Essential Elements of Fee-for-Value Implementation

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What defines your patient management? Is it fee-for-service or fee-for-value? The choice you make will be crucial to the future of your practice.

In 1960 we spent 5 percent of GDP on healthcare. In 2019, that figure was almost 18 percent of GDP, which means that we are spending more than three times on healthcare as we were sixty years ago. The U.S. per person’s health expenditure as of 2017 was on an average double of what other wealthy countries spend. That sounds good, but what has been the outcome? Despite the big-spending, we ranked 29th out of 195 countries in the Global Healthcare Access and Quality Index. 

Clearly, we need to make significant strides in the quality of care and the outcome of our healthcare efforts. In fact, in our last podcast, Dr. Pariksith Singh, the founder of Access Healthcare, raised the all-important difference between ‘fee-for-service’ and ‘fee for value’ . The fee-for-service model is prone to misuse as it rewards providers for ‘more care,’ when, in fact, there may be a case for less care. And with patients increasingly questioning the value of care received, the fee-for-value model is rising to prominence. The growth in technologies such as telemedicine is also redefining the doctor-patient relationship.

Difference between ‘Fee-for-Service’ and ‘Fee for Value’ Care

In the fee-for-service model, the need for medical care is initiated by the patient. When the client has a problem, they make an appointment, the physician sees the patient, prescribes medication, or further tests, and the patient goes home. After that, it is for the patient to come back to the physician for follow-up visits. The fee-for-service model is transactional, reactive, incident-based, and in line with the way medicine has mostly been practiced and continues to be practiced in most countries.

In a fee-for-service model, the physician is paid basis the amount and type of medical services provided. From a revenue perspective, the fee-for-service model implies that you see as many patients as you can per day to stay profitable. That means that you are likely to spend less time per patient, which will hinder the patient experience, and lead to lower Medicare reimbursements ( as your customer ratings drop). It also can lead to physician burnout. 

The fee-for-value care model is based on complete physician accountability for the patient’s health outcome. Fee-for-value involves proactive management of existing and future health conditions of patients. Instead of being episodic, fee-for-value requires constant patient engagement.

Under the fee-for-value model, physicians are paid for improving the health of patients, reducing the impact of chronic diseases, with the impact being measurable (e.g., higher patient satisfaction scores, lower cost per patient, and fewer claims). 

In fee-for-value, you follow up with the patient to ensure that the patient has taken the post-visit measures prescribed by you. The patient experience becomes the focal point, from the time the patient checks in with you to when they leave the clinic. What was the wait time, did the patient get information on billing upfront, were they clear on what the physician has asked them to do next, and do they need any help with getting the tests done? You look at proactively recommending tests and lifestyle changes that will lead to patients leading healthier lives. Fee-for-value improves patient ratings and puts you in a stronger position to negotiate higher reimbursement rates with payers.

From a patient-experience perspective, the fee-for-value model trumps the traditional fee-for-service approach.

Implementing the Fee-for-Value Approach at a Physician Practice

The service and value models are both based on patient care, but in the fee-for-value approach, you create an entire infrastructure to ensure continuity of care. Here are the three core elements for implementing the fee-for-value model at a physician practice and some of the key decisions you need to make under each category.

References –  1. How to successfully implement a value-based care model at a medical practice 2. Value based care

Even though physician practices acknowledge fee-for-value benefits, they are often hesitant or unequipped to make the shift. One way to overcome the challenges of implementing value-based healthcare is to acquire knowledge through programs such as the one offered by Boise State University (online certification), Johns Hopkins, and Dartmouth.

Fee- for-value is the more expensive approach to managing a practice. Still, it is one that is increasingly in line with the risk-based contracts that evaluate practices on quality of care, utilization of resources, and compliance.

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