Skip to content

How To Prepare For Value-Based Reimbursment

December 9, 2014

Private insurers and the government are increasingly pushing for value-based reimbursement (VBR) of providers, leading to a shift from the traditional physician compensation model toward a new focus on quality outcomes. With VBR becoming less a matter of “if” and more of “when,” savvy physician practices are beginning to familiarize themselves with how it works so they can make the transition more smoothly when the time comes.



The Patient Protection and Affordable Care Act (PPACA) offers a number of options for providing care and paying providers, including the formation of accountable care organizations (ACOs). The CMS will reward ACOs that reduce costs while meeting performance standards on quality of care.

Provider participation in ACOs is purely voluntary but, even if you’re not planning to join one, you’re likely to find yourself operating in a new compensation environment in the near future. It’s likely that compensation will reflect quality instead of volume, taking into account physician performance metrics such as efficiency, coordinated care and patient satisfaction.

Indeed, by 2015, the health care act requires the CMS to begin applying a “value-based payment modifier” under the physician fee schedule based on their performance in calendar year 2013. Although the modifier will initially apply only to practices with 100 or more eligible professionals (including nurses, physician assistants and other nonphysician staff), it’s scheduled to apply to all physicians and groups by Jan. 1, 2017.



Since the passage of the health care act, several models of value-based reimbursement have emerged, including:

Pay-for-performance. Under this hybrid model, physicians are paid a negotiated payment for each service, with additional incentives based on costs, quality and patient experience.

By 2015, the health care act requires the CMS to begin applying
a “value-based payment modifier” under the physician fee schedule.

Shared savings. Providers work together to meet certain quality standards based on outcomes and care coordination. They then share in the savings they achieve on the targeted costs.

Bundled payments. Multiple providers share a single fixed-fee payment for, say, a single episode of care.

Comprehensive primary care initiative. This initiative, made possible by the health care act, is modeled after innovative practices developed by large employers. With this approach, practices will be given resources to better coordinate primary care for their Medicare patients.

Patient-centered medical homes. The CMS is currently testing the effects of the advanced primary care practice model — commonly known as the “patient-centered medical home” — in improving care, promoting health and reducing the cost of care provided to Medicare beneficiaries served by federally qualified health centers. In this model, a patient’s health and care are coordinated through the primary care physician, and financial incentives are paid based on quality metrics.


Take steps now to position your practice for the coming models:

  • Determine what each model would mean to your practice, including how it would change your financial performance.
  • Rather than focusing on revenues, develop ways to increase profits by containing costs.
  • Pay attention to communications from payers so you know as early as possible what they have planned regarding reimbursement.
  • Evaluate your readiness for measuring and satisfying quality- related metrics.
  • Finally, consider exploring the potential for collaborative arrangements with other practices and hospitals.



New compensation models will likely have a significant effect on your practice’s finances. By planning ahead and working with your financial advisor, you’ll increase the odds of maximizing revenue and minimizing disruption.




This publication is distributed with the understanding that the author, publisher and distributor are not rendering legal, accounting or other professional advice or opinions on specific facts or matters, and accordingly assume no liability whatsoever in connection with its use. ©2013 VSsu13

Leave a Comment

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

<span>%d</span> bloggers like this: