With healthcare costs high and continually on the rise, the medical and mental healthcare industries are making a concerted effort to find ways to ensure that people get the care they need at a reasonable cost. Value-Based Healthcare is one of the newest concepts that are starting to gain serious traction throughout the industry.

Though there are some key details to understand before deciding to use it as your practice’s reimbursement model.

At its core, the value-based care healthcare model connects provider reimbursement with the quality of care they provided to patients. It uses a measured approach based directly on patient health outcomes. It then also rewards providers for their effectiveness and efficiency.

This means that the Value-Based reimbursement scale needs to be based on carefully constructed care agreements, or contracts. This ensures that providers are properly rewarded for helping patients improve their health, while further reducing the incidence and potential impacts of chronic disease. All with the overarching goal to help all patients to live healthier lives in a way that can be measured for fair compensation.

How Does Pay for Performance Work Under the Value-Based Model?

The “Pay for Performance” concept of the Value-based health care model uses a measurable and relatively simple form of reimbursement. It’s a method that employs financial incentives in an effort that moves providers away from the current volume-based system toward a model that focuses more on increasing quality outcomes and decreasing the cost of care.

With the value-based healthcare model physicians will be proactively compared to their peers in the same specialty as well as having self-analytics applied to understand how they can maximize their performance from one year to the next.

Developing a Value-Based Reimbursement Model for a Small Practice

Value-based reimbursement can look a little different for a small practice. There are several methods and contracting approaches that might be customized to maximize a small practice’s effectiveness and efficiency, in a way that maximizes fair reimbursement for services rendered.


This model is directly tied to the provider’s performance in a way that encourages better clinical outcomes for patients. It requires individual providers within a small organization to be reimbursed or incentivized based on a set of predefined quality metrics. The underlying goal of this approach is geared to fairly reimburse high-quality care at a lower cost to patients.

This often involves a variety of new practices such to do things like:

  • Reduce errors
  • Improve efficacy
  • Increase physician engagement
  • Maximize patient satisfaction levels

Shared Savings

Shared savings is a concept designed to provide rewards for providers who reduce their spending to or below a level set by a payer. It helps to incentivize providers to spend less on patient treatment, than they would in the fee-for-service model, in a way that entitles them to part of the savings.

Shared Risk

Under the Shared Risk model, the provider is given a variety of targeted savings objectives. If those targets aren’t met in the specified time frame, the provider might have to share cost savings with insurers or potentially be at risk of paying penalties as compensation. At the same time, the risk can be limited if the provider pays a pre-negotiated fixed fee to a third-party insurer. This entity then takes on the financial risk of excessive costs.

Bundled Payment for Episode of Care

This model involves a preset arrangement via third-party payers who provide performance and financial accountability for a specified episode of care. During this time period, the contracted providers can generate savings by proactively eliminating unnecessary care practices and improving efficiency. These fixed payment arrangements are based on clinical standards of risk stratification, care, and balanced metrics of performance.

Accountable Care Organizations

More commonly known as ACO these are organizations that are deeply invested in the value-based model concept. They are typically volunteer-based programs where physicians and hospitals are reimbursed by healthcare plans and insurance providers in a way that improves outcomes while also meeting specific quality metrics.

ACO contracts might involve payment models that include value-based purchasing, bundled with shared savings, and pay-for-performance contracts. This combination of approaches means that the providers themselves are being held accountable for the health management of their enrolled patients at every level. This, in turn, entitles them to potential bonuses for slowing spending growth in comparison to peers within their predefined region.

What Are The Benefits of Value-Based Reimbursement

Transitioning from the fee-for-service model to a value-based reimbursement model can be a major benefit for most well-run healthcare organizations. This includes things like:

  • Improved health outcomes for current patients
  • Ease in attracting new patients
  • Decreased costs of care
  • Reduction of medical errors & malpractice issues
  • Increased patient satisfaction level

The Benefits of Third Party Medical Billing Services

The Value-Based Healthcare concept is admittedly in its infancy, but it is growing fast and looks to one day supplant the outdated and increasingly unpopular fee-for-service model. One of the things that give a lot of solo practitioners and small practices pause in embracing the Value-Based concept is the changes they would need to make in their coding and medical billing practices.

It can be especially daunting for solo practitioners without an administrative staff, who are already losing a massive amount of treatment hours to medical billing.

That’s why a lot of small practices that are turning to the Value-Based model are choosing to work with a third-party medical billing agency like Operant Billing Solutions. Our expert coding and medical billing specialists are well-versed in the value-based model.

We comb through every single claim before it is submitted to an insurance company or public health institution. The experienced eyes of our technicians catch a lot of minor errors and/or missing pieces of information to correct the issue long before the claim is submitted.

This reduces delay from claim questions, as well as virtually eliminates claim rejections. It also frees you and your clinical staff up to spend more time working with patients and helping them effectively manage their quality of care. Not only does this make your revenue stream more consistent, but it also increases your opportunity to see bonuses from things like Shared Savings and Bundled Payments in episodes of care.