Is there real value in value-based care?

By Elise Wilfinger



Over the past few months, I’ve talked to various healthcare influencers about the meaning and implementation of Value-Based Care (VBC), primarily doctors.

To get a full-bodied perspective, we thought it best to now bring some external, yet experienced points-of-view, from ‘healthcare outsiders.’ That’s why today’s blog, our second in a planned series of three on value-based care, features Mara McDermott, a real ‘outsider, insider.’

Mara is an accomplished health care executive and a recognized authority in federal health care law and policy, including delivery system reform, physician payment, and Medicare payment models.

In 2018, she joined McDermott+Consulting which provides health industry clients with policy advice and lobbying services.

Prior to her consulting role, Mara served as the Senior Vice President of Federal Affairs at America’s Physician Groups. As the head of the Washington DC office, she worked on behalf of the Association’s member organizations to advance policies that promoted coordinated care, including working with members of Congress and their staffs, the administration, health policy stakeholders, and coalitions to advance alternative payment models.

Earlier in her career, Mara was counsel in the health industry practice at a law firm, also in Washington, DC. Her focus was on health policy and regulatory issues facing physician organizations, hospitals, pharmaceutical companies and academic medical institutions.


As a seasoned outsider, who works alongside many healthcare insiders, how would you define Value-Based Care (VBC)?


In its most perfect form, Value-Based Care is a system where the payer and the provider are aligned to deliver the care needed to enable patients to lead a full, healthy life and to freely engage in all desired, daily activities.


How does this care model differ from traditional healthcare models?


Traditionally, we see a fee-for-service model, where doctors are paid for each and every service provided to a patient.

In the value-based care model, it is no longer about one doctor or one service. Here, it’s more of an ecosystem around each patient. Doctors are incentivized to provide preventative services and encourage patient wellness. The goal is to keep people out of the hospital if they don’t need to be there, to prevent disease, and its likely progression, and ensure better overall health for entire populations.

Think of it as a paradigm shift, from procedure-based care toward wellness care.


In concept, Value-Based Care makes so much sense. Is there any proof that it drives better results?


Yes, there is proof that these efforts are working to both improve care and lower costs. Research has shown that Medicare Shared Savings Program ACOs, one type of value-based care model, improve quality, largely through three measured improvements: screening patients at risk for falls, administering pneumonia vaccines, and screening/follow-up for depression and blood pressure. In addition, this model saved Medicare about $1.9 billion in 2020.

Deeper dive: doing the math on Value-Based Care

In January 2019, the New England Journal of Medicine published data proving the sustained improvement in care and lowered cost in a value-based care model.

The study was conducted across several hundred thousand members of Blue Cross Blue Shield of MA during an 8-year period. It was compared to privately-ensured enrollees in other states within a traditional fee-for-service model.

  • Reduced annual medical spending on claims, with a documented savings of up to 12% which, over time, exceeded provider incentives
  • The percentage of BCBS members who met the clinical criteria for quality care for chronic disease management increased from 75% to 85% in contrast to national averages, which declined
  • Reduction in ER visits and unneeded imaging was also demonstrated

“Is the goal to treat the patient
holistically or just his current ailment?”

– Ms. McDermott


Even though results may say otherwise, ‘fee-for-service’ models often claim the same benefits as value-based care models. Do you find that to be the case too?


Yes, that’s a great point. To level set, one must always ask the question – what is the goal? Is it to treat the patient holistically or to treat his current ailment and then to transition him or her to the next doctor?

In the former, we’re looking for an integrated, whole-person approach that’s focused on primary care and prevention. Those approaches go hand-in-hand with value.

“If I was ‘King for the Day,’ this is what
I would change about the healthcare system…”

– Ms. McDermott


If you were named ‘King for the Day,’ with the power to permanently change healthcare in the U.S., what role would you have Value-Based Care play?


If I were King, I would immediately do these three things:

  1. Encourage and support more doctors in the transition to VBC models, ensuring that they had full responsibility – including clinical and financial accountability – for a population of patients, and the tools to take on that level of responsibility.
  2. I’d change the way that Medicare pays its physicians. We need to simplify the rules and requirements and make incentives clear.
  3. I would also put in place nationwide doctor and patient outreach and education about value-based care. We’ve seen that there is confusion about what VBC is and what it means for patients. Many doctors are interested, and willing to invest in this VBC journey, but don’t know where to start. We need to bring physicians to the table and help map the way.


