Value-Based Care

Traditional fee-for-service pays primarily for specific, itemized care delivered by clinicians. This approach has several downsides, such as:

• Rewarding the number of services clinicians provide rather than the quality of care
• Focusing more on treatment than prevention and wellness
• Disincentivizing coordinated care
• Discouraging practice transformation and clinician-driven innovation

To address these issues, changes in healthcare payment — partly driven by the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) — aim to shift the focus toward rewarding high-quality, cost-effective care. These changes also seek to fairly compensate providers for patient-centered care and encourage innovation in how care is delivered.

Initiatives offering an alternative to traditional fee-for-service payment are broadly referred to as value-based care.

Value-based care seeks to reward healthcare providers who deliver higher quality care for individuals, better health for populations, and lower healthcare costs. Paying for better care through value-based care programs can reduce the incentive to increase volume of services. Value-based care programs often focus on:

• Emphasizing prevention and wellness, in addition to treatment
• Improving outcomes
• Helping patients navigate the healthcare system
• Integrating and coordinating care
• Investing in practice transformation

Value-based care programs aim to support a better, more patient-centered approach to care and to promote clinician satisfaction. Value-based care has the additional benefit of being cost effective, particularly for patients with chronic, complex, or costly illnesses. These programs seek to:

• Limit duplicative testing
• Prevent avoidable emergency department visits
• Increase adherence to care plans and medication
• Improve patients' quality of life

The Centers for Medicare and Medicaid Services (CMS) have incorporated value-based care approaches into many of its programs as part of CMS's larger quality strategy to reform how healthcare is delivered and paid for.

How do value-based care programs work? In a primary healthcare environment, value-based care programs seek to shift the focus of payment from the individual office visit (usually to treat an illness or injury) to person-focused payments. These payments reward clinicians for keeping people well and achieving better outcomes when measured against benchmarks of quality and value.

In the context of specialty-based healthcare, value-based care programs often pay for a comprehensive “episode” of treatment (for example, for an elective hip replacement) rather than paying separately for each individual office visit, test, procedure, medication, or other service the patient receives during that time. Again, this approach rewards clinicians for achieving better outcomes when measured against benchmarks of quality and value.

In both primary and specialty care, value-based care often includes accountability for the combined quality and value of care should these factors fall below predetermined benchmarks.

CMS refers to many of its value-based care programs as Alternative Payment Models (APMs). APMs include:

• Enhanced Fee-for-Service models, which pay for selected services that go beyond treatment
• Accountable Care Organizations (ACO) models
• Episode Payment models (also known as Bundled Payment models)
• Population Health models
• Models that integrate care for patients who have Medicare and Medicaid

What are the challenges? Transitioning to value-based care and APMs requires changes in day-to-day operations, the scope and delivery of care, and the relationship between clinicians and their patients.

What are the advantages to patients? Through value-based care and APMs, patients may experience better access to care, more help navigating their healthcare, more direct coordination between providers, more opportunities for shared decision-making, and more productive time with their clinicians. In other words, they can expect better quality care without increased out-of-pocket costs.

What are the advantages to clinicians? Value-based care and APMs offer clinicians opportunities to make the delivery of healthcare more rewarding and fulfilling. In addition, clinicians can earn additional revenue for meeting quality and cost targets, enhance the care they provide through support for care coordination and other services, more readily invest in practice transformation, and build their own innovations in healthcare delivery and payment.

What is the QPP?

The Quality Payment Program (QPP) was established by MACRA. Under MACRA, the QPP provides 2 ways for clinicians to participate:

• The Merit-based Incentive Payment System (MIPS)
• Advanced APMs

What are the objectives of the QPP?

