Medical practices, including radiologists and orthopedic surgeons, are facing numerous challenges in 2015 as the entire healthcare industry debates the benefits of volume-based care versus value-based care. The current volume-based reimbursement model has faced controversy over the idea that doctors may be over-treating patients as a way to generate additional income or in an attempt to keep up with lowered reimbursements. This has created an ethical and financial dilemma for practices who want to be reimbursed at a rate that can keep their doors open, but without over-treating patients or increasing the volume of patients to unmanageable levels. The move from the volume-based to a value-based model is supposed to be a step toward resolving these concerns, but it also raises six critical issues when comparing the two models.
The Six Basic Issues of Volume-Based vs. Value-Based Care
- The Fee-For-Service Model (FFS) – The current volume-based FFS model reimburses the service provider for the particular services rendered and so creates an incentive to provide more services. It can also promote upscaling to more highly reimbursed procedures. This historic model is dependent on the ethical character of the provider and has lead to increased emphasis on “medical necessity” and pre-authorization of services by third-party payors.
- Value-Based Care – The idea behind value-based care is to emphasize outcome so that the patient, and the payor, can continue to trust that the physician will keep costs low while providing just the right level of service. A value-based, shared savings model, can also include some of the FFS framework. It would actually reward the service provider for getting the exact care and saving money at the same time.
- Physician Autonomy – It may be harder to run a small practice in a value-based system due to increased documentation and reporting requirements. There will be an added incentive to join with hospitals, health systems, or larger practices that can deal with the shift in focus and still remain solvent. Some physicians may be forced out of private practice because they will not be able to generate sufficient income due to lowered reimbursements.
- Pricing – Physicians argue that if they can set their own prices, then they can reduce excessive volume through pricing. However, price control proponents argue that the pricing then becomes too high and inflation sets in for care that is critical. The solution may be a combination of price controls on some common procedures and the ability to price others in the new value-based system. This may provide some of the benefits of both.
- Excessive Coverage – There is some validity to the argument that what we really have with our current system is not really healthcare insurance, but rather pre-paid medical care. Health insurers have opted to cover minor, easily anticipated, healthcare services that could just as easily be planned and paid for by the patient themselves. An alternative is to only provide a major medical insurance plan. This would reduce the cost of insurance as it would serve as catastrophic care for the most part, serving those most in need. However, it omits preventive care that could serve to reduce healthcare costs.
- Two-Tiered Services – The current value-based, Accountable Care Organization (ACO) model is based on a capitated payment model, and can suffer from scheduling backups due to excessive volume. Patients who want the same or better care elsewhere may still want the private option to get care through private offices that set their own prices. This type of two-tiered system can help address the volume problem that can occur when the system becomes solely value-based alone.
As healthcare providers, insurers, and other medical professionals grapple with these issues, it is likely that a hybrid of both models may end up being the system of choice in the future. We at Healthcare Information Services, L.L.C. (HIS) will continue to keep up to date with all the latest trends in healthcare financing and reimbursement.