The COVID-19 pandemic has hit many industries in profound ways. Due to the lockdowns and social distancing efforts, many health care providers have seen a dramatic drop in patients, translating into diminishing bottom lines.
What this pandemic has also revealed is that the “fee-for-service” payment model is actually harming providers. Hospitals alone are reportedly losing $40 billion each month in loss of revenue due to cancelled “non-emergent” outpatient and inpatient procedures. As a result, physician practice overall revenue has been slashed in half. Many are saying this is a direct result of “volume-based contracts” that are currently in place at numerous providers.
In addition, the high cost of treating COVID-19 patients, along with physician practices and health systems having to lay off or furlough workers in great numbers, certainly didn’t help.
On the upside, this crisis has made the case for more of a “value-based models of care”. This approach efficiently places providers in a more robust position to withstand the changes.
The Case For Alternative Payment Models
Value-based care ensures that the U.S. health system will respond more favorably during any health care crisis. Those providers that have always depended on patient volume have not fared well compared to the providers using alternative payment models. In fact those participating in alternative payment models (APM) did not experience a drop in revenue. Plus, with (APM), providers can focus more of their efforts on health improvements to maintain the health of their patients during this pandemic.
Another unexpected result of the pandemic is the rise of telehealth. Investment in virtual care has proven to be a great move by providers to dramatically reduce the cost of care and increasing engagement with their patients. Telehealth also allows providers to care for the most vulnerable of populations, as they are the ones that can suffer most during the pandemic.
A report released in 2019 by the HCPLAN (Health Care Payment Learning and Action Network), demonstrated that 35.8% of the total U.S. healthcare payments made in 2018 were connected to alternative payment models. This was a “year-over-year” boost of 34%. Furthemore, when payers were surveyed in the 2019 Measurement Effort, 97% of respondents mentioned that the adoption of APM will result in improved quality care and 88% said that it will translate into more affordable care.
This will ultimately happen when the government, providers, and health plans are ready and interested in adopting this model.
The Need For Data Transparency
In order to carry out value-based care programs, there needs to be “data transparency”. This data must reveal which sections of the population need targeted advocacy. What greatly bars this new healthcare innovation is the lack of data exchangeability between providers and payers. By breaking down this barrier, this would greatly reduce the opposing meanings of value and quality. Not doing so creates a roadblock to progress into alternative payment models.
Every piece of data, from consumer experience to “clinical quality” must be analyzed and improved in partnership with providers for continued innovation.
APM Could Greatly Improve Patient Population
Many providers in APMs have concentrated their efforts on methodologies to help promote suitable and necessary care. This has been done by empowering patients with tools to manage their own health. If providers and payers can work together, it would greatly facilitate this aim.