is the End-Stage Renal Disease Quality Incentive Program (ESRD QIP) offered as part of Medicare. CMS links a portion of payment paid directly to facilities’ performance on offered patient care quality.
Another example of a value-based care model is the Hospital Value-Based Purchasing (VBP) Program, which incentivizes acute care hospitals to improve the quality of care provided in the inpatient hospital setting.
CMS also provides bundled payments for a complete tenure of care for a particular patient. This includes a single payment made to the hospital and associated doctors and staff for the entire stay period of the patient.
Promises and hurdles of Value-based care. Do we expect long-term benefits to outweigh the challenges?
At this time, the US healthcare scene needs a complete resurrection. A shift from volume-based care to value-based care would do exactly that. In value-based care, reimbursement is driven by the efficiency and efficacy of the treatment provided to the patient. The transition will improve patient outcomes and also keep healthcare costs in check. In the long run, by moving to a value-based model, we anticipate healthcare costs to be controlled to a certain extent.
This cost control is likely to be achieved as providers’ objective would be to offer cost-efficient and effective care rather than providing not-so-effective treatments just for the sake of a high billable. Furthermore, the patients can expect better treatment quality as care providers engage more with the patients.
There is no doubt that this is a momentous task involving many challenges, such as complex procedures to change the existing framework, processes and systems, the financial risk involved, and, most importantly, the intent to change and adapt. However, in the current scenario, the long-term benefits of transitioning to the value-based care model outweigh the challenges.
Do you want to stay updated on trends and challenges in healthcare payment systems undergoing a paradigm shift?
Contact us and gain best-in-class market insights. Learn how we help you make informed decisions.
#healthcrisis #ushealthcrisis #healthpolicy #valuebasedcare
Sources
http://hcp-lan.org/workproducts/APM-Methodology-2020-2021.pdf
https://www.healthaffairs.org/doi/10.1377/hlthaff.2020.01560
https://www.enlacehealth.com/how-alternative-payment-models-are-revolutionizing-healthcare/
https://www.mhaonline.com/blog/fee-for-service-healthcare
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4322626/
https://revcycleintelligence.com/features/what-is-value-based-care-what-it-means-for-providers