From your vantage point, do you see the makings of a groundswell of doctors who want to interact with their patients within a value-based care model but find too many barriers?


I see a groundswell of enthusiasm for value-based care and certainly there are some barriers that could be removed.

On one hand, COVID-19 highlighted the vulnerability of a fee-for-service payment system. If you are paid based on volume of services provided, and suddenly the volume stops, the payments also stop. As stay-at-home orders swept the country, that is what many fee-for-service physicians experienced. While telehealth and provider relief measures filled in some gaps, many physician practices were hard hit as patients canceled or never scheduled appointments.

In contrast, doctors in value-based care models tended to fare better through the pandemic. For some, this was because they had greater certainty given their per-member, per-month payment arrangement (where they are paid for whole-patient care), resulting in a continued cash flow during the pandemic. Value models also supported practices and their communities by creating local care relationships and work flows that streamlined pandemic response. As a result, many physicians have a renewed interest in value-based care and value-based delivery models.

“We need to convince the ‘two canoe’ doctors
to get into the value boat”.

– Ms. McDermott


Where do your clients sit on this idea of a change in model?


As with anything, there are a wide variety of perspectives.

Most of my clients sit on one end of the spectrum: they are true believers in value-based care. They believe that it works, and more so, have devoted their careers to achieving its vision.

On the other end, the physicians who still believe in a fee-for-service system. They don’t believe that a transition to value-based care will ever happen.

Of course, we also have those in the middle. This situation is commonly described as having one foot in each canoe – one foot in fee-for-service and one foot in value. They have dabbled in value-based care but are not completely sold on its virtues. They need more data, incentives, and encouragement to move into the one VBC boat.

We have seen the federal government try to drive this shift in a couple of different ways, whether that is designing new models or expanding participation in existing models. Or, trying to make fee-for-service more unattractive by increasing pay-for-performance adjustments and requirements and/or applying downward pressure on payments.


Obviously, this is a tremendous Medicare issue, since its financial solvency is at great risk. But isn’t it a much broader issue than that?


Yes, it is a front-and-center issue for all federal programs, including, Medicaid, CHIP, other federal payors, for large commercial payers, and even for large employers.

In the case of employers, for example, how can they keep workers healthier? How can they help prevent future health issues, forcing employees to be out of work? How can they engage employees in their own care, potentially through innovations like telehealth? These are critical questions that all employers are asking.

“We can’t expect doctors to be actuaries.”

– Ms. McDermott


To be fair to the dissenting point-of-view, what, if any, drawbacks exist in value-based care models?


One of the biggest barriers to adoption is the complexity.

In many cases, a doctor or practice needs to apply to be included in a new model or to enter a contract with a payer. In these instances, they also need to know how to negotiate terms, and to do that effectively, they need to access and analyze various data sets (e.g., how sick is my patient population and how can I design programs around them?).

Although its only become part of the national conversation in recent years, we are actually ten years into our value-based care journey. The data and metrics captured are better as is visibility to them. That said, it’s not good enough.

If we could ensure data transparency and consistent metric usage plus the simplification of contractual partnerships between doctors and payers, we would have an uptick in adoption.


Value-Based Care sometimes seems like just a healthcare concept. Can you provide a tangible example of how an actual category of the health care system, like diagnostics, intersects with a value-based care model?


Good question. Let me try to make it more tangible with a real-life example.

You would expect a doctor who is practicing value-based care to have a higher rate of preventive screening and diagnostic testing, keeping his/her patient population healthier.

These doctors would be paid and measured in a way that encourages adoption of these types of preventive tests, e.g.: Were mammograms conducted across a significant number of their female patients? Were flu shots given to a high percentage of their overall patient population? Were diagnostic tests conducted for those at high risk for comorbidities, like diabetes, kidney disease, or cardiovascular disease?

“Once doctors adopt a VBC model,
we rarely see them leave it.”

