July 25, 2017
Crucial Elements in the Shift from Volume to Value

Frenzied coverage of the ongoing effort to repeal and replace (or maybe just repeal) the Affordable Care Act has focused primarily on how many Americans will lose their health insurance if Republicans succeed, how much the sought-after tax cuts will benefit the wealthiest taxpayers, and what the political fallout might be. Virtually absent from the discussion is what will happen to the already-underway Obamacare provisions designed to shift healthcare reimbursement from the historical volume-based approach to value-based models.

In fact, the text of the American Health Care Act, which passed by a thin margin in the House of Representatives, and is now being debated and repurposed by Senate Republicans, doesn’t mention the words “value” or “volume”.

Wrong incentive

But politics aside, there remains wide consensus that the traditional fee-for-service model of healthcare delivery is rife with problems. We know that physicians who are paid for every test they run and every surgery they perform are inadvertently incentivized to deliver more services to more people, with no corresponding promise of improved outcomes. In fact, physicians may be penalized for keeping people healthy and reducing errors and complications. Moreover, since they have little or no incentive to coordinate with other providers, care often ends up being fragmented and disjointed. And patients end up at the mercy of an inefficient, largely opaque system. (Shopping for health care is like trying to find a purple sweater in a department store while blindfolded, says Princeton economics professor Uwe Reinhardt).

But the proposed transition to value-based reimbursement is a demanding obstacle course and is likely to continue to meet considerable resistance. Polled recently by the Medical Group Management Association, 49% of responding physicians said they had mixed feelings about the shift toward value-based models, while 40% said they had negative feelings about the transition, and a mere 11% said they looked favorably upon it.

Key elements

What will it take to bring such a monumental change to fruition? Experts say several prerequisites will be crucial:

Providers will need to make a meaningful front-end investment in information technology, says Dr. Bill Frist, a former U.S. Senator, adding that data is “fundamental to understanding costs and identifying inefficiencies in the systems.” There will be a “significant increase in the need to acquire, aggregate, and analyze data across a healthcare network,” agrees McKesson Technology Solutions. And the investment will need to take place across multiple levels, says health systems management expert Renée Glanzman, encompassing new staff, new billing methods, claims data analysis and patient care coordination, because “data analysis is the bloodline of risk-based payments” and institutional structures will need to accommodate value-based payments. Electronic medical records are a start, she says, but other internal and external data will also be needed.

  • Physicians will have to coordinate with other providers to create integrated financial and clinical platforms that encompass common views of patients across care settings, says Dr. Frist. Many medical services can be performed in outpatient facilities, in the home, or via telehealth, he adds, which can both reduce costs and increase patient satisfaction. The traditional silo care model will have to be transformed into a network care model, says McKesson, and cultural shifts will be necessary at all levels of the care continuum, adds Ms. Glanzman. For example, surgeons and primary physicians will need to develop relationships with providers in post-acute care settings, since post-acute care may require skilled nursing, inpatient rehabilitation, home health and physical therapy.
  • Physicians and patients will both need to know the true costs cost of care. That’s virtually impossible now, says Dr. Frist, because every unit of service is associated with five different charges: the hospital “chargemaster” rate, the private insurance rate, the Medicare rate, the Medicaid rate, and the actual cost. Physicians have been shown to actually order fewer tests, when they know how much those tests cost, but they’re often in the dark. Patients, meanwhile, will have to take it upon themselves to demand greater transparency in pricing, rather than simply relying on payors to pick up the tab.
  • Time will be needed for providers and health systems charged with changing years of practice habits to put the new mindset into action, says Ms. Glanzman. Providers will also need to budget for an initial revenue loss, adds Dr. Frist — “a hard pill to swallow,” he says — because better value will lead to a healthier population that requires less care.

Value-based priorities

Whether or not the Affordable Care Act survives, the push for value and the demands for data collection and cross-channel communication are likely to increase over time. By allowing physicians to prioritize time spent providing high-quality care over time spent entering data, medical scribes are well positioned to play a crucial role in the transition from volume-based care to value-based care.