What We Talk About When We Talk About Value-Based Care

There is near-universal consensus that “value-based care” is a good and worthy objective. In any instance when unanimity embraces an idea, a thoughtful person might ask whether there’s true agreement or perhaps just a cone of vagueness that accommodates a variety of opinions and lets eyes of the beholders see what they want to see. With value-based care, it may be the latter.

Erik Johnson

While the Triple Aim identifies categories of objectives, in which there are various worthy measures that can be useful, value-based care is more strategic. Programs like pay-for-performance and bundled payments can help implement value-based care, but they are just tools in the kit.

When viewed as a strategy, value-based care has four foundational elements:

Provider-managed risk. In this context, “risk” refers to insurance risk, and it is the most significant difference in this era of provider-led, value-based care. Under value-based care, providers are seeking to move toward first-dollar premium risk. In the most ambitious scenario, health systems are bringing new products to market for which they either own the premium or are delegated full risk from a partner. But other arrangements also approach true value-based sense. ACOs that include both significant upside and downside risk move participating health systems toward taking responsibility for the lives of individuals, rather than just their episodes. CMS is pushing its Medicare Shared Savings Program ACOs in that direction.

Population health programs. Health systems have deep experience in deploying patient-centered medical homes, care transition programs, and disease management protocols. Value-based care places an even greater premium on targeting such programs at people with chronic diseases and those who are vulnerable to them because of socioeconomic reasons. The increasing appreciation for, and sophistication in, treating social determinants of health (SDOH) is slowly pushing health systems to engage even more aggressively in the community to mitigate health risks. Moreover, the increasing integration of SDOH in population-health approaches is creating the need for risk-bearing providers to rethink their networks. Networks of primary care physicians and specialists are necessary but no longer sufficient; risk bearers now must have integrated post-acute, social work, and community-based resources.

Data integration and stakeholder reporting. Health systems have significant investments in their own clinical and financial systems, with continuing efforts to integrate and add data sources to these systems in order to generate greater insight into their own performance and opportunities. Payers also have made substantial investments in their ability to aggregate and report on patient and provider activities, with a common aim of improving patient outreach and engagement. Value-based care models have aligned these efforts. Now it is up to both payers and providers to follow through and truly collaborate on data reporting, sharing, and aggregation.

Payer–provider collaboration. Past efforts at value-based models—the physician–hospital organization movement of the ’90s, closed network managed care approaches—have largely been efforts to “go it alone,” and they have rarely succeeded or proven repeatable. The cultural and business elements of the payer–­provider relationship have long been contentious. Successful value-based care arrangements require both sides to leave the baggage behind and recognize that they need each other. Resetting the payer–provider relationship takes time and in-depth involvement from top-level managers in both provider and payer organizations. But without it, providers won’t scale their population health efforts because they’ll avoid taking on risk, and payers will miss the opportunities to engage more fully with patients.

None of this is simple. None of it can be done quickly. But the demands of employers and patients for better, cheaper care—for care with value—leave the primary stakeholders little choice but to engage with each other on a sustained, collaborative journey toward a shared vision.

Erik Johnson is vice president and the national practice lead for value-based care at Optum.