How We CAN Move from Fee-for-Service to Value-Based Reimbursement

By Dustin Miranda | August 21, 2018

There are some things in life that we look at and say, “We should change that. The world would be so much better if we would all just do X, Y, Z.”

Our healthcare system is a common focus of such comments.

While I am grateful that so many people recognize the need for change in our healthcare system, it is not enough to talk about it around the water cooler.

In fact, there are much more powerful platforms where we can move that conversation to inspire others, reach key decision-makers, and drive action.

To begin, we need to envision our healthcare as it should be. Then, with that shared dream, we can all take steps toward manifesting it into reality.

John Lynch and Associates value based medical reimbursement

Fee-for-Service Medical Reimbursement

For more than 20 years, our healthcare system has been operating on a system based on compensating healthcare providers for the number of service appointments they complete. This is what is known as a fee-for-service system.

You may be saying, “Well, Dustin, that is how the world works. You do a job, you get paid for that job.”

Yes, attentive reader. You are correct. That is how our world works in many industries. However, I would not call America a one-size-fits-all country and neither should our healthcare system be.

Unfortunately, that is precisely what the fee-for-service model creates: one-size-fits-all care.

In the fee-for-service model, physicians are forced to speed through patient appointments to see as many people they can each day. Essentially, the more patients they can see, the more money the healthcare facility can make from insurance.

The result is a hurried, impersonal experience for both the patient and the physician.

We have all been there: You have an 9:30 AM appointment with your doctor. Despite getting one of the first appointments of the day, your doctor is late to call you back. By the time you see your physician step into your patient room, it is 10:10 AM.

She asks you a few questions. “What hurts? When? Any idea why?”

Then, in the blink of an eye, she is gone.

The office support staff comes in to hand you a prescription or a referral slip, then you are thanked for your time and sent on your way.

As you leave, you think of all the things you wish you could have told your doctor – like how you have not slept well for three months, you have been facing some new challenges and a lot of stress at work, and how your youngest child just started the “mine” phase.

This is the trouble with our current fee-for-service system. Physicians are forced to treat every patient by the rules of triage and look at just the symptoms.

Ultimately, each patient is a commodity that represents more money coming into the facility to cover the costs of care.

The saddest part is that most doctors do not support the fee-for-service model as it limits their ability to effectively treat a patient. It is not the doctors who want to hurry from patient room to patient room with their “I’m sorry, we’re running a bit behind today” spiel to get to the symptoms before running off to the next appointment without even a 5 minute break to grab a bite of lunch.

Similarly, healthcare administrators and executives understand that patient quality of care is a top priority, but they are confined by the heavy demands of budgetary limits. While doctors and nurses are tending to the health of patients, administrators and executives are grappling with the rubix cube of maximizing the health of their organization at an institutional level.

Thankfully, there is a better way.

Value-Based Medical Reimbursement

Recognizing that decades of treating the waiting room like a revolving door is only costing health insurance companies, healthcare providers, and patients more and more money, many facilities have begun to shift to a value-based medical reimbursement plan.

Within this system, healthcare providers are given much more time with the patient to understand, assess, and diagnose patients before writing a treatment plan or prescription.

In many cases, doctors only see six to eight patients per day within the value-based model. However, the end results are true to the core purpose of our healthcare system.

Value-based reimbursement models result in all the good things we want for ourselves, our family members, and all patients we serve.

Rather than forcing as many appointments into a day as possible, which inevitably leads to patients being seen later and later than their scheduled appointments, patients are seen at the time they are scheduled and wait times are virtually non-existent.

Evidence-based research studies have shown that care provided within a value-based reimbursement framework results in improved quality of care, better health outcomes in the short- and long-term, and saves money for all parties in the long run.

Because value-based medical reimbursement systems focus on treating the whole person (as opposed to honing in on the surface-level symptoms), they facilitate doctors being able to detect chronic care issues, identify root health problems that may be causing a constellation of symptoms, and provide more effective interventions.

Additionally, value-based reimbursement models take a holistic perspective of care that encourages the integration of both physical and behavioral health. In this way, physicians can treat the entire patient, both physically and mentally.

