Value-Based Care: What It Is, Why It's Important, And The Best Way To Deliver It

The traditional fee-for-service system was operating on life support even before COVID-19, but now it’s going out of business.

Value-based is the only sustainable way forward for payers, and those that move first will gain an advantage.

Payers who choose to get into the business of providing value-based primary care to their members are able to take control of the supply chain. They build a competitive advantage by improving the patient experience and dramatically improving health outcomes. Value-based primary care allows payers to align financial incentives around health outcomes rather than transactional reimbursement.

This page attempts to unpack important considerations when moving into payvider territory. Use the interactive table of contents to navigate this page.

The Definition of
Value-Based Care

Any discussion about value-based care requires a common definition of terms.

  • Value-based care shifts the financial conversation away from a traditional reimbursement-based model based on volume.
  • It replaces that reimbursement model with one that rewards providers for the outcomes that it drives.
  • As a result, it shifts the focus of care delivery away from simply treating symptoms to providing appropriate care to any population by using an informatics-driven approach.

The peer-reviewed journal NEJM Catalyst does a nice job summarizing these factors with this simple definition offered in a recent article on the topic: “The ‘value’ in value-based healthcare is derived from measuring health outcomes against the cost of delivering the outcomes.”

The Relationship
Between Value & Total
Cost Of Care

As NEJM Catalyst explained above, outcomes aren’t the only relevant factor in a value-based care arrangement. The cost of delivering that care is also important to consider. This is called the total cost of care, which the Centers for Medicare and Medicaid Services define as “… the total (100 percent) cost of care a patient receives across all settings and services.”

There’s a very simple reason why total cost of care is important. For any payer, value is derived by delivering the best health outcomes at the lowest possible cost. This requires creativity and discipline. Creativity that goes beyond the traditional care model. And discipline that balances outcomes with cost. Any shortcut to either side of the equation – outcomes or total cost of care – will undermine value.

Shortcuts That Fail To Create Value

Creating value means radically reexamining your entire approach to healthcare. Typical formulas don’t work. Here are just a few of the shortcuts payers should avoid as they try to create value:

Shorter visit times

Shorter visit times make providers more “productive” by allowing them to see more patients. But this doesn’t produce value. By squeezing more patients into the day and shortening visit times, providers lack time to explore underlying issues that must be resolved to drive improved health outcomes.

Billing for more services

An approach that bills for more services creates an ecosystem of inappropriate care disguised as an attempt to “cover all bases.” This approach emphasizes reimbursement and productivity over true health outcomes even if the provider is billing procedures with high relative value units (RVUs). Higher productivity doesn’t always equate to value.

Billing for higher acuity services

Pushing patients into specialized care before the patient has been properly diagnosed is wasteful. Not only is it possible for a patient to visit multiple specialists just for a diagnosis (not to mention the patient has no visibility into cost prior to visiting), but there’s no guarantee without a full work-up that a specialist is going to be able to help the patient solve their problem. In fact, it’s entirely possible that whatever the patient needs could easily be taken care of in a primary care setting. In a true value-based environment, primary care providers would spend the time to complete a full work-up and diagnosis so that the patient, if necessary, can be referred to the right specialist.

A Blueprint for
Implementing Value-
Based Care

In order to deliver true value, payers must take a more expansive approach that builds on the foundation of population health management and expands beyond typical approaches to delivering care. In this section, we’ll provide a blueprint for doing just that using the advanced primary care (APC) model.

The Population Health Management Foundation

In any given population, about 75% of people are considered generally healthy (i.e., they haven’t generated a claim). The vast majority of costs are driven by the other 25% of the population, which is broken into two segments: polychronic (the costliest 5% of the population) and at-risk (the 20% that can benefit most from primary care). A data-driven population health management approach will prioritize the at-risk population segment while engaging the largest part of the population to reveal hidden at-risk patients.


Segment 1: Polychronic — 5% of the population, 45% of the cost

The small percentage of the population that is polychronic (multiple chronic conditions) accounts for 45% of the costs for a typical population. These costs come from high ER visits, numerous extended hospital visits, complex care needs, and nonadherence to care recommended by providers.

