The transition from fee-for-service to value-based payments began as an effort to balance out the United States’ high healthcare spending with its disappointing national health statistics. The New England Journal of Medicine defines value-based care as “a healthcare delivery model in which…providers are rewarded for helping patients improve their health, reduce the effects and incidence of chronic disease, and live healthier lives in an evidence-based way.”

Value-based care ties the amount healthcare providers earn for their services to the results they deliver for their patients, such as the quality, equity and cost of care. Through financial incentives and other methods, value-based care programs aim to hold providers more accountable for improving patient outcomes while also giving them greater flexibility to deliver the right care at the right time.

The COVID-19 pandemic exacerbated and highlighted the need to focus on these five critical components, as it brought heightened attention to clinician burnout (nearly 63 percent reported signs of burnout at the end of 2021) and massive disparities in access to care, quality of care, outcomes, and affordability. The government and regulatory bodies have also played a key part in pushing the value-based care agenda forward with various initiatives (MACRA rule, Value Modifier program, etc.) incentivizing providers to shift away from fee-for-service.

This value-based performance and payment approach has shown signs of moderate success so far by reducing care costs and improving patient outcomes, as well as driving changes in readmission rates, avoidable ED visits, wellness visits, caregiver satisfaction and access to care.