What is the history of value based care?

Originally developed with the intention of focusing on quality outcomes rather than quantity of patient visits, value based care was established initially to help reduce the rate of hospitalizations and readmissions. The concept has grown over the past decade and now the history of value based care includes the establishment of a number of programs involving incentive payments for independent providers.

The Centers for Medicare & Medicaid Services (CMS) describes value based care as “part of our larger quality strategy to reform how health care is delivered and paid for.” The programs support the three-part aim of:

  • Better care for individuals
  • Better health for populations
  • Lower cost

Five original value based programs arose out of the Medicare Improvements for Patients & Providers Act (MIPPA) of 2008 and the Affordable Care Act (ACA) of 2010:

  • End-Stage Renal Disease Quality Incentive Program (ESRD QIP)
  • Hospital Value-Based Purchasing (VBP) Program
  • Hospital Readmission Reduction Program (HRRP)
  • Value Modifier (VM) Program (also called the Physician Value-Based Modifier or PVBM)
  • Hospital Acquired Conditions (HAC) Reduction Program

As the history of value based care progressed, more programs were added that were specifically targeted toward independent physicians and their need to realize financial rewards for providing quality care. Some of these programs resulted in an administrative burden for independent providers and were either restructured or replaced in an effort to relieve that burden.

Two such programs are the Medicare Access & CHIP Reauthorization Act of 2015 (MACRA) and the Merit-Based Incentive Payment System (MIPS) of 2019.

The concept of value based care is based on certain metrics, including a reduction of hospital readmissions as well as the improvement of preventative care and the use of certified health technology such as electronic health records (EHRs).

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Another idea that has formed from the history of value based care is the encouragement to form networks that coordinate patient care. These networks focus on collaboration between primary care providers, specialty providers, and healthcare organizations such as hospitals, to improve the overall quality of care provided and as incentives for financial bonuses.

Efficiency of care and shared savings are also major factors in the formation of accountable care organizations (ACOs) that have been encouraged by the Medicare program as part of the value based care program. The shared savings aspect has focused on bundled payments. The provider receives a fixed amount to treat a patient for a specific condition or procedure or within a certain period of time.

The benefit to the provider is if they are able to treat the patient for a lower cost than the fixed amount provided, then they would be entitled to a share of the surplus. However, if the cost of treatment exceeds the fixed amount, the provided would miss out on the reimbursement that would have been available under the traditional fee for service model.

In August 2021, CMS announced that “Accountable Care Organizations (ACOs) participating in the Medicare Shared Savings Program (Shared Savings Program) in 2020 earned performance payments (shared savings) totaling nearly $2.3 billion while saving Medicare approximately $1.9 billion.”

Most recently, as part of the Calendar Year (CY) 2022 Medicare Physician Fee Schedule Final Rule, CMS made some adjustments to the Alternative Payment Model (APM) for ACOs, in response to concerns among members of those organizations. CMS finalized a longer transition, essentially a three-year extension, for ACOs to “prepare for reporting electronic clinical quality measures/Merit-based Incentive Payment System clinical quality measures (eCQM/MIPS CQM) under the Alternative Payment Model (APM) Performance Pathway (APP).”