Overcoming hurdles to value-based care adoption

Over the past two decades, value-based care has been championed as an alternative payment model that prioritizes quality over quantity. This approach was predicted to be transformative to the health care industry and was set to revolutionize healthcare quality and payments. The idea was so appealing that, in 2014, a substantial 72% of health care executives were confident that the industry would transition from volume- to value-based care. That same year, a survey of U.S. physicians projected that half of their compensation over the next decade would be tied to value-based models. The Centers for Medicare & Medicaid Services (CMS) reinforced this vision, setting an ambitious goal for all Medicare fee-for-service beneficiaries to be in a value-based care arrangement by 2030.

The concept of value-based care is straightforward, and the potential benefits are significant. Value-based care arrangements can—and do—improve health care outcomes and reduce costs for patients. Additionally, the value-based care model could generate upwards of $1 trillion in enterprise value across payers, providers, and investors.

Yet, as we approach the end of 2024, the widespread adoption of value-based care has not met those lofty expectations. According to a 2022 report from The Commonwealth Fund, only 46% of primary care physicians (PCPs) reported receiving any payments from value-based care arrangements. These figures underscore a critical issue: there are significant challenges in transitioning to and sustaining this payment model.

Creating a value-based care model requires a significant administrative overhaul and large capital investment. The metrics underpinning value-based care—such as readmission rates, appointment timeliness, preventable infection rates, accounts receivable turnover, and patient-reported outcomes—are numerous and are continually evolving. Simply put, traditional practice management strategies must be drastically altered to manage and excel in the new value-based care model, necessitating extensive investments in information technology and human resources.

With ongoing staffing shortages and existing administrative burdens, physicians lack the resources necessary to navigate the complex setup required for value-based care. To transform the promise of value-based care into reality, the health care industry must truly work together and accelerate the implementation and adoption of this impactful care model by considering the following solutions, and payers are playing a large and effective role in making this transition a reality.

Greater adoption from commercial payers

While Medicare Advantage has heavily invested in value-based care, the commercial sector has been slower to make this shift. For PCPs, the necessary implementation changes for value-based care are more manageable if a significant portion of their patient population is covered by these arrangements. This is why CMS is aiming for the majority of Medicaid beneficiaries and all Medicare fee-for-service beneficiaries to be in value-based care arrangements by 2030.

And as the CMS deadline of 2030 approaches, industry experts expect that momentum for value-based care programs will increase. To help, CMS opened the CMS Innovation Center, which has committed to engaging all health care stakeholders—payers, providers, and beneficiaries—to improve quality, achieve equitable outcomes, and reduce health care costs. Other various initiatives, such as information gathering from beneficiaries, transparency, and the formation of State Transformative Collaboratives and the Health Equity Advisory Team, have been launched to support the agency’s goals.

Understanding how important provider networks are to the payer ecosystem, collaborating on how to make their networks successfully adopt value-based care has become increasingly important.

Industry enhancements in payment integrity

Claims processing and payment integrity have become growing administrative burdens for PCPs. Providers have experienced a 15% increase in administrative tasks over the past few years, partially as a result of staffing shortages from the pandemic. Payers and other health care partners can alleviate the documentation review process for providers and ensure that services are accurately billed and compensated. This support enables physicians to focus more on patient care rather than administrative tasks.

PCP incentives built into payment arrangements

Value-based care is based on incentive payments for quality patient care. However, additional incentives may be necessary to encourage widespread adoption among PCPs. Concerns about a national physician shortage are growing; the American Medical Association estimates that over 83 million people live in areas without sufficient access to a PCP. Additionally, primary care may not be the top career choice for new medical graduates due to lower compensation compared to specialists. By integrating further incentives into PCP value-based care agreements, the industry can motivate more physicians to enter and remain in primary care, thereby advancing the adoption of value-based care.

In a previous role as an emergency physician at a community hospital, I observed that many PCPs struggled to manage the overhead costs required to run a small practice, let alone the added expenses of adhering to value-based care requirements. These financial challenges are driving physicians to leave private practice and seek employment with health systems or other entities. The health care industry could help address these issues by offering infrastructure support to small practices. For example, artificial intelligence-driven tools can assist physicians in compiling the metrics needed for value-based care. While some progress has been made in this area, a lot of work remains to be done.

The impact of value-based care can significantly benefit all health care stakeholders, and it will require effort from everyone to make value-based care a reality. As a former practicing physician, I understand that the aim of delivering quality patient outcomes can be hindered by the paperwork and documentation that pull doctors away from patient care, but payers are moving in the right direction to reduce those administrative burdens and ultimately let doctors be doctors.

Timothy Garrett, M.D., is the Chief Medical Officer at Zelis