Patients in this segment are dealing with serious health issues like cancer, congestive heart failure, and more. It is highly unlikely that a patient in this segment will move down to a lower segment and the focus should be on supporting them with the absolute best primary care possible (including coordination for specialty care).


Segment 2: At-risk — 20% of the population, 35% of the cost

This segment is dealing with underlying conditions and drives 35% of the cost for a typical population. Primary care drivers in this segment are infections, complications, and rehospitalizations.

At-risk patients are the sweet spot for APC because this is where rigorous primary care can have the most impact by treating the underlying conditions, empowering patients to make positive behavior changes, and moving them back into the health segment of the population.

Apparently Healthy

Segment 3: Apparently healthy — 75% of the population, 20% of the cost

The final segment of the population are those people who have not yet generated a major claim. This segment makes up the vast majority of the population but only incurs a fifth of the cost.

Within this segment are people who are actually part of segment 2. They may even feel unhealthy but have not pursued care because they are on an HDHP (high deductible health plan) that makes seeking care expensive. This population needs high-quality preventive care to identify those who belong in segment 2 so that they can receive care early before becoming part of segment 1.

Advanced Primary Care: The Right Model for Value-Based Care Delivery

For a care delivery model to deliver value, it must fulfill on the foundation of population health management just discussed. APC when implemented with a proven partner, is the best option. Here are four specific ways that it helps you create value.

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Increased control

When a payer invests in the APC model, they gain control at the top of the supply chain, giving them power to influence downstream costs. As a result, the care delivery approach can be tailored to the needs of your populations to ensure they’re receiving the help that they need most. With this type of control there’s an inevitable impact to the bottom line.

Personalized outreach to drive engagement

As discussed above, it’s essential that at-risk populations receive the care they need if you want to drive down the total cost of care for the overall population. The APC model leverages an advanced informatics population to identify those high-risk populations in need of care so that you can build custom registries and personalized engagement for the care they need.


Because the APC model serves the needs of a specific population, it’s ideal for innovation. Any promising new care approaches can be easily piloted and then launched to the entire population if they prove effective (e.g. virtual care necessitated by the pandemic). In addition, this type of innovation is possible due to the value-based arrangement that prioritizes outcomes over activity. Being able to deliver more effective care in a more efficient way will always be prioritized within an environment driven by a capitation financial model.

Member experience

Improved quality means a great member experience and higher HEDIS quality scores and CMS Star ratings for Medicare Advantage populations. APC allows payers to do both by giving them the ability to construct an ideal member experience for their populations and prioritizing the specific needs of their populations to ensure high scores across the board.

The APC model, when executed well, improves health outcomes while controlling the total cost of care. APC generates positive returns for all parties involved — patient , provider, and payer. Patients end up paying less. Providers end up with more time to provide care. Payers pay less for the overall cost of care.

Value-Based Care

Once you’ve selected an effective model, you need a solid approach for operationalizing it. This requires strategies for the following categories of care:

Prevention & wellness

Care provided in this category primarily serves the 75% of the population that is healthy. Here the goal is to provide preventive care, and when health issues or risks do arise, the appropriate care to head them off.

Disease & care management

Disease management and compliance becomes much more important in this phase. At this point, patient registry outreach is important to engage with more high-risk patients who are dealing with multiple diseases that will require care coordination. Patients who need disease and care management can also especially benefit from behavior change coaching.

Complex care management

Patients requiring complex care management are often dealing with complex diseases like cancer or autoimmune disease. These patients will likely require frequent referrals to the high-value network, careful care coordination, and ongoing proactive care.

Value-Based Care: A Vital Step for Payers

Even before COVID-19 the traditional fee-for-service system was operating on life-support, but now it’s going out of business. Value-based is the only way forward, and those that can make the jump first will be the most successful.

In this whitepaper, we’ve defined value-based care, discussed how it positively impacts the total cost of care, and provided a blueprint for implementing it using the advanced primary care model. Now it’s time for you to take action.

To learn more about how Vera Whole Health can help you implement a value-based advanced primary care model, please get in touch with us today. We’d love to talk.

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