Medical practices that rely on volume-based billing for healthcare services are struggling to stay profitable in the face of rising administrative expenses, declining reimbursements, staffing shortages, and other challenges. These obstacles underscore the limitations of the current billing model.

Is transitioning to value-based care a more viable alternative?

According to an MGMA poll, about 66 % of medical group leaders plan to increase or maintain the same level of participation in value-based contracts. Although adoption has been gradual, value-based care is steadily opening new revenue streams and transforming the healthcare landscape.

Join us as we delve into the significance of shifting to value-based care and how it will redefine medical billing.

What Is Value-Based Care?

Value-based care (VBC) is a healthcare delivery model that rewards providers for their efficiency, effectiveness, and positive patient outcomes. The goal is to improve patient's health conditions while reducing healthcare costs by emphasizing preventive measures and encouraging providers to deliver the best possible care. Unlike traditional fee-for-service reimbursement, which incentivizes the quantity of care provided, VBC focuses on quality.

The value-based care model promotes preventive measures and holds providers accountable for improving patient outcomes while offering financial incentives and giving them greater flexibility to deliver care.

Why Should Practices Shift to Value-Based Care?

In 2022, the U.S. healthcare system spent an estimated $12,742 per person on healthcare, and this is expected to rise to $15,074 in 2024, making it the highest among comparable countries. Despite this hefty spending, almost double what other wealthy OECD nations spend per person, our utilization rates are similar to theirs.

Healthcare costs are influenced by the number of services used and the prices charged for them. Higher spending is a good thing if it leads to optimal health outcomes. However, the U.S. still faces some of the worst health metrics, like high infant mortality rates, lower life expectancy, and poorly managed diabetes, compared to other developed nations.

This is why practices should consider shifting to value-based care.

Traditional fee-for-service payment models often lead to overutilization of resources and inefficiencies, as physicians are paid for each service rendered, regardless of the outcome. This can lead to higher costs without necessarily improving patient health.

Value-based care aims to flip the script. It focuses on outcomes rather than the volume of services and encourages providers to deliver better care while managing costs. Physicians are rewarded for improving patient health and achieving better results, not just for performing more procedures. This shift helps control spending and improves the quality of care, leading to better health outcomes.

Moving to a value-based care model aligns financial incentives to care quality, making it a promising solution to some of the longstanding issues in our healthcare system.

How Does Adopting VBC Redefine Medical Billing?

Moving from a fee-for-service model to value-based care might seem like climbing a steep mountain. Suddenly, you’re dealing with new rules, different metrics, and a whole new way of thinking about payments. It might sound overwhelming, but it’s an ideal opportunity for additional revenue.

Value-based care isn’t just about changing how you bill; it’s about delivering better patient care, improving outcomes, and finding new ways to grow your practice.

So, how does the value-based payment model change medical billing? Let’s dive in.

1. Quality>Quantity

Your billing is no longer about the quantity of services but rather the quality and effectiveness of care. You will be rewarded for keeping patients healthy, reducing hospital admissions, and effectively managing chronic conditions. This shift requires a new approach to billing, where metrics such as patient satisfaction, readmission rates, clinical outcomes, and cost reduction benchmarks are key factors in reimbursement calculations.

To thrive in this model, your medical billing software must accurately capture and record these critical data points. Additionally, value-based care relies heavily on data analytics to predict patient risks, identify gaps in care, and support decision-making. With accurate data and effective analytics, you can optimize care delivery, improve outcomes, and meet performance benchmarks that drive financial rewards.

2. Team-Based Care

Providers in the VBC model collaborate to create comprehensive care plans tailored to each patient’s needs. For example, a patient with diabetes might have a care team that includes an endocrinologist, a dietitian, a primary care physician, and a nurse educator, all working together to manage the patient's condition.

Regular communication between team members is key to coordinating follow-ups, adjusting care plans, preventing duplication of tests and services, and ensuring accurate billing. Practices must also refine their billing systems to reflect these collaborative efforts, ensuring all team members are appropriately compensated.

3. Comprehensive Documentation

Value-based reimbursement is based on several metrics, such as patient outcomes, quality of care, and patient satisfaction. So, it's critical to track these data and back it up with robust documentation.

Here's how you can bolster your documentation:

• Keep Detailed Patient Records — Document every patient encounter, diagnosis, treatment plan, and follow-up, including patient feedback and any social factors that affect their health.
• Use Standardized Data Entry — Accurately reflect the care provided using standard codes (ICD-10 or CPT).
• Document Care Coordination — Record all care coordination activities, such as referrals or shared care plans, to demonstrate a holistic approach to patient care.
• Show Evidence of Preventive Care and Patient Engagement — Log preventive services (like vaccinations and screenings) and note discussions about lifestyle changes or adherence to treatment plans.
• Track Quality Metrics and Outcomes — Monitor key quality metrics, like readmission rates and patient satisfaction scores, to prove the effectiveness of care.

4. Bundled Payment

Bundled payments encompass all services a patient requires for a specific treatment or condition over a defined period, from initial consultation to recovery. This approach encourages healthcare providers to work together to deliver high-quality care in the most efficient way possible.

Efficient care delivery and best billing practices within the bundled payment model lead to better financial results and improved health outcomes.

5. Coding Accuracy

Under value-based care, Current Procedural Terminology (CPT) coding becomes even more critical. Accurate and precise coding is essential to reflect the quality of care, patient outcomes, and adherence to treatment plans. Practices must ensure their coding accurately captures the complexity and coordination of care required under VBC models. Mistakes or inaccuracies in coding can lead to reduced reimbursements or penalties, making it crucial for medical billing teams to stay up-to-date with evolving guidelines and documentation standards.

6. Shared Savings Models

In a shared savings arrangement, providers are rewarded for delivering high-quality care while keeping costs below a certain threshold. The entire care team — the surgeon, anesthesiologist, hospital, and rehab center — receives a fixed amount to cover all services related to a patient's care episode, like surgery and the associated follow-up treatments.

The shared savings model involves some financial risks. However, if the healthcare team can provide the necessary care for less than the predetermined amount, they share the savings.

Providers should be well-versed in these models and implement robust health IT systems to monitor accountability, track clinical outcomes, and ensure accurate billing.

Let’s Make Medical Billing Simple

Value-based care is shaping the future of healthcare, as CMS aims to transition all Medicare and Medicaid beneficiaries to these models. Many commercial payers are likely to follow suit.

If the thought of extra administrative work is holding you back from making the switch, don’t worry; we’ve got you covered. Glenwood Systems offers a cloud-based practice management solution designed to streamline clinical documentation, cut down on administrative tasks, and keep you compliant with regulations. Our comprehensive tools — GlaceEMR, GlaceRCM, GlacePhoneSmart, and GlaceScribe — ensure accurate data capture and analysis, helping you maximize revenue while reducing costs.

Need a hassle-free transition to value-based care? Give us a call today!