Simplifying value-based care in 2025

?? I would love to hear from you: What do you see as the biggest challenge or opportunity for value-based care in the year ahead? Share your thoughts in the comments and tag others to join in on the conversation!??

As we move further into the year and continue to navigate numerous areas of uncertainty under the new administration, we find ourselves at a pivotal moment with the adoption of value-based models in healthcare.??

We have notably seen great progress in recent data –?every year, the HCPLAN conducts a national effort to assess the adoption of APMs over time and track progress towards the HCPLAN’s goals. Since its start in 2015, the Measurement Effort has evolved to incorporate data from a large sample of payers that represents nearly 92% of covered Americans and now serves as the most comprehensive snapshot available for measuring progress on payment reform.?

The 2024 survey found continued growth in the adoption of VBC arrangements and shared risk arrangements. Across all lines of business, value-based arrangements grew by nearly 4 percentage points from 41.3% in 2022 to 45.2% in 2023.??

Medicare Advantage (MA) continues to lead in this space with 64.3% of payments in 2023 flowing through value-based arrangements, compared to 42% for fee-for-service (FFS) Medicare. This is a 7.1 percentage point year-over-year increase for MA plans from 57.2% in 2022, compared with a 0.6 percentage point increase for FFS over 2022.? And as more eligible Medicare beneficiaries enroll in Medicare Advantage plans, we will continue to see growth in these models.???

As value-based models continue to grow, we also see the positive impacts they have on utilization and outcomes. In their 11th annual Value-Based Care report, Humana found that MA enrollees in VBC arrangements experienced 32.1% fewer inpatient hospital admissions and 11.6% fewer emergency department visits due to their increased likelihood in seeking primary care and preventative care services. As a result, the company has seen MA and value-based models outperform traditional models in preventative and chronic care management across their patient populations.??

But the broader landscape remains complex. Despite these encouraging findings, there are valid concerns around increasing healthcare costs and uncertainty at the federal level regarding how the current administration could accelerate or slow down value-based care adoption efforts.??

In my last newsletter, you might recall one of my healthcare “Big Ideas” for 2025 predicted value will likely dominate the payment conversation in the year ahead –?both as the industry continues to audit and improve existing systems in the face of the larger economic and political environment. In this month’s issue, I will dive deeper into why VBC is both a necessary solution to rising healthcare costs and a critical strategy for improving outcomes across the board.?

Value will be a solution to addressing increased healthcare costs and keeping up with inflation?

Transitioning to value-based models isn’t without its challenges, especially as many healthcare organizations grapple with operational costs and are hesitant to introduce any new variables of change or additional investments into their current environment.??

However, there is more overlap than one might think between traditional Fee-For-Service (FFS) models and Value-based models (VBM) that could help ease this transition. For example, hospital readmissions are a costly issue and carry financial penalties under Medicare FFS models. Reducing readmissions would benefit an organization operating in an FFS environment, while at the same time, setting up and easing the transition to a VBM where there are significant benefits to maintaining low readmission rates.?

No matter the challenges an organization faces, value can be a cost-effective, no-regrets strategy to improving outcomes and benefitting from gained efficiencies. Systems should take proactive steps—such as gathering data and identifying cost-saving opportunities—to transition to value-based models now and drive future savings.?

Looking at the larger economic and healthcare landscape, I do not anticipate an immediate impact on VBM adoption goals to have all traditional Medicare beneficiaries enrolled in accountable care relationships by 2030, as outlined by the CMS and CMMI. RFK Jr.’s Health Secretary appointment will not likely change anything in the short term as his focus appears to be on health and wellness versus payment reform, meaning VBC efforts might continue their current trajectory for now. Regardless of any federal action, the healthcare system will need to address the ongoing increase in costs and the staggering number of people aging into Medicare, so we will still need some kind of payment/model reform that moves us towards value.??

Process improvement can be overlooked but is often a key value driver?

We often talk about a four pillar-framework as we help organizations transition to value-based care:??

• People: What kind of talent and human resources do you need to do this work well? How do those needs evolve with new technology and what new skill sets might be needed???

• Process: How do you get a patient from point A to point B in their care journey and avoid losing them along the way? How do we support our clinical teams in doing this work??
• Technology: What technology do you need to support the process? Is it measurable and scalable? How is it connected to actionable insights to assist clinicians and engage patients???

• Culture: How do we build an environment around value for patients? How do we hardwire a focus on improving quality and access, reducing cost and providing excellent patient experiences.??

Process is one of the functions within this framework that is often undervalued but is crucial to evolving toward value.??

Twenty to thirty years ago, organizations had “management engineering” departments with dedicated people trained in improvement science and then evolved to quality and process improvement teams dedicated to this work.? In recent years, many of the systems I have spoken with have downsized dedicated resources in this area.? I believe continued investment in these efforts are essential for understanding and creating value, improving efficiencies and maintaining quality standards.??

It's becoming increasingly important to build processes and no-regrets strategies that are evergreen regardless of the shifting landscape – this will help ease the transition to VBMs across our vastly complex system. Building strong, scalable processes sets organizations up for success in value-based care and ensures they can deliver value no matter how the industry (and payment models) evolve.??

Measurement has and will continue to evolve in this space?

Measurement in healthcare often starts solely for the purposes of record-keeping and reporting but often later evolves from process-only measures (i.e., the number of screenings) to outcome-driven measures (i.e., the number of screenings impacting an outcome like reduced ER usage).???

The metrics most important in evaluating VBC initiatives are those that are established and monitored by the payor – typically a mix of outcome and process quality measures, documentation and coding measures, and patient engagement/usage measures included in VBC payment constructs.???

However, improving measurement requires robust data accessibility and inclusive data standards, such as REALD (Race, Ethnicity and Language Data) and SOGI (Sexual Orientation and Gender Identity). These standards ensure equitable outcomes for all populations, especially underserved communities.??

One example of impactful value-based work is Providence and VP of Medicare Strategy Craig Enge ’s Medicare Shared Savings Program (MSSP) ACO, Health Connect Partners. In 2023. The program achieved $137 million in savings for the CMS, which is the highest amount ever for an ACO to achieve in a single year. To hear more from Craig on the success of this program, you can listen to the full Becker's Healthcare podcast episode here or by clicking the link below.??

Looking Ahead + Final Thoughts?

Value-based models will continue to evolve and be refined across the healthcare system, just as they have been for the past 20 years. While I don’t believe adoption of these models will happen overnight, future adoption will be profoundly influenced on how far and how fast the current administration and healthcare leadership move this transition forward.???

Looking ahead to next month’s newsletter issue, I’ll provide a sneak peek into an upcoming class I am teaching on strategic leadership in healthcare and what I’m reading and thinking about as I look ahead to that course.???

Stay tuned! Until next month.?

- Ruth ????

Have an idea for a future topic or questions in the world of healthcare? I’d love to hear from you!?