VALUE-BASED CARE vs FEE-FOR-SERVICE: What’s The Difference?
admin | July 3, 2019
“Value-based care” (VBC) and “fee-for-service” (FFS) are key terms for self-insured employers seeking financial control over annually increasing employee health benefit costs. VBC is a viable, long-term solution to the healthcare system’s cost and service inefficiencies. It’s critical for employers to become familiar with these terms and how VBC can impact them, their employees, and their bottom line.
Value-based care links primary care physician reimbursement incentives to the outcomes of the care they provide based on the overall quality of care rendered and cost-efficiency. Instead of financially incentivizing volume (as the FFS model does) the VBC-model incentivizes practice efficiency, cost control, and patient improvement. This often leads providers to take a group-based approach to patient care, wherein physicians and specialists work together to ensure a patient’s path to wellness is well-communicated, highly engaging, and closely monitored. This approach is referred to as “care coordination.” (Read more about this below.)
The industry’s default model of payment reimbursement, FFS, could be described as “volume-based care.” In this model, healthcare providers are incentivized based on the number of tests, procedures, or visits ordered, often in the (more expensive) hospital setting, to help an employee along their wellness journey. Paid for by insurance companies, self-insured employers, and government agencies, these services are billed separately and may or may not be needed, as supported by data.
The FFS model explains much of the average employee’s currently confusing, frustrating, and financially burdensome relationship with their healthcare benefits package.
Without a dedicated team of professionals, communicating frequently with equal access to the continuing progress of their shared patient, employees have little hope of effectively making use of their health benefits.
Healthcare benefit packages are an increasing expense for their employers, with poor ROI in improved health outcomes which would reduce worker burnout, “presenteeism,” and more avoidable, late-stage medical interventions, that pull their employees out of the office completely for extended periods. Both employer and employee suffer when seeking care within the FFS model, receiving stagnant health outcomes, low satisfaction, and increased expense for their frustrating experience.
Self-insured employers are seeking clarity and control to improve healthcare benefit packages for their employees, reduce their costs, and retain talent: 80% of employees would choose additional benefits over a pay raise (survey.) Utilization must be reduced, but without controls to ensure overutilization is reduced while appropriate care is made more accessible, employee health suffers.
As noted by our Chief Medical Officer Creagh Milford DO, MPH FACOI: “The advent of high-deductible health plans, which shifted more cost-share responsibility to the patient, yielded mixed results: when health care is too costly, patients choose cheaper healthcare options, often lacking appropriate coverage or going without coverage entirely[i, ii, iii]. These high-cost plans ultimately failed to produce the desired outcome of more educated and healthcare-industry savvy consumers, leaving huge swaths of America’s workforce functionally uninsured and financially fragile [iv].” (Read the full post on Harvard’s Primary Care Blog.)
Shifting away from the FFS model isn’t as simple as a change in marketing—the entire healthcare system: consultants, networks, hospitals, pharmacy benefit managers, and healthcare providers must re-align their incentives around supporting and prioritizing the primary care physician-to-patient (P2P) relationship. “A true value-based care model should result in better clinical outcomes for employees and lower costs for employers,” our Chief Operating Officer Marc Pinney notes in his The Illusion of Choice In Healthcare Coverage Negotiations series.
Care coordination serves as the vehicle for mobilizing the benefits of this relationship to translate proactive, highly engaged care into improved outcomes, greater productivity, and long-term employer savings. As noted by our CMO Dr. Milford,
“Greater patient engagement, access to care, and appropriate service utilization can reduce the total cost-of-care per employee while improving health outcomes and maximizing talent retention and productivity.”
When seeking care, employees must navigate a foreign landscape of physicians, specialists, payers, regulators complete with their own unfamiliar language, with costly surprises at every turn (ie balance billing). This decentralized, fragmented view of their wellness journey makes it extremely difficult for employees to reach their health improvement goals.
Care coordination programs may be executed a variety of ways, but they each have the same core goal: to identify patients requiring high-engagement and facilitate delivery of proactive, personalized care in the most appropriate order, time, and place. (Read our Chief Medical Officer’s detailed breakdown of care coordination, here.) As our CMO Dr. Milford explains:
“Care coordination models leverage a trained team of care givers that cover the healthcare delivery spectrum (i.e. Registered Nurse, Social Worker, Behavioral Health) who work with the patient and primary care physician to establish a strong relationship. . . .”
That relationship ensures employees have a team of empowered healthcare providers working together to successfully guide them through the healthcare landscape to improved health outcomes.
MAKING THE CHANGE
A shift to a VBC health benefits package, supported with care coordination, built on high-performance networks of ACO-participating providers is not a siloed, HR-only decision. If the usual, annual options presented are difficult to tell apart, employers must demand new options. Simple customization is not enough, companies need true innovation.
As noted by our COO Marc Pinney, “… [c]onsultants may be unfamiliar with VBC health plans, accustomed to their limited success within a FFS system. This yields an opportunity for employers and consultants to find a best-fit solution, together. … [A]sk for health plans that have already done the work to build a provider network based on above-average service provider performance. Choosing a plan built upon accessible top-performers, that meets company-specific coverage needs, creates a foundation for lowering TCOC while increasing employee health outcomes and satisfaction (read more here).”
While in transition, employers can take five steps to maximize their current plan, as they seek new health benefit package solutions.