Value-Based Care

Value-based care is an approach to healthcare where the emphasis is on the quality, as opposed to the quantity, of care provided. While traditional fee-for-service reimbursement models pay providers based on the number of services, states and federal governments have been pushing for value-based models that focus instead on the quality of services. With mental health care costs continuing to rise, governments are refocusing their efforts on how to manage costs while improving the quality of care that people receive.

Value-based care aims to resolve this issue by rewarding healthcare providers for the quality of care they provide. Value-based models put greater emphasis on outcomes and quality measures, while reducing excessive costs by eliminating unnecessary treatments. The overarching goal is to use the precise amount of resources necessary to deliver the best care.

value based care infographic
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Fee for Service vs. Value Based Care

In traditional fee-for-service models, providers are incentivized to deliver as many services as possible, since they are reimbursed for the quantity of services they provide. However, this model does not take into account the quality of care or whether individuals actually need every one of those treatments. Value-based reimbursement models aim to resolve this by paying providers for meeting certain outcomes and demonstrating quality.

Often, CMS looks at indicators such as a reduction in hospital readmissions, client engagement, and reduction in spending on unnecessary services. In many value-based models, providers are allowed to keep any savings they generate by reducing unnecessary costs. In this way, providers themselves are incentivized to deliver care in the most cost-efficient way possible.

How Does Value-Based Care Work?

Value-based care agreements are written to reward providers for helping clients improve individual outcomes, while also enhancing population-based health. This is accomplished using evidence-based practices including integrated care approaches, prevention, early interventions, as well as a focus on social determinants of health.

Unlike in a fee-for-service approach, value-based care reimburses providers based on the value of the services they provide. This value is defined as a measurement of health outcomes against the cost of delivering those outcomes. While the general concept is simple, this model is very complex in practice -- with hundreds of moving parts, interrelated relationships, technological dependencies, aging infrastructure, and a rigid workforce. There are also varying definitions of outcomes and quality measures, making it difficult to implement value-based reimbursement across the board. 

"For our healthcare system to survive and thrive, this paradigm shift is not only desired but necessary."
David Bucciferro
Senior Advisor,
Foothold Technology

Value Based Reimbursement Models

There are numerous methods to carry out value-based payments, but below are some of the most common reimbursement models. Each involves a unique blend of risk, savings, and provider upside. 


Shared Savings:

In a shared savings model, providers strive for a target spend and share in some of the savings if they come in under budget. This model is known as an “upside-only” arrangement, since providers are not responsible if they do go over budget. This approach is often used as an entry point to value-based care before transitioning providers to shared risk agreements.

Shared Risk:

In a shared risk model, providers are given savings targets. If they manage to keep spending below the target, they can share in some of those savings. But if they overspend their targets, they may pay penalties. 


In this model, payers set rates for “bundles” of services, usually based on historical prices for a particular diagnosis. If a provider can eliminate unnecessary services from the bundle according to a client’s needs, the provider gets to keep any remaining savings. If the costs are higher than expected, the provider absorbs those costs. 

Global Capitation:

With global capitation, providers are given a single, fixed payment that is meant to cover all the services a client will receive during a specific period of time. If costs for a client exceed that amount, the provider takes the loss.

The Shift to Value Based Care

For a successful shift to value based care, there needs to be a variety of measures and improvements in place. These include aspects of change management, improvements in technology, government support, and standardization of data elements and outcomes. 

Change Management

Successfully transitioning an organization from fee-for-service to value-based payments requires strong internal change management practices. Not only will billing staff need to understand how to track services and submit claims under this new model, direct care teams will need to understand how they can potentially reduce unnecessary services while focusing on improving outcomes. 

Additionally, there is no established framework for transitioning a behavioral healthcare organization to value-based payments, so each organization often has to undertake the process on its own. 

Standardization of Quality Measures

Currently, there are very few nationally recognized, standardized ways to measure quality and outcomes for behavioral health treatments. Providers report on outcomes in their own way, often depending on the requirements of their specific funders. This makes reporting burdensome for providers and makes it difficult for value-based care to scale efficiently in the behavioral health world.

Technology and Interoperability

Although many organizations now use some form of Electronic Health Records to document services, many agencies continue to use a mix of paper and electronic documentation. This makes it difficult to consistently share information with other providers, which is a key component of enabling successful value-based care. 

Even for those agencies that are using an EHR, there needs to be effective connections in place to ensure the safe transmission of client data. With the evolution of FHIR and its promise of an “app store-like” model for the healthcare industry, there will hopefully be a more streamlined way to share information in the future. To make value-based care successful, there will also need to be a continued investment in data analytics, reporting, and visualizations in order for providers to effectively track outcomes, report on outcomes to funders, and identify gaps in care.

Looking for a partner that can guide you in the new landscape of value-based care? Look no further.