Part 2: How FFS Burdens Are Holding Back the Shift to Value-Based Care

As the healthcare industry pushes toward Value-Based Care (VBC), physicians are expected to focus more on delivering quality care, improving patient outcomes, and managing patient risk. However, many doctors remain entangled in administrative tasks that stem from the Fee-for-Service (FFS) system—prior authorizations, denials, coding, and billing—which distract them from the patient-centered approach that VBC promises. These burdens not only drain valuable time and resources but also make it nearly impossible for physicians to fully embrace the data-driven strategies necessary for success in VBC.

In Part 1 of this series, we discussed the key elements physicians need to make the transition to VBC: timely, actionable data, interoperability, and patient attribution. In this article, we’ll focus on how the current administrative burdens rooted in the FFS model are preventing that shift and why simplifying these processes and increasing data transparency are essential to overcoming this challenge.

Administrative Burdens Under Fee-for-Service: A Major Distraction

The FFS system is designed to reward volume, not value. Under this model, physicians are reimbursed based on the number of services they provide—each visit, test, or procedure carries a corresponding billing code that must be properly documented to receive payment. This creates a mountain of administrative tasks that often prevent physicians from focusing on patient care and proactive health management. Here are some of the most common burdens doctors face under the FFS system:

1. Prior Authorizations: Before certain procedures, tests, or treatments can be performed, physicians must obtain approval from insurers. While intended to control unnecessary spending, the process often leads to delays in care and forces physicians to spend significant time navigating approval processes instead of focusing on patient needs.
2. Denials and Appeals: Even after care has been provided, claims may be denied by insurers, requiring physicians to engage in time-consuming appeals processes. This not only creates additional paperwork but also adds friction between providers and insurers.
3. Coding and Billing Complexities: Physicians are required to use complex coding systems to ensure they are properly reimbursed. A small error in documentation or a misused billing code can result in claim rejections, forcing physicians to redo paperwork or risk losing revenue.
4. Compliance and Documentation: Beyond billing and coding, physicians must meet a wide range of regulatory and compliance standards, adding yet another layer of administrative tasks to their already packed schedules.

Together, these administrative responsibilities significantly reduce the time physicians can spend focusing on proactive care and engaging with patients. Instead of using data to improve outcomes, they are stuck responding to the bureaucratic demands of an FFS system that incentivizes volume over value.

The Impact on Physician Burnout

The toll that administrative burdens take on physicians cannot be overstated. Studies have shown that doctors spend nearly twice as much time on administrative tasks as they do in direct face-to-face care with patients. This imbalance contributes significantly to physician burnout, which not only affects doctors’ mental health but also impacts the quality of care delivered to patients.

Burnout leads to a range of negative outcomes, including decision fatigue, decreased empathy, and higher rates of error. When physicians are overwhelmed by paperwork and administrative demands, their ability to provide high-quality care and prevent medical issues before they arise is severely diminished. Ironically, the very system meant to control healthcare spending ends up exacerbating the problem by distracting physicians from patient care and preventive interventions.

Fee-for-Service as a Distraction from Value-Based Care

The FFS model not only increases administrative burden but also fundamentally distracts from the goals of Value-Based Care. Physicians are incentivized to perform more services, but these services aren’t necessarily improving patient health. Instead of focusing on preventive care, chronic disease management, or reducing hospital admissions, physicians are preoccupied with billing codes, denials, and prior authorizations.

To truly transition to VBC, physicians need the freedom to focus on outcomes, not the volume of care delivered. They need to be able to use data to identify high-risk patients, intervene early, and improve overall population health. But these efforts are hampered when doctors are drowning in administrative work that doesn’t directly contribute to better care.

The Role of Data in Shifting to Value-Based Care

One of the most critical elements missing in the shift from FFS to VBC is real-time access to data. As discussed in Part 1, physicians need comprehensive, up-to-date data on their patients to manage outcomes effectively. This includes information on hospital admissions, emergency room visits, medication adherence, and more. Having access to this data allows physicians to make informed decisions, manage risk proactively, and improve care coordination across different providers.

Unfortunately, this data is often controlled by insurers and not readily shared with physicians. Without transparent access to the necessary information, physicians are forced to operate reactively rather than proactively. Instead of using data to prevent complications, they are left responding to problems after they arise—further driving up healthcare costs and worsening outcomes.

Administrative Tasks as a Barrier to Value

By focusing on administrative tasks rather than patient care, the FFS system creates a self-perpetuating cycle: physicians must engage in these tasks to be paid, and in doing so, they reinforce the very system that rewards volume over value. These tasks prevent doctors from using proactive data insights to manage patients and take on more financial risk in VBC models.

In contrast, Value-Based Care emphasizes quality and outcomes over service volume. It’s designed to incentivize physicians to deliver the right care at the right time while avoiding unnecessary procedures or hospitalizations. But to succeed in this model, physicians need actionable data and less time spent on bureaucratic hurdles like prior authorizations and denials.

How Insurers Can Enable the Shift to Value-Based Care

Insurers play a critical role in enabling the shift from FFS to VBC. Rather than enforcing complex administrative processes, insurers should focus on empowering physicians with real-time, transparent data and simplifying the workflow for providers. Here’s how insurers can help:

1. Streamline Administrative Processes: Insurers can reduce the complexity of prior authorizations, coding, and billing. By simplifying these processes, they allow physicians to focus on patient care rather than administrative paperwork.
2. Provide Real-Time, Actionable Data: Timely and transparent data sharing is essential for physicians to manage patient outcomes effectively. Insurers should prioritize sharing this data with physicians, including patient histories, outcomes data, and population health insights.
3. Support Interoperability: Data systems should be fully interoperable across providers and insurers, allowing for seamless care coordination. When data flows freely, physicians can spend less time piecing together fragmented records and more time managing care.
4. Align Incentives Toward Value, Not Volume: Insurers should align their payment structures to reward value-based outcomes rather than service volume. This means moving away from RVU-driven models and encouraging physicians to focus on quality care.

Conclusion: Freeing Physicians from Administrative Burdens

If the healthcare system is serious about transitioning to Value-Based Care, physicians need to be freed from the administrative tasks that keep them tied to the FFS model. By simplifying processes and providing the data transparency that allows physicians to be proactive, insurers can help unlock the full potential of VBC.

The path forward lies in collaboration between providers and insurers, with a shared goal of delivering better outcomes, improving patient care, and reducing healthcare costs. Removing administrative burdens and shifting the focus from volume to value is not only essential for the success of VBC but also key to reducing physician burnout and improving the overall quality of care.