Value-Based Reimbursement System | Rainmakers Srategic Solutions

Focusing on Health Equity Supports Value-Based Reimbursement Systems to Improve Person Centered Healthcare

Adrienne Mims, MD, MPH, FAAFP, AGSF
Adrienne Mims, MD, MPH, FAAFP, AGSF

Chief Medical Officer (CMO), Rainmakers Strategic Solutions

Why move from Fee For Service to a Value-Based Reimbursement System?

Changing incentives for payment can lead to better patient outcomes.

Until very recently, the norm in the US healthcare system was to pay healthcare providers based on services delivered — a fee-for-service (FFS) system, also known as a volume-based care system. The Fee for Service healthcare payment system is long overdue for change.  It was designed to be an efficient system to make payments for services from the payor to the provider, rather than considering the unique background and needs of the patient.

To explain the FFS challenge, let us look at a typical case:  An older woman, we’ll call her Hope, who has uncontrolled diabetes, high blood pressure, early dementia and takes 12 medications. Her daughter, June who is her caregiver, lives with her but works out of the home. If Hope has a new medical problem like a fall, June will call for an appointment for her mother to be evaluated by her primary care physician. In many settings, the appointment is based on the availability of the clinician, often days to weeks out from the call. Once scheduled, June must take time off work and arrange transportation for the two of them to attend the visit. After waiting at the clinic 30 minutes or more, the visit is likely less than 15 minutes in duration. The clinician is paid for the visit regardless of whether Hope’s symptoms are resolved, or the blood pressure and diabetes are under control. The choice of when and the location of the visit are based on the clinician’s availability, rather than the best time that June, the care giver can arrange time off and transportation.

Alternatively, envision a healthcare system that proactively considers a patient’s conditions and needs; develops outreach and accessible programs to address potential barriers; demonstrates through metrics that patient care is improved; and receives additional payment based on outcomes. Originally launched by the Affordable Care Act (ACA), Value-based Reimbursement (VBR) is such a system. It entails a population-based approach that considers the needs of the insured recipients under the care of a medical professional, and determines the amount and type of needed resources, based on the prevalence of medical conditions and risk factors for disease.

Healthcare providers replacing a legacy fee-for-service reimbursement model with a VBR system face multiple organizational challenges during the transition from one model to the other. Although the Centers for Medicare & Medicaid Services (CMS) has embraced value-based reimbursement, most US health insurance companies are much slower in adopting it.

CMS and private insurers have begun collaborating on moving toward VBR through the Healthcare Payment Learning and Action Network (HCP-LAN).  The HCP-LAN calls for an acceleration of the percentage of US healthcare payments tied to quality and value in each market segment through the adoption of two-sided risk alternative payment models.

With VBR systems becoming more widespread, and possibly the majority reimbursement method by 2030, the goal is for healthcare recipients to have better quality and more accessible healthcare without having to pay more for it.

What are Some Challenges to Value-Based Reimbursement Models?

Value-based Reimbursement models are intended to encourage healthcare providers to deliver the best care at the lowest cost. It’s an approach that financially rewards healthcare systems for performing better than expected. There are two basic kinds of VBR: Gain Share, that rewards healthcare providers and professionals for performing well, and Risk Share, that both rewards and punishes providers depending on their performance. Most VBR models today are Gain Share arrangements. Put simple, Gain Share is popular with healthcare providers and professionals because as performance improves, employees share financially in the gain. Also, many organizations do not have the infrastructure in place to take on the potential risk penalties.

As with any major structural or organizational change, there is always the possibility, or even likelihood, of implementation risk. These risks can impede implementation efficiency and effectiveness. Four of the most common risks are:

  • Access to real time data at the point of care to drive clinical quality decisions
  • Coordination with community resources that impact the social determinants of health
  • Increased financial risk to healthcare organizations
  • Effectively flowing down savings to those on the front lines providing the care

What is the role of health equity in improving care?

The healthcare system is designed for a one size fits all model. However, every person enters the healthcare system with a unique background. Unequal access to healthcare services due to location, transportation, cost, language barriers, education, income, healthy food, and structural racism has resulted in unequal distribution of diseases and complications. Health equity is “achieved” when everyone has the opportunity to be as healthy as possible ( . Achieving health equity results in the elimination of disparities in health and its determinants that adversely affect certain people.

A Value-based Reimbursement healthcare system can address barriers to achieve the best health status regardless of background. In the design, a VBR system can consider the needs of the individuals and design systems to meet those needs: easy telephonic/virtual or online care, access to healthy food, transportation, caregiver education, translation services, health screenings to determine those most at risk and targeting preventive resources. In VBR, enhanced payment for care is based upon health outcomes.

The Future Looks Bright for Value-Based Reimbursement Systems for Person Centered Care!

Under Value-based Reimbursement, physicians and hospitals and other care facilities, are rewarded for helping recipients improve their health, reduce the incidence of chronic disease, and live healthier lives. With value-based healthcare, recipients experience:

  • Superior treatment and improved care
  • Lower healthcare cost
  • Reduced risk
  • Greater satisfaction with care received

We are witnessing the dawn of a new era in healthcare reimbursement – an advance from outmoded fee-for-service payment systems to high-quality, efficient, Value Based Reimbursement systems. Healthcare disparities, uneven quality, and the continued rise of health care costs are no longer seen as the norm. By addressing the social determinants of health that lead to health inequities, it won’t be long before VBR payment systems becomes the preferred payment method and improves the nationwide healthcare standard. The future looks bright for person centered care as the goal of a sustainable, affordable, equity-based healthcare reimbursement system is reached.

Share This

Accessibility & Accessible Information Statement

Rainmakers is committed to providing accessible information for all visitors. We strive to adhere to the globally recognized Web Content Accessibility Guidelines (WCAG) 2.1 level AA. Our commitment includes designing our website to be compatible with various assistive technologies, providing keyboard navigation, using alternative text for significant images, using clear and concise language, maintaining a consistent structure and organization, and welcoming user feedback. While we continually review and improve our website’s accessibility, we appreciate your understanding that it’s an ongoing endeavor. If you have any accessibility-related concerns or questions, please reach out to our accessibility team at

2 thoughts on “Focusing on Health Equity Supports Value-Based Reimbursement Systems to Improve Person Centered Healthcare”

Comments are closed.

Scroll to Top