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Value-Based Reimbursement in Healthcare Financing
Introduction
The value-based reimbursement policy that is currently gaining momentum on the national level has rightfully garnered a lot of attention. According to the overwhelming majority of both healthcare providers and customers, the traditional volume-based approach, also known as a fee-for-service model, does not provide the necessary level of commitment. Therefore, the consensus holds the shift as both necessary and desirable and points to several financial and motivational advantages of value-based care. Nevertheless, some controversy exists regarding the adverse effects of the reform due to the fact of the emergence of unforeseen barriers. The following paper aims at outlining the main benefits and drawbacks of value-based reimbursement policy and concluding on its value for the stakeholders.
Advantages
The most evident and widely recognized advantage of value-based care is the supposed increase in the number of positive outcomes associated with it. It is a logical conclusion for the patient to expect being charged for the positive result rather than for the fact of admittance or a visit to a hospital. Simultaneously, since the providers performance will ultimately determine their financial condition, they are expected to be better motivated and engaged on an individual as well as organizational level.
The second most-often cited benefit is the opportunity for organizations to generate profit by improving the interaction between departments and entire establishments. A good example of such a scheme is bundled payments which theoretically cover the entire duration of care. Once the provider can cut the expenses (thus also reducing the number of unnecessary actions for the patient), the excess of the bundle is withheld as profits. Conversely, the providers face the risk of falling short of the budget and increasing expenses, which theoretically motivates them to maximize efficiency.
Finally, the policy is expected to promote innovation and introduce improvements such as electronic health records. While such a move requires an initial investment, it also results in long-term benefits from both the financial and clinical standpoint (Infosys, 2015). It should also be mentioned that the collective effect of the reform leads to significant savings on the local and national level.
Barriers
However, the theoretical advantages are undermined by a host of difficulties associated with the shift. First, value-based reimbursement policy creates unequal pressure on providers due to scalability issues. In other words, smaller providers often find it difficult to comply with the identified requirements and eventually face financial problems. Also, smaller providers are more likely to be incapable of obtaining data necessary for achieving savings on macro-level interactions.
Second, because the policy relies heavily on innovation and new technologies such as EHR, many organizations adopt different systems early in the course of the reform. This secures the possibility to communicate data within the system but often restricts communication between entities, contributing to disparity and further widening the gap between better-prepared organizations and those who fail to comply (Poizner, 2016). While it fosters competition, it also diminishes the possibility for state-wide improvement, which makes a contribution to the health of the population unattainable.
Finally, the quality measures used for evaluation are currently in their early stage of development, and sometimes poorly suited for determining penalties and incentives (Brown & Crapo, 2014). Also, some measurements require complexity to become meaningful on a level that is currently impossible.
Conclusion
As can be seen, all of the advantages of value-based reimbursement are long-term while the disadvantages can be traced to the infancy of the reform. It is, therefore, reasonable to conclude that the policy is both necessary and desirable, although an additional effort is required to ensure its integrity and efficiency.
References
Brown, B., & Crapo, J. (2014). The key to transitioning from fee-for-service to value-based reimbursement. Web.
Infosys. (2015). Value based contracting and reimbursement. Web.
Poizner, M. (2016). Value-based reimbursement: The new norm for health care? Web.
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