– Ms. McDermott


We’ve talked about some of the barriers to VBC adoption. Is there also a deep-seated fear that practices won’t be profitable in this setting? If so, is there any truth to that belief?


Yes, this is a fear and it’s true that not every model will be profitable for every practice or every clinician type. It is important that practices carefully assess their options and evaluate whether they can succeed in a given model.

In a value-based care model, the reward tends to be distant from the performance. So, if you ‘perform services’ in a given year, a portion of your bonus is delayed to a few years later. This ‘divorce’ between performance and payment, which is certainly evident with Medicare patients, makes doctors uncomfortable.

Further, as mentioned, doctors don’t have confidence in whether this model will translate into a better financial picture for their practice. They are not actuaries who can best predict with financial certainty. With a fee-for-service model, however, they know exactly what they will get paid and when.

That said, most of the doctors that we work with have found value-based care to be a fruitful endeavor. Once doctors adopt this model, we rarely see them leave it.

Deeper dive: do doctors plan to stay in VBC models?

According to a September 2021 Insights Report from Xtelligent Healthcare Media, nearly half of healthcare leaders said the pandemic has “propelled the industry away from fee-for-service”.


In a VBC model, is the doctor more dependent on the patient’s motivation for self-care?


Patient engagement is a critical component of value-based care and its success. That’s why we see doctors in value-based models deploying many strategies to engage patients in their own health and to try to address total-care needs.

One of the advantages of VBC is that it expands the physician’s ability to address or connect a patient to services that support Social Determinants of Health (SDoH), like housing, safety or food insecurity issues. Depending on individual need, one patient could receive heart-healthy meals, where another may benefit from safety handles being installed in the shower to prevent a fall or ER visit. In yet another case, a patient may need help with medication adherence and might benefit from additional assistance in their home to get their medications organized. All of these strategies are encouraged in a VBC model.

Deeper dive: comparing real data of VBC vs NVB models

YOY study published by Humana found that Medicare Advantage (MA) members receiving value-based care had better outcomes overall, plus lower costs and more preventative care. Here’s a summary of key findings:

1. Care consistency

Among their MA members, in 2020:

  • 86% still saw their value-based primary care physician during the pandemic at least once/year vs 78% seen in non-VBC models
  • 7% reduction in hospital admissions
  • 12% reduction in ER visits
  • 22% reduction in hospital admissions

2. Patient satisfaction

Physicians in value-based care (VBC) arrangements scored higher than those in non-value-based care models (NVB), based on HEDIS scores (Healthcare Effectiveness Data and Information Set, which is one of health care’s most widely used performance improvement tools).

Overall HEDIS scores

  • 2018
    • VBC: 4.50
    • NVB: 3.70
  • 2019
    • VBC: 4.30
    • NVB: 3.90
  • 2020
    • VBC: 3.90
    • NVB: 3.40


You mentioned that we might see more patient home visits. If that were to happen, who would actually make the visit? Is it the primary care doctor or a specialist or a social worker?


There is not a one-size-fits-all answer to this question. It depends on the patient. It could be a physician, a social worker, a peer-to-peer support person, or even a Meals-On-Wheels volunteer. Sometimes all of these resources come together to tackle the problem.


Let’s talk about your work on Capitol Hill. Can you give us the inside scoop on how the federal government is thinking about Value-Based Care today?


On Capitol Hill, there is a long history of bi-partisan commitment to value-based care models going back decades.

The Biden Administration has reaffirmed this commitment, highlighting the importance of every Medicare beneficiary, and the vast majority of Medicaid beneficiaries, having an accountable care relationship by 2030. This Administration has also emphasized the importance of bringing health equity into the value conversation. This will hopefully spur further adoption of value-based delivery models in underserved areas and continue to inspire creative thinking about solving complex health care problems.

The bipartisanship around value-based care has been a bright spot in Washington, DC and I hope that continues well into the future.

Deeper dive: what else is the Biden administration saying?

Elizabeth Fowler, from The Center for Medicare and Medicaid Innovation (CMMI), recently confirmed the agency’s plan to enact fewer, but more targeted VBC models, with a greater focus on health equity and improving the nation’s primary care infrastructure.

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