Value-Based Care Model Needs More Review Before Implementation in Workers’ Comp

By Denise Johnson | January 22, 2019

At face value, value-based care (VBC) seems like the answer to some of the woes associated with the fee for service model currently used in workers’ compensation. However, several factors need to be considered to determine whether it can be implemented into a payor’s program.

A model that reimburses for treatment based on measuring the quality and cost of care rather than on quantity, it’s currently being used by government and commercial healthcare payors, said Dr. Randall Lea, orthopedic surgeon and senior research fellow at the Mass.-based Workers Compensation Research Institute (WCRI).

During a recent WCRI webinar on the subject, he explained the concept and examined the factors necessary to implement the model.

The model consists of three parts, Dr. Lea said. A payment method, quality measures and an infrastructure to operationalize features.

The overarching strategy, he said, is to decrease costs while increasing the quality of care.

There are six payment method types of VBC models – fee for service, bundles, pay for performance, shared savings/risk, capitation and patient-centered medical homes, Dr. Lea explained. Hybrids exist as well.

Under fee for service, providers are reimbursed at a set rate based on the medical services performed. This payment model came about in the late 20th century and has been the predominant payment method since its introduction, he said. Without regard to quality, it offers the shortest cycle time of all the payment models.

According to Dr. Lea, this model incentivizes overutilization based on the number of services provided and pays little attention to the quality of care delivered to the patient. Hence, the interest in eliminating it.

Bundled payments offers one payment for one case or procedure, no matter the number of treatments. Dr. Lea explained this model’s incentive is to eliminate waste and shift risk to the provider. Providing some level of cost savings, it’s a good model for solo providers, he said.

Another payment model, pay for performance, is just as it sounds. Providers must meet pre-established guidelines focusing on quality and/or efficiency.

In population-based payouts, according to Dr. Lea, the focus shifts from a single case to a whole population – by employer, payor, diagnoses or location of residence. Since it covers a broad number of patients and services, it is the riskiest model for providers.

Accountable care organizations fall under the shared savings/shared risk payment method. Dr. Lea explained that in this payout model, groups of providers assume accountability for the quality and efficiency of healthcare for a given population. There’s increased risk to the provider in that if target goals are not met, they may incur penalties.

In the capitation payment model, a set amount is paid to providers per month to manage all healthcare services for a pre-defined population. There is also the option of global versus partial capitation, known as a carve out.

In a patient-centered medical home payment model, Dr. Lea said providers gain reimbursement via a fee for service payment for each visit, a monthly care coordination fee and a performance-based bonus if pre-determined goals are achieved.

There are five factors for payors to consider when applying the VBC model to workers’ compensation, he said. They include:

  1. Determining whether regulatory policies that support VBC strategy are already in place.
  2. Determining if the payment method is already in use.
  3. Smaller providers may not be equipped to implement operational requirements and regulators many not be able to offer oversight.
  4. The model requires sweeping policy change compared to other models.
  5. Consideration as to how early versions of the model might appear.

Other factors include examining data-sharing issues and evaluating measures for scoring performance.

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