Over time, shared savings incentives more than make up for the fact that fewer patients are seen each day.

So if value-based reimbursement is better for patients, physicians, and healthcare facilities, why are we not implementing these systems across the board?

The Difficult Transition

Recognizing that the value-based model is rich with opportunities for everyone involved on all sides of the healthcare system, many providers adopted the value-based system, at least in part. However, the fee-for-service model is so deeply ingrained in our healthcare culture that many providers are straddling both sides of the fence. Because fee-for-service and value-based systems are worlds apart from one another, these providers who are trying to do it all are experiencing a drain on their resources.

Additionally, these providers are not equipped to report on all of the required data that must be submitted on both sides of the aisle. The result is a lack of accurate reporting, which can lead to insufficient medical reimbursement and financial difficulties.

There are currently no enforced standards for value-based reimbursement models, which makes it difficult for healthcare providers to communicate with one another and speak the same language in terms of patient care, priorities, and reimbursement schedules.

Luckily, there are steps we can take together to put our nation’s healthcare on a trajectory towards a healthier, value-based reimbursement model.

Our Next Steps

Our healthcare culture is always in catch-up mode. We are always hurrying from one place to another, racing to meet regulatory deadlines, and staring at our calendars in disbelief as the end of every quarter looms.

To make the shift to value-based reimbursement, we need to take a step back and look into the future. Rather than fumbling to hold on to the next moment in our agenda, we need to look months and years ahead.

To begin, we need to set and focus on our long-term goals. This requires taking a long, hard look at data analytics. By looking at the most pressing health challenges the population you serve is facing, you can set some very practical, impactful goals. Population health tools and data can predict issues and help healthcare organizations create well-informed health initiatives.

As we begin to implement the changes and shift wholeheartedly toward a value-based reimbursement model, we must remember to lean on the numbers rather than leaning into the fear of trying something new and unfamiliar.

Additionally, we need to standardize the contracts used by health plans specifically for value-based reimbursement models. While the Centers for Medicare & Medicaid Services have been working hard to bring value-based reimbursement systems into the spotlight, we are not quite there yet. We need to use the existing conversations as an opportunity to get more concrete in our objectives and the precise actions we can take to implement change.

Similarly, we have seen attempts to adopt the value-based medical reimbursement model on a national level that ultimately fall flat. The issue here is that we are not using the most basic premises of medicine and healthcare to inform our actions: hypothesize, research, test, analyze the data, communicate results, form a new hypothesis, repeat, improve.

Rather than starting with national implementation, we must start with regional- or state-level tests. Once we have fine-tuned the best practices, then we can expand the system.

As with any great endeavor in history, the key is to stay the course. Too often we have made half-hearted attempts at revolutionizing our healthcare system only to see our efforts fail – and then we give up entirely.

Failure is never truly failure if we learn from the data and vow to make educated improvements for the next attempt.

Time to Take Action

Another mistake we often make in healthcare is seeing the nation’s healthcare system as greater than ourselves.

It is not.

We are our nation’s healthcare system. We are the patients, the providers, the administrators, and the consultants that keep our healthcare organizations functioning every day.

If change is going to occur, it must begin with us – and that is entirely within our power.

The actions you take can dramatically impact the future of healthcare in America. You simply have to decide to take the ones that will move us in the right direction.

In the medical field, conversations are powerful. Get involved with the local chapter of the American Medical Group Association. Express your ideas, your enthusiasm, and your dissatisfaction when it arises. There are others who share your passion. By joining your voice to theirs, we can transform the paths our respective organizations decide to take.

In order to reach our goals of quality, effective healthcare that improves patient quality of life, we need a greater representation of leaders. Healthcare executives, physicians, nurses, and administrators all have valuable perspectives that need to be shared and heard.

We all have the same goal in the field of healthcare: to save lives. The tools to do so more effectively are in front of us. We just need to pick them up and use them in unison to build a better system.

Has your healthcare organization considered a value-based reimbursement system? Let us know what your experience has been in the comments below. The dialogue starts now.

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