According to the Centers for Medicare and Medicaid Services (CMS), in the United States Medicaid provides health coverage to more than 60 million low-income children, pregnant women, adults, seniors, and people with disabilities. An additional 7 million individuals are also enrolled in the Children’s Health Insurance Program (CHIP).1 Combined, these two programs represent $1 out of every $6 spent on health care.2
Given the size of the Medicaid program (it’s the third largest domestic program in the federal budget after Social Security and Medicare),2 both states and the federal government are committed to implementing value-based models that aim to improve both how care is delivered and how it’s paid for.
What are Value-Based Programs?
The traditional funding model in Medicaid, known as Fee-for-service (FFS), compensates providers based on the volume of services provided. In a FFS model, providers are paid regardless of the outcomes of the services they provide.
As defined by CMS, value-based programs reward health care providers for the quality of care they give to patients, as opposed to the quantity of billable services they provide.3 Under value-based models, payment is linked to quality and outcomes. In addition to holding providers accountable for the care they provide, there are many benefits to value-based approaches, including:
- Promoting proactive outreach, coordinated care, and evidence-based practices. Because providers and/or managed care organizations are held accountable for patient outcomes, they are incentivized to take actions that have data supporting their ability to keep individuals healthy.
- Focusing on Person-Centered Care. Under value-based arrangements, patients are at the center of the health care experience. Value-based models encourage providers to more intentionally consider the patient’s preferences, needs, and values. This tends to have a positive effect on health outcomes.
- Encouraging proactive care. With a focus on value over volume, providers are incentivized to keep consumers healthy by proactively addressing their social determinants of health (SDOH) needs, such as access to food, housing, income security, and transportation. All of these factors have been determined to impact an individual’s health outcomes.
- Emphasizing collaboration and transparency. Under value-based arrangements, payers and providers share a common goal of better outcomes. Value-based models emphasize team-oriented approaches to patient care.
- Reducing health care waste. Fee-for-service models contribute to waste in the health care system by promoting unnecessary utilization and fragmented care that often results in additional costs.
What's ahead for the move to value?
State and federal leaders alike are committed to supporting value-based transformation. Success will take all stakeholders, including managed care organizations, providers, social services agencies, community-based organizations, and patients working together. This will require:
- Enthusiasm and commitment from providers (including non-traditional and community-based providers) to move away from FFS models.
- Desire by providers to take on risk, which can be especially challenging for Medicaid providers that may not have the resources, interest, or capabilities to bear financial accountability for the individuals that they serve due to tight margins.
- Policy changes such as changes to the Stark Law to encourage coordination under value-based arrangements.
- Expansion of the types of providers participating in value-based arrangements.
- Support from payers and managed care organizations that will include working to meet providers where they are in their ability to bear risk, helping them navigate value-based models, sharing new levels of data, and providing a glide path for them to follow as they change the way they deliver care and accept increasing levels of risk.
I am a firm believer in UnitedHealthcare’s mission: helping people live healthier lives and helping make the health system work better for everyone. This is especially true for the millions of individuals whom we serve, many whom contend with complex medical conditions on top of a daily struggle to make ends meet.
Supporting people at every stage of their lives, while at the same time enabling our state partners to deliver more effective, sustainable health programs, requires a commitment to improving how care is delivered and paid for. For us, this is not just a trend but also a critical shift within the health care delivery system.
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