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Healthcare's Paradigm Shift - Moving to Value-Based Care

August 16, 2023

Rick VanNess, Director Product Development


Healthcare was founded on fee-for-service, a method where providers and physicians are paid for services performed and deemed medically necessary. As the system shifts to value and proactive care it becomes very difficult to use predictive clinical analytics to determine medical necessity. For example, if an algorithm predicts a patient heart attack is eminent, someone needs to act on it, but it may not be considered medically necessary to perform tests. Another example is a pregnant patient who has a urinary tract infection. Clinical data indicates this patient is at risk for a preterm delivery, but it may not be medically necessary to act on the positive urine test. In a value-based care model, the provider would call the patient and make sure she is taking her medication and schedule ongoing tests. In a fee service model, the provider may not get paid for these follow-up tests because it was not considered medically necessary. The healthcare industry is very much in a reactive state and should become more proactive.


How does the industry become more proactive? One solution can be when contracts are signed between the payor and provider. The amount can be a capitated per person per month rate regardless of medical necessity. By implementing more of these type contracts, medical necessity is no longer the primary way to get reimbursed. Everyone can now make decisions on what will help the patient rather than only getting paid for each service performed.


With value-based care, providers are using the contracted amount to best treat a patient. Value based care has been used for knee and hip replacements for many years. Providers will only receive a certain amount of money for a hip or knee replacement. Before the physician conducts surgery on a patient, they will evaluate the patient and determine what is their status i.e., willingness to exercise, mobility, and recovery time. It may not make sense to do the surgery because there may be a poor outcome and the total expenses may outweigh the contracted amount. The provider is deciding what’s best for the patient.


For a complimentary evaluation of how you can move to a more value-based model, click here.

Rhodes Value Based Strategy.PNG
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