Navigating the Transition to Value-Based Payment: Options for Independent Practices

Value-based payment (VBP) arrangements have been championed by policymakers and payers as a way to improve patient outcomes while reducing overall costs, in part by supporting the high-value care that primary care physicians provide. VBP models better support the delivery of cognitive services, such as care coordination and chronic disease management, completed largely outside the 15-minute office visit and not adequately captured in fee-for-service (FFS) reimbursement. FFS payments do not fully support the teams and systems necessary to provide comprehensive primary care in the context of a longitudinal patient relationship, which produces better health outcomes at lower costs.¹ Instead, FFS puts primary care physicians on a hamster wheel of rapid visits, documentation, and billing.²

When properly structured, VBP arrangements recognize that value by providing up-front payments for each patient on a physician's panel and potential shared-savings payments. As an illustrative example, it is estimated that one current group of 10 primary care physicians that influences almost $100 million in health care spending can reap the benefits of up-front payments and fewer administrative burdens in the VBP arrangement it participates in.³

The financial investment necessary to succeed in VBP arrangements largely depends on the practice and its current infrastructure.⁴ Practices must consider the costs and benefits of individual VBP models and leverage available resources. This article provides an overview of the barriers to VBP participation, primary-care-focused VBP models, and key considerations for establishing partnerships to support this transition.

Transitioning to VBP can feel daunting, particularly for small or independent practices. Common barriers include the following:

• Capacity: The effort needed to succeed in VBP models includes understanding quality reporting obligations, modifying clinical models and workflows, and building out needed staffing, technology, and other infrastructure — which requires an investment of time and money. Many practices need assistance to increase their capacity for this work.
• Financial risk: Practices may lack the capability to assess the impact of taking on financial risk for the care outcomes of their patient population, which will ultimately determine their success in VBP arrangements.⁵ This can be especially challenging in markets or models that require practices to take on risk more rapidly.
• Care of complex patients: Certain characteristics in a patient population can make it more challenging to take on financial risk. As a result, practices in areas of high social vulnerability, or that serve more complex patients, must carefully consider how and whether to participate in VBP models.⁶
• Delayed payments: While the most advanced VBP models provide prospective payments, many models take 18 months or longer to distribute shared savings, making it difficult for practices to develop capacity and infrastructure as well as to generate the necessary cash flow to support staff.
• Lack of commercial payer participation: While commercial payers continue to increase use of VBP arrangements,⁷ a lack of sufficient engagement (and revenue) from commercial payers can still be a barrier to practices making necessary care delivery changes.⁸ Just 4.1% of commercial payments in 2022 were linked to the most sophisticated VBP models (population-based payments) versus 9.8% for traditional Medicare and 24.6% for Medicare Advantage.⁷