Value-based care programs are revolutionizing the healthcare industry by shifting the focus from the volume of services provided to the quality of patient outcomes. These programs are structured around five core objectives:
- Elevating Patient Experience: Ensuring patients receive care that is not only effective but also centered around their needs and preferences.
- Advancing Health Equity: Striving to eliminate disparities in healthcare access and outcomes across all patient populations.
- Improving Patient Health Outcomes: Focusing on delivering care that leads to measurable improvements in patients’ health and well-being.
- Delivering Cost-Effective Healthcare Services: Providing high-quality care while managing and reducing unnecessary healthcare costs.
- Supporting Healthcare Workforce Well-being: Creating a sustainable and supportive environment for healthcare professionals.
Value-based care arrangements fundamentally change how healthcare providers are paid. Instead of the traditional fee-for-service model, where payment is tied to the number of services rendered, value-based care links payment amounts to the actual results achieved – the quality, equity, and cost-effectiveness of the care delivered. This alignment of financial incentives aims to encourage the provision of more evidence-based, preventive, and equitable whole-person care.
The benefits of value-based care extend to improved coordination among various healthcare professionals. By fostering a collaborative environment, these programs can minimize redundancies, eliminate unnecessary or avoidable services, and reduce medical errors. Furthermore, value-based care models are designed to expand access to care, particularly for historically marginalized and clinically complex patient populations, ensuring everyone has the opportunity to receive optimal healthcare.
Accountability is a key feature of value-based payment arrangements. Physicians and healthcare organizations are often held responsible for both the quality of care their patients receive and the efficient utilization of healthcare services. This accountability is typically measured through performance metrics and financial risk-sharing requirements, driving a continuous focus on improvement and efficiency.
Note: While the terms are sometimes used interchangeably, it’s important to distinguish between “value-based care” and “alternative payment models” (APMs). “Alternative payment model” is a term specifically defined within the Medicare program by the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). APMs are a subset of value-based care approaches tailored for Medicare.
Healthcare professionals collaborating to provide value-based patient care
Expert Perspectives on Value-Based Medical Care
Experts in the healthcare field are strong proponents of value-based care. Dr. Maria Ansari, CEO and executive director at The Permanente Medical Group, describes value-based care as “a care-delivery system that rewards for patient outcomes and quality of care, managing a population rather than transactional care.” In a 2024 interview for the AMA Update video series, she elaborated, “It’s more continuous care, population health and being rewarded for patients who live longer, healthier lives, as opposed to more siloed, transactional care that’s more episodic.” This perspective highlights the shift from treating illness episodes to proactively managing patient health over time.
Essential Components and Challenges in Value-Based Healthcare Systems
The AMA Ed Hub™ module, “What Are the Components of Value-Based Care?,” outlines critical attributes of an ideal, high-value healthcare system. These include:
- Patient-Centered Vision: A clear, shared vision placing the patient at the heart of all care delivery efforts.
- Healthcare Worker Leadership and Professionalism: Strong leadership and a commitment to professionalism among all healthcare team members.
- Robust IT Infrastructure: A sophisticated and reliable information technology system to support data collection, analysis, and care coordination.
- Broad Access to Care: Ensuring that all patients have timely and convenient access to the healthcare services they need.
- Value-Driven Payment Models: Payment structures that incentivize quality improvement and positive patient outcomes, rather than just the volume of services.
Despite the growing momentum towards value-based care, fee-for-service models remain the most common payment arrangement for physicians in the U.S., according to a 2023 AMA Policy Research Perspectives report. This indicates that fee-for-service still plays a significant role and must remain a viable financial option for many practices. Furthermore, the increasing complexity and rapid changes associated with participating in Value-Based Care (VBC) arrangements pose ongoing challenges for physician practices, requiring significant adaptation and resources.
However, the adoption of value-based care continues to expand. Physician participation in Accountable Care Organizations (ACOs), a key type of value-based care arrangement, has steadily increased since 2014. Currently, nearly 60% of physicians work in practices that are part of an ACO, demonstrating a significant shift towards value-based models.
The Vital Role of Physicians in Value-Based Payment Models
Physicians are central to the success of value-based care programs. Dr. Bryan N. Batson, CEO of Hattiesburg Clinic, emphasized the importance of physician leadership in value-based care during an AMA webinar, “Private Practice Simple Solutions.” Hattiesburg Clinic’s commitment to value-based care, while remaining an independent practice, demonstrates the feasibility and benefits of this approach. Dr. Batson noted that while quality of care improved, as measured by various value-based care indicators and EHR tools, he was particularly proud of delivering better healthcare, especially in a state often challenged by poor health outcomes.
As value-based care evolves, physicians are crucial in achieving the overarching goals of improved health outcomes, greater health equity, enhanced patient and clinician experiences, and responsible healthcare spending. Their clinical expertise and patient relationships are essential for driving success within these new models.
Advancing the Widespread Adoption of Value-Based Medical Care
While there isn’t a single, universally prescribed method for implementing value-based care, the AMA has identified several best practices for value-based care to facilitate participation and ensure long-term success. Developed in collaboration with AHIP and the National Association of ACOs, these voluntary best practices are grounded in the practical experiences of physicians, value-based care entities, and health plans actively engaged in these arrangements.
These best practices are detailed in playbooks focusing on critical elements for value-based care success, specifically data sharing and underlying payment methods.
The data sharing playbook emphasizes:
- Enhancing Data Collection and Use for Health Equity: The importance of collecting and sharing data to effectively identify and address health disparities within patient populations.
- Timely and Actionable Data Sharing: Prioritizing the sharing of relevant insights and data frequently and in accessible formats to enable timely improvements in patient care.
The payment methods playbook focuses on key domains such as:
- Attribution Accuracy: Ensuring the correct identification of patient populations and their associated medical costs for accurate accountability during performance periods.
- Transparent Benchmarking: Establishing clear, predictable, and achievable financial targets that reward both efficiency and tangible improvements in care quality.
- Open and Transparent Feedback: Promoting honest and constructive conversations about data, fostering a collaborative partnership between payers and physicians rather than adversarial relationships.
Measuring the Impact of Value-Based Care
While the fundamental goals of value-based care are widely agreed upon, a standardized methodology for measuring and evaluating its impact is still developing. The absence of a uniform approach has led organizations like the University of Utah to develop their own “value equation.” This equation aims to provide a common framework for quantifying “value” within value-based care models.
Regardless of the specific equation used, further effort is needed to establish consistent metrics for measuring progress towards the intended goals of value-based care. Frameworks such as the National Academy of Medicine’s STEEEP (safe, timely, effective, efficient, equitable, and patient-centered) goals or the Quintuple Aim offer valuable benchmarks. Standardized measurement will be crucial for accurately assessing the gap between current performance and desired outcomes in value-based care.
Health Systems Leading the Way in Value-Based Care
Many health systems are actively implementing value-based care strategies in innovative and effective ways. These leading organizations serve as models for successful transitions to value-based models, demonstrating practical approaches and achieving positive results.
Explore AMA Resources for Value-Based Care
The AMA provides a wealth of resources to support the continued development and sustainable implementation of value-based care. These resources are designed to help healthcare professionals and organizations navigate the complexities of value-based care and succeed in this evolving landscape.
Explore these resources:
- The basics: What is value-based care?
- Dive deeper: Discover VBC’s key elements
- Payment models: Learn about all the options for physicians
- Medicare: Growing alternative reimbursement approaches
- VBC in practice: How 3 health systems are leading the way
Reviewed by: Christopher Botts, AMA Care Delivery and Payment Senior Manager
Reviewed on: May 14, 2024, updated on Feb. 12, 2025
