There is a broad consensus around the world that healthcare reimbursement should at least partly be based on performance and outcomes and not exclusively on service provision. This is mostly a theoretical consensus though. True, in the US, a certain degree of performance-based reimbursement was introduced by law some years ago, and it has since been expanded. But as of today, it remains a mere add-on, and outside of the US, almost no country has followed. One reason is that the data necessary to measure performance is often not available, at least not digitally.

But there is also widespread doubt about whether simply supplementing a traditional service-based reimbursement scheme by reimbursement components that are linked to quality indicators will really do the trick. Isn’t value-based care about the ‘triple aim’ of improving population health, enhancing patient care and patient experience, and reducing overall costs by, for example, avoiding unnecessary treatments or hospital stays? And if this is the case, don’t we have to do more than simply define some institution-based quality indicators, based on individual hospital stays? Shouldn’t we rather look across institutions at individual patients and how they do in terms of health in the long run? Don’t we, in other words, have to switch the reimbursement philosophy completely, away from service-based reimbursement towards capitated payment schemes?

Value-based care: Not yet mainstream

“Optimizing fee for service is completely different from optimizing value-based payment,” according to Dr Rushika Fernandopulle, founder and CEO of Boston-based Iora Health: “There are some places where there is a critical mass of both payers and providers working in value-based frameworks – in the US for example Southern Florida, Southern California, and some parts of Texas. But it hasn’t yet become mainstream.” Among the reasons, according to Fernandopulle, is that value-based care, properly done, leads to a reduction in hospitalizations, procedures, and emergency room visits – which is exactly how health systems usually make money.

In other words, as long as fee-for-service isn’t overcome completely, it will always be an uphill-battle to introduce truly value-based models. And there is a risk that projects fail, illustrated, among others, by Turntable Health in Las Vegas, a much-hyped primary care clinic founded in 2013 and shut down in January 2017. The episode inspired Forbes magazine to its widely distributed article ‘The rise and fall of Turntable Health’ in 2017.

Iora Health, who was a partnering company of Turntable, was founded in 2010 with the goal to institute fully capitated payment systems that focus on primary care across different geographies. Outside of Las Vegas, this has worked better, specifically on the East Coast, in Colorado and Southern Arizona. The model is a flat monthly primary care fee for members. This fee is higher than what insurers would usually pay for primary care. Savings come through reductions in hospital stays, ER room visits, and better overall health. Over the last couple of years, Iora Health has proven that this approach makes sense medically and economically. It has reduced hospitalizations of its patients by a third and – despite higher costs for primary care – lowered total health costs by around a sixth.

'IT solutions are critical'

Fernandopulle singles out two reasons for Iora’s success. One is its coaching model that aims at keeping patients engaged and as healthy as possible. The other one is data: “IT solutions are critical. If you are to take risk for the outcomes of a population, you need to have data on how each patient is doing so you can stratify them, figure out who needs your intervention and when, and track and improve performance. These require IT systems that are different than the ones we currently have for fee-for-servicee healthcare, which are designed to optimize payment, not outcomes.”

Iora has in fact developed its own IT solution, Chirp, a collaborative care platform with an advanced population management at the core. The key is that Chirp is not a closed shop, but an integrative IT system that allows patients and Iora to interact in multiple ways, taking the philosophy of patient engagement into the digital world: “Our patients message and communicate with us electronically, both through our platform and through regular email and texting. They can see their entire medical record and send us data from connected devices.” Patients can also make – and not only request – appointments to see Iora staff in person, by phone or by video. “All in all, roughly 60 per cent of our encounters are not face-to-face. Most popular is texting,” Fernandopulle told HIMSS Insights.

Patient data access could become driver for capitated payment schemes

In Europe, Germany-based Optimedis is among the very few healthcare management organizations that engage in fully capitated payment systems. Their flagship is Gesundes Kinzigtal, a value-based healthcare scheme that has been running successfully for many years now and that covers about half the population in the somewhat remote Kinzigtal valley in the Blackwood Forest.

Oliver Gröne from the Optimedis management team has been asked many times why it proves to be so difficult to replicate a successful, value-based care network like Gesundes Kinzigtal elsewhere. Gröne says that, when this work started over ten years ago, capitated payment systems started with measuring and managing outcomes, and patient engagement and digitization came last. “With increasing digitization and with patients having access to personal health records and digital healthcare platforms, this is turning around. We need to start with digitally engaging patients and with making data available to patients, and this will make measuring and managing outcome much easier.”

Depression care: Performance contracting goes digital

Optimedis is starting to introduce patient apps now as a new means of engaging patients digitally. “Our goal is to establish a catalogue of apps that doctors can recommend to their patients. These shouldn’t be just any apps though, but they have to be tested and selected in a way that they solve specific problems that are relevant for the region in which the capitation model is implemented,” says Gröne.

In Kinzigtal, mental health and specifically depression care was identified as an area with room for improvement. This is one of the few areas in which hospital admissions within the Kinzigtal network are not below the national average, according to Gröne: “One reason is that there are not enough psychotherapists in this region. So we have screened available depression apps and are developing digital processes. In the future, our doctors will be able to prescribe carefully selected apps such as depression care tools directly from within their IT system.”

The hope is that the apps will not only improve patients’ quality of life but also reduce hospital admissions and thus costs. Gröne is optimistic that this will indeed be the case: “We did extensive cost-benefit modelling based on our own patient datasets, and we expect that we can generate savings in addition to an improvement in quality of care.” And here it is again, the triple aim of improving health, advancing care, and reducing costs. No fee-for-service model will ever reach this Holy Grail. But capitated payment schemes can, and with a little help from digitization, they might be able to leave the niche they are still in.

This article was first published in the newest issue of the HIMSS Insights eBook, which looks at redesigning care and empowering patients. Healthcare IT News is a HIMSS Media publication.