Tip Sheets

When evaluating value-based care, consider whether costs are falling and quality is improving

By Joseph Burns

During AHCJ’s recent Health Journalism 2018 conference in Phoenix, one presenter was unequivocal about the significance of value-based care in lowering costs and improving quality.

Sam Ho, M.D. and chief medical officer at UnitedHealthcare, said executives at the company were “maniacal” about the value-based care model for delivering and reimbursing care. Ho recounted the company’s history supporting this approach, which dates back to 2001 in its California and Texas markets.

In 2008, UHC introduced the concept of patient-centered medical homes (PCMHs), where physicians and other providers work as a team to ensure that each patient gets all the appropriate care needed each year, including preventive disease screening and care as needed for both acute and chronic conditions.

Other observers, however, aren’t so sure that value-based care is where the market is headed — or whether it’s even producing a significant shift in health care delivery.

Other innovations, such as bundled payments and risk-based contracting, demonstrate that the nation’s health care system is shifting from paying fee-for-service (FFS) for high-volume services by shifting to payments based on value. But experts from the Leonard Davis Institute of Health Economics asked in an article this spring whether the transformation was more like an old idea promoted under a new name. LDI Senior Fellows Lawton R. Burns (no relation) and Mark V. Pauly in a Milbank Quarterly piece, “Transformation of the Health Care Industry: Curb Your Enthusiasm?,” challenge the proposition the change from paying for value instead of volume is happening quickly. They also are skeptical about the notion of requiring physicians and other providers to accept more financial risk for delivering care improves quality and lowers costs.

The authors began asking these questions after reviewing the history of health care trends and analyzing studies of value-based care. They concluded that the transformation from volume to value appears to be driven more by ideology and aspiration than by evidence.

Others have questioned the value-based approach, such as this article, “DIA18: Value-based contracts pose more questions than answers,” written by Jacob Bell for BioPharmaDive about discussion at the Drug Innovation Association’s meeting this year. Here’s another skeptical article, by Eric Oliver for Becker’s Hospital Review: “Value-based care progress is grinding to a halt — 5 study insights from Quest Diagnostics.”

Despite such questions, health insurers and their provider partners are moving forward with value-based care practices. In 2010, UHC launched what Ho called “industrial strength” value-based payment. Five years later, the federal Centers for Medicare and Medicaid introduced its alternative payment models (APMs), which were similar to UHC’s approach to value-based care.

“At the time, we were five years ahead of CMS and we were ahead of most of our competitors as well,” Ho said.

Another AHCJ panelist, Patrick Carroll, M.D., Walgreens divisional vice president for clinical programs and chief medical officer for its health care clinics, outlined how the company has a significant role to play in delivering value-based care, noting that an estimated 8 million patients daily visit the pharmacy retailer’s 8,175 stores in the United States.

Before joining Walgreens, Carroll worked as a family physician in a variety of health systems. In most of those settings, physicians had little time for patients, he said. Conversely, at Walgreens’ stores, pharmacists see those millions of patients, and 6 million come into the stores and 2 million visits are virtual. “As a family doctor, I would see diabetic patients about three to four times per year,” he said. “Those patients come into our stores 60 times per year.”

As a pharmacy company, Walgreens has some of the most accessible locations in the country. “Why not use those locations as access points to care?” he said. Walgreens now has 600 retail health clinics in its stores. Of those, it operates 150 of them, while 13 other companies, including UnitedHealthcare, operate the rest.

In these clinics, patients can get the care they need quickly, and if they need prescriptions, the pharmacy is in the same building. “We need to use the entire health care team to provide access to care,” Carroll said.

The panel’s moderator was Bruce Japsen, who writes about health care for Forbes. “Value-based care can be complicated, but journalists should think of it as all a part of the same effort to get patients medical care and treatment in the right place, in the right amount and at the right time,” Japsen said. “The key going forward will be how successful these models will be at reducing costs. We will know that when premiums stop rising or slow dramatically.”

As an example of value-based care, he cited UnitedHealthcare’s plan to provide housing for some of its Medicaid plan members who are homeless. “Does paying a person's $500 a month rent translate into saving money if this person has mental illness, gets care and no longer shows up at the emergency room 10 times a month at a cost of $1,000 or more?” he asked. “Time will tell.”

In “The Road to Value-Based Care,” Deloitte consultants said the market shift toward value-based care involves moving away from rewarding physicians, hospitals and other providers for delivering a certain volume of services to value-based payment models that reward better results, such as lower cost, improved quality and better patient outcomes.

The Centers for Medicare & Medicaid Services, the nation’s largest health insurer, defines value-based care in similar terms, saying, “Our value-based programs are important because they’re helping us move toward paying providers based on the quality, rather than the quantity of care they give patients.

“Value-based programs reward health care providers with incentive payments for the quality of care they give to people with Medicare,” CMS said. “These programs are part of our larger quality strategy to reform how health care is delivered and paid for. Value-based programs also support our three-part aim: better care for individuals, better health for populations and lower cost.”

Given that not all observers are convinced that value-based care is different from any other trend that physicians, hospitals and health systems have adopted over the years, one true conclusion that we can draw for now is, as Japsen said, “Time will tell.”

Joseph Burns (@jburns18), a Massachusetts-based independent journalist, is AHCJ’s topic leader on health insurance.