Fee-For-Service vs. Value-Based Care: What Private Practices Need to Know, and How to Prepare for a Value-Based Future
It’s the age old question: Fee-for-service vs. value-based care?
While the overwhelming majority of private practices remain in a fee-for-service (FFS) model today, the writing is on the wall: The transition to value-based care (VBC) is coming. Private practice has traditionally been resistant to this change, but remember that just ten years ago, hospitals and health systems were primarily FFS, too. But the Centers for Medicare Services estimates that by 2030, nearly all hospitals and health systems will be operating under a VBC model—and they’ve made it clear private practice won’t be far behind.
Making this change won’t be easy, but if private practices are going to remain viable and competitive, change will be necessary.
Ultimately, technology will be required for organizations to successfully provide all patients with the level of care they need, and it’s time for private practices to consider how they can make the transition and continue to thrive in an increasingly value-based healthcare landscape.
What is the Difference Between Fee-For-Service and Value-Based Care?
Fee-for-service is a healthcare payment model where providers are reimbursed for each service they deliver to their patients. Providers submit claims for these services, and the payor (such as an insurance company or a government agency like CMS) reimburses the provider. Because providers are reimbursed for each service, they are incentivized to perform more services for the patient.
In contrast to FFS, value-based care emphasizes providing quality care to patients while improving their outcomes. Because they are reimbursed by the payor based on the quality of the care rather than the number of services, they are incentivized to be as efficient as possible while demonstrating that they have improved patient outcomes, care coordination, and patient satisfaction.
What is driving the change from fee-for-service to value-based care for private practices?
Simply put, payers are making rules that make it more and more costly and difficult for therapy providers to remain in a FFS model. There’s a concerted effort from CMS that will make it more expensive to remain as a sole FFS provider, with the goal of driving practices towards VBC models. Financial incentives are increasingly being linked to performance—under VBC, it’s not about how many services you provide, it’s about how effective they are and the outcomes being achieved.
But there are other causes down the line that will expedite this transformation and make it impossible for private practices to remain siloed in a FFS world. As mentioned before, five years from now a majority of hospitals and health systems will be under a VBC agreement. If private practices are going to remain viable and competitive, they need referrals from providers working in these health systems—but health systems will have an additional incentive to refer to private practices that are also under a VBC agreement. If clinics want to continue to work with private/governmental payers and not operate solely as a “cash-based” service, they will need to move toward VBC as well, or risk becoming unprofitable.
Additionally, Medicare and other payers have rolled out policy changes that penalize providers in FFS arrangements by decreasing reimbursements while rewarding those in VBC arrangements. These forces will continue to contribute to the shift to VBC.
How can private practice clinics prepare for a change to a value-based care model?
This is going to be a big change, and it isn’t going to be easy. But if there’s a silver lining for private practices, it’s that all home health agencies and many hospitals and health systems have already undergone this process! And while private practices will experience different challenges than their counterparts in other settings, there’s plenty of past experience to learn from.
First of all, effectiveness of care must be demonstrated through quality outcomes data. That means this data must not only be collected, but clinics need to adopt standardized quality measures to demonstrate and articulate the value they bring to patients (and therefore payers). The more accurate the data that is collected, the better both the provider and patient will be in the long run.
Second, because it improves outcomes, value-based care encourages more collaboration among healthcare providers. Under a VBC agreement, if you receive a referral for a patient from a hospital, you’ll have access to their quality outcomes data to help your patient successfully transition into your care.
What should private practice clinics do today to prepare for a value-based care future?
Value-based care is coming, but that doesn’t mean that you don’t have time to prepare. Digital care tools have become essential to the transition to value-based care in other settings, and luckily, there are plenty of digital care tools out there that can help private practices too.
Improve patient conversion rates
Patient engagement will only become more important under value-based care. Targeted education programs for providers and engagement tools for patients like digital home exercise programs, two-way messaging, and patient adherence monitoring can help keep patients activated, capture more visits, and improve clinical outcomes.
Focus on patient retention through better satisfaction and care outcomes
Patient satisfaction and outcomes are both pillars of VBC measures in other settings, and will likely be the case in any future VBC agreement for private practices. Standardized digital care pathways make conservative care the easiest choice to increase access and help adhere to their program for better outcomes and engagement.
Emphasize referrals
Under VBC, referrals are going to become more important than ever. A great way to make your practice more attractive for referrals is to increase interoperability by having a HIPAA-compliant EMR integration solution. Not only does it make everyday tasks easier for clinicians, but it streamlines the data collection needed to be successful under VBC with automatic HEP documentation and instant patient record creation.
Ensure staff are aligned with your clinic’s goals
Without clinician buy-in, you’re going to have trouble getting any initiative off the ground. It will be important to explain the benefits of value-based care, and also how digital care can help you achieve those goals.
How does MedBridge support clinics undergoing the shift to value-based care?
Whether you’re still in the discovery phase or are ready to start preparing for a value-based future, MedBridge is here to help. In fact, we’re already helping clinics dip their toes into managed care with RTM, as well as helping others like Ivy Rehab dive into the deep end with a hybrid approach to patient care.
MedBridge Pathways
Get more patients the right level of care with a patient-centered platform that improves engagement and outcomes. Pathways acts like an extension of your staff, allowing providers to capture patients earlier, get a deeper understanding of their condition, and assign evidence-based clinical programs that support their entire recovery journey.
Want to start incorporating digitally-enabled patient care within your practice? Our all-in-one solution makes it simple. From robust engagement and patient monitoring tools to powerful analytics and reporting, we keep your patients active in their care and your RTM billing milestones on track.
Digital health is key to value-based care success, but changing the way we treat patients isn’t an easy task. Included in every plan, the Digital Health Academy is your key to unlocking the value of digital care so both clinicians and patients can enjoy the benefits.
HIPAA-Compliant EMR Integration Solution
Help your clinicians spend time with patients—not patient records. Bring multidisciplinary care teams quickly up to speed with patient status through real-time updates, and increase clinician compliance when assigning HEP with the ability to easily create and save detailed care plans in the patient record.
