For the last several years, the U.S. health care system has been undergoing a significant transformation in its payment structure, evolving from a fee-for-service model to a value-based payment model.
This evolution took a key step forward earlier this year when the Health & Human Services set a goal of "tying 30 percent of traditional, or fee-for-service, Medicare payments to quality or value through alternative payment models … by the end of 2016, and tying 50 percent of payments to these models by the end of 2018."
I applaud HHS Secretary Sylvia Burwell and the department for this initiative. Value-based payment models have proven to be good for the patient, the provider, the industry and our country. In her remarks, the secretary stated that we needed to move from "the old way of doing things, which amounted to, ‘the more you do, the more you get paid.'"
The secretary is right: These goals are a step in the right direction as they bring more value to health care. Value-based payment models can help to build a healthier population because physicians are rewarded for the health of their patients as opposed to episodic treatment.
The goals as identified by Burwell are positive for providers in that they bring additional standardization measures and make clearer the collective expectations of the payers. This up-front transparency and delineation of expectation will simplify provider experience. Providers do not treat Medicare patients one way and private-pay patients in a different way; they perform the treatment based on their expert opinion on what's best for the individual patient.
In the health care industry, I've seen firsthand the results of abandoning the fee-for-service model and using value-based payment models to help physicians in their quest to get their patients on the path to better health.
Take my company. At Humana, results for more than 1 million Medicare Advantage members in pay-for-value agreements reflected better quality, outcomes and costs: better HEDIS [Healthcare Effectiveness Data and Information Set] scores and Star ratings, fewer trips to the emergency department among our members, and a 19 percent cost reduction.
Yet, these results show that we've only scratched the surface when it comes to how the value-based payment model can help to disrupt our nation's health care system for the better.
Expanding Patient Populations
Population growth projections indicate that demand for medical services is only going to grow over the next decade. The Medicare population is expected to increase from 50.7 million in 2012 to 81 million by 2030. The Congressional Budget Office is projecting that the Affordable Care Act will bring 25 million people into the health care system by 2017, up from the nearly 7 million people who enrolled last year.
So, what does this HHS initiative mean for our hospital system? There is a belief among the hospital systems that the value-based payment model does not work for hospitals. Simply put: If a bed isn't filled, the hospital will lose money.
But value-based payment is not about keeping people in hospitals; it's about changing the paradigm so that people are healthier and don't need to spend as much time in the hospital. With the expanding populations I cited previously, our health care system needs to have a more holistic understanding of each patient who walks through the doors of the ED so it can handle this expected demand. Imagine if each emergency physician in the country had a highly detailed patient histories before he or she even ordered tests and decided on treatment choices.
To help hospitals tap into the transformative power of value-based payment models, we have to start by engaging these physicians, who are centered in and throughout the hospital system. As part of the integrated care delivery platform, hospitals are part of the epicenter of care.
The Physician's Role
Physicians are worried about reimbursement for medical outcomes and are justifiably concerned about being responsible for unexpected events such as broken legs from car crashes. These are legitimate concerns and they must be addressed.
But let's be clear: Physicians can be held accountable to educate and proactively help their patients maximize their best health. For example, if a physician has a patient with diabetes, the physician needs to educate the patient about the appropriate use of the patient's diabetic medications and to ensure early on that the patient sees a retinal expert or a kidney expert to lessen the likelihood of diabetic complications.
It's the educational conversation with the patient that is the responsible act the clinician should be accountable for. The physician needs to ask: "How do I maximize the health of this person with diabetes?" By supporting the physician's efforts to be more proactive on the educational front, we diminish the risk of waiting for the person with diabetes to suffer kidney failure.
In addition, consumers are going to have questions. Physicians can help their patients understand what value-based care means when it comes to their health, and why it's good for them, by incorporating the following three key elements into initial discussions:
Use relatable examples to explain what accountable care means. Provide an overview of fee for service and accountable approaches to care, and discuss real-life examples of patients who have experienced improvements in quality of care and outcomes in an accountable care model to illustrate the point.
Emphasize the ways in which accountable care is designed to benefit patients, such as more coordinated care, increased focus on preventive care and more time spent with their doctor.
Proactively address commonly asked questions. In my experience, many patients want assurance that they will be able to continue seeing the same doctor once he or she transitions to an accountable care model, and that their insurance coverage will remain the same.
The unveiling of the value-based goals from HHS Secretary Burwell, combined with the momentum from value-based payment models, can help the health care industry to continue its evolution toward helping people achieve their best health.
Value-based payment models are also fundamental to improving population health. By tapping into the power of preventive care, we can encourage and reward providers who take a holistic approach, which results in better health and quality as well as reductions in cost. Everyone wins — consumers, physicians and our system.
By the end of the decade, millions of new people will enter the health care system, and the first step for many of them will be in the hospital. Through the value-based model, hospitals and physicians will help to usher in this new era of holistic care and help build a healthier country.
Roy Beveridge, M.D., is the chief medical officer at Humana, based in Louisville, Ky.