Based on feedback from thousands of physicians and other relevant professionals, CMS developed objectives for the QPP, including the following:

• Improve patient population health and care received by people with Medicare
• Lower costs to the Medicare program through improvement of care and health
• Advance the use of healthcare information between allied providers and patients
• Educate, engage, and empower patients as members of their care team
• Maximize QPP participation through education, outreach, and support tailored to the needs of practices, especially those that are small, rural, or in underserved areas
• Provide accurate, timely, and actionable performance data to clinicians, patients, and other stakeholders while expanding APM participation
• Continuously improve the QPP based on participant feedback and collaboration

Clinicians can participate in the QPP through either the Merit-based Incentive Payment System (MIPS) — earning payment adjustments based on performance for services provided to Medicare patients — or Advanced APMs, where they earn payment for delivering high-quality, high-value care.

What is MIPS?

Clinicians who bill to Medicare are included in MIPS if they are an eligible clinician type and if they meet the low volume threshold. This threshold is based on allowed charges for covered professional services under the Medicare Physician Fee Schedule and the number of Medicare Part B patients who receive those services.

MIPS performance is measured using the data clinicians submit in 4 performance categories:

• Quality Measures
• Promoting Interoperability
• Improvement Activities
• Cost Measures

Each performance category is scored by itself and has a specific weight that contributes to the MIPS Final Score. The MIPS Final Scores may result in a positive, negative, or neutral payment adjustment that will impact Medicare payments to MIPS-eligible clinicians 2 years after the year in which performance was measured.

Learn more about MIPS on the QPP webpage.

An alternative pathway in QPP is to participate as part of a MIPS APM, a model that meets MIPS standards but does not necessarily qualify under MACRA as an Advanced APM. Note that many MIPS APMs also qualify as Advanced APMs. Participants in a MIPS APM may have reduced reporting requirements and the opportunity for more favorable performance under MIPS.

Advanced APMs: Clinicians who participate to a sufficient degree in APMs certified as Advanced APMs can receive payment as Qualifying APM Participants (QPs), earning both APM-specific rewards (such as potential shared savings) and an additional lump-sum APM incentive payment for a limited time. Additionally, they're excluded from reporting requirements under MIPS. See Section 6.4 for details.

An APM is a payment approach that provides added incentives to clinicians to provide high-quality and cost-efficient care. APMs include:

• CMS Innovation Center models
• The Medicare Shared Savings Program (MSSP)
• Demonstrations required by federal law

To view a list of the APMs that CMS operates, visit the APMs overview page on the QPP website. Current and past APMs with a focus on primary care and small practices include:

• The MSSP
• The Making Care Primary Model
• The Primary Care First Model
• The Comprehensive Primary Care Initiative and Comprehensive Primary Care Plus

Advanced APMs

Advanced APMs are a kind of APM that allows practices to earn more — through the QPP — for taking on additional risk related to their patients' outcomes. Clinicians who participate sufficiently in Advanced APMs earn QP status, allowing them to receive added incentives and be excluded from MIPS requirements.

Advanced APMs in the QPP: Clinicians who participate in Advanced APMs and earn QP status receive an additional lump-sum APM incentive payment for a limited time, in addition to potential APM-specific incentives. Under the QPP, Advanced APMs:

• Require participants to use certified electronic health record (EHR) technology (CEHRT)
• Provide payment for covered professional services based on quality measures comparable to those used in the MIPS quality performance category
• Are a Medical Home Model expanded under CMS Innovation Center authority or require participants to take on a meaningful amount of financial risk

To be eligible for Advanced APM incentives and MIPS exclusion, clinicians must become QPs, with a certain percentage of their patients or payments occurring through an Advanced APM.

As we discussed in Section 6.3, Promoting Interoperability is 1 of 4 performance categories under MIPS.

The Promoting Interoperability performance category builds on the Medicare EHR Incentive Program for Eligible Professionals (also known as the Promoting Interoperability Program). It requires participants to report on measures related to the use of CEHRT. The Promoting Interoperability performance category may count for up to 25% of an eligible clinician’s MIPS Final Score.

Small practices, especially those in rural or Health Professional Shortage Areas, play a vital role in caring for Medicare patients with many different types of needs.

The QPP provides options for clinicians in small practices (defined as 15 or fewer clinicians) to address the unique challenges that small practices face in their communities. Learn more about the support available for small practices in the QPP.