What is Value-based medicine? Is this patient or profit-centric?

Value-Based medicine. Everyone is talking about it; biopharma is questioning what the managed market model will be when they launch new drugs, lots of hand-wringing and a fair dose of confusion (that included me, too!). So let’s use a recent Deloitte report and some CMS content to define it.

What I ask is: do any of you readers see this impacting your brands today? Are people putting their heads in the sand? Are they accepting the inevitable and trying to shape it?

Here’s an infographic from a Xerox company healthcare survey:

After taking in that content and facts from the survey, it seems that uncertainty as to whom Value-based serves is greater than the end goal of better quality care at lower costs. Is this patient or profit-centric?

Deloitte top line finding:

The Deloitte 2016 Survey of US Physicians, a nationally representative sample of 600 US primary care and specialty physicians, confirms the slow pace of adoption of value-based payment models among physicians: Currently, there is little focus on value in physician compensation, and physicians are generally reluctant to bear financial risk for care delivery. At the same time, however, many physicians conceptually endorse some of the principles behind value-based care, such as quality and resource utilization measurement.

Here is the government definition: Global healthcare in the 21st century is characterized by evidence-based medicine (EBM), patient-centered care, and cost effectiveness. EBM involves clinical decisions being made by integrating patient preference with medical treatment evidence and physician experiences. The Center for Value-Based Medicine suggested value-based medicine (VBM) as the practice of medicine based upon the patient-perceived value conferred by an intervention. VBM starts with the best evidence-based data and converts it to patient value-based data, so that it allows clinicians to deliver higher quality patient care than EBM alone. The final goals of VBM are improving quality of healthcare and using healthcare resources efficiently.

Now if you ask me, this is so broad you could drive a truck through it. But CMS actually provided a list of Value-based models:

Bundles (bundled payments): Instead of paying separately for hospital, physician, and other services, payments for services linked to a particular condition, reason for hospital stay, and period of time are grouped together. Providers can keep the money they save through reduced spending on some component(s) of care included in the bundle.

Global capitation: An organization receives a per-person per-month payment intended to pay for all attributed individuals’ care, regardless of which services they use.

Patient-centered medical home (PCMH): A team-based model of care, typically led by a primary care physician who is focused on the whole person and provides continuous, coordinated, integrated, and evidence-based care. Physicians may receive additional payments (for example, care coordination and/or performance-based incentives) on top of FFS payments.

Shared savings: This type of arrangement generally requires an organization to be paid using the traditional FFS model, but at the end of the year, total spending is compared with a target; if the organization’s spending falls below the target, it can share some of the difference as a bonus. Or, if patients have better-than-average quality outcomes, the provider receives a bonus or increased payment.

Shared risk: As a complement to shared savings, if an organization spends more than the target, it must repay some of the difference as a penalty. Or, if patients fail to have better-than-average quality outcomes, the provider receives a lower payment.

Downside risk: Payment models in which the provider is penalized if its patients fail to have better-than-average quality/cost outcomes.

Upside risk: Payment models in which the provider receives a bonus if its patients have better-than-average quality/cost outcomes.

CMS Bundled Payment Care Improvement (BPCI): Initiative for organizations to be paid under bundles for specific procedures/conditions. The first program is for joint replacement. After the first level of the program, participants are required to participate with gradually increasing levels of downside risk.

Medicare Comprehensive Joint Replacement (CJR) program: A mandatory bundled payment model for lower extremity joint replacement services in select geographic areas.

Medicare Shared Savings Program (MSSP): Initiative for organizations to develop ACOs for Medicare patients and be paid via shared savings arrangements. After the first level of the program, participants are required to participate in shared risk arrangements with gradually increasing levels of downside risk.

What to do? Educate, stay on top of this changing landscape and don’t assume anything is static: this is going to be a rocky ride.

Thank you to Deloitte and Xerox for providing such great content and valuable ideas.