The most popular word in health care today is “value.” It describes the relationship between what someone is paying for health care services and how well those services perform.
Health care providers often are criticized for not providing value. Health insurers pay hospitals and doctors based on the volume and type of services they provide, not on whether those services produced the desired medical or health outcomes. And employers pay the health insurance premiums that pay the insurers that pay the hospitals and doctors based on volume, not value.
But health insurers don’t want to do that anymore because it costs too much. It’s not a sustainable business model. They want to pay hospitals and doctors based on how well they do their jobs, and health insurers—both public and private—are developing what are called value-based reimbursement systems. Essentially, they will pay health care providers based on a sliding scale, with the reimbursement rates determined by how well hospitals and doctors perform on specific performance measures of quality, safety, efficiency and outcomes. Do your job, get paid. Do your job really well, get paid more. Do a lousy job, get paid less or not at all.
Switching from a health care payment system based on volume to one based on value is a foundational change. But unlike other foundational changes in health care or any other industry, this one is happening so fast that employers may not have time to write their names in the wet cement before it dries. They must educate themselves quickly and figure out how they can get a piece of what their carriers are saving from value-based reimbursement systems. If insurers are paying the same or less for better care, then the employers that pay the premiums should pay the same or less, right?
How long will this switch take? It will all be over within the next five years based on the following:
As mentioned often in this column, Minneapolis-St. Paul is one of the nation’s leading incubators of value-based reimbursement schemes such as accountable care organizations, patient-centered medical homes (primary care facilities that emphasize care coordination and communication) and value-based insurance design. It’s time that employers in the Twin Cities and across the country start asking what’s in it for them.
David Burda (twitter.com/@davidrburda, email@example.com) is editorial director, health care strategies, for MSP-C, where he serves as the chief health care content strategist and health care subject matter expert.