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Out with the FFS, In With The VBR: Health Care’s New Payment Model

I always try to stay up to date on current trends in the health care industry, especially when it relates to how we can make our health care system more efficient for the greater good of our country. While we continue to build and create more innovative ways to live longer and healthier lives, we seem to hear more and more about the rise in health care costs and the decrease in quality of patient care.

Our health care system has been traditionally structured as a Fee for Service (FFS) model, where provider reimbursement is directly based on the services performed. For each service, regardless of patient outcome, there is a value paid to the rendering provider. While many believe this is a great motivator for physicians to treat patients with the best care possible and to drive physicians to spend more time treating patients, others believe physicians are over-treating and ordering unnecessary medical tests and procedures. Unfortunately, this model has shifted the attention from patient care to more of an assembly line approach to health care. And as health care costs continue to balloon and insurance providers continue to report record profits, care efficiency and patient health have not followed suit.

What is the alternative to Fee for Service? Recently there has been a shift away from the FFS model to a Value Based Reimbursement (VBR) model. VBR focuses not on just the number of services rendered, but more importantly, the quality of care, efficiency of care, and the outcome of the patient's overall health. The VBR model also hold providers more accountable because it penalizes caregivers for poor outcomes, medical errors, and increased costs.

How is Value-Based Reimbursement measured? The Center for Medicare and Medicaid Service (CMS) created an incentive and penalty program called the Value-Based Payment Modifier Program in order to support this new reimbursement model. Through a data registry, eligible professionals (EPs) can submit data on quality measures set forth by CMS. The Value-Based Payment Modifier Program rewards and penalizes EPs or Taxpayer Identification Numbers (TINs) based on the performance of their scores and measures, which are directly tied to the care they've provided.

It was reported last year that Anthem, which operates Blue Cross and Blue Shield in 14 states, would increase payments that are tied to value-based contracts to $65 billion by the end of 2018. And according to Aetna, their value-based contracts now represent approximately 30% of Aetna's medical spending, with a goal to achieve 75% by the end of the decade.

While we may not have the most efficient, cost effective health care system, we’re headed in the right direction with the shift toward new payment models with better incentives to provide the best patient care possible.
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