Embracing Value Based Care: How Value-Based Primary Care Enables Employers to Prioritize Employee Experience and Cost Efficiency

The Healthcare Paradigm Shift

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Healthcare costs are out of control, and one major contributing factor is traditional fee-for-service models that reward quantity of services over quality of outcome. 

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Fortunately, self-insured employers have at least one efficient and effective lever they can pull to simultaneously decrease costs and improve employee experience and health outcomes. Value-based Care (VBC) is a paradigm-shifting healthcare payment model that prioritizes patient outcomes and cost efficiency. This is a necessary evolution in a landscape marked by rising costs and uneven quality and access. 

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VBC has been broadly adopted by Medicare and Medicaid, largely as a result of their own focused cost-saving efforts. Both have invested billions to identify models that drive quality and cost savings, and found that the best results come from comprehensive primary care-centric models, which realize savings in total cost-of-care by improving access to high-experience, high-quality care. More recently, VBC has been picking up momentum in other market segments, including commercial payers.

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In this article, we will:

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• provide an overview of VBC models
• explain why primary care providers should be at the helm
• explain the appeal of VBC primary care for self-insured employers
• describe how Aligned Marketplace removes barriers to adoption and realizes cost savings and improved quality, access, and experience for employees

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Understanding Value-Based Care

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At its core, VBC is a healthcare delivery model where compensation is tied directly to the quality of care provided and patient health outcomes. Unlike traditional models, where providers are reimbursed for the services they deliver, VBC mandates that providers meet certain performance metrics, then rewards them for efficiency and effectiveness.

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The Spectrum of Value-Based Care Models

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The landscape of VBC includes a variety of structures that realign incentives across the healthcare continuum to promote high-quality, cost-efficient patient care:

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• Pay-for-Performance (P4P) Models: P4P models are designed to improve healthcare quality and patient outcomes by financially rewarding providers who meet or exceed specific performance metrics. These models often focus on quality of care and efficiency, and can complement other VBC arrangements such as Patient-Centered Medical Homes (PCMHs) and bundled payment structures, incentivizing a comprehensive approach to patient health.

• Shared Savings Models: These models create financial incentives for payers and providers to collaborate in cost reduction efforts. Providers, such as those in Accountable Care Organizations (ACOs) within the Medicare Shared Savings Program (MSSP), hospitals, and physician groups, are rewarded for reducing healthcare costs while maintaining or improving quality of care. They achieve savings for payers by staying below predetermined cost benchmarks and are rewarded with a share of the realized savings. These models can be either ‘upside only’ or provide ‘upside and downside’ economics to the providers responsible for outcomes

• Capitation Models: Under capitation, providers receive a fixed payment per patient over a certain period, covering all needed services. Medicare Advantage plans operate on a similar capitation basis, where private insurers receive a monthly set fee from Medicare to provide enrolled beneficiaries with all their healthcare services, encouraging a focus on preventive care.

• Bundled Payments: This model attempts to simplify the payment system by using a single bundled payment to cover all services provided for a particular treatment or condition within a specified timeframe. Providers are incentivized to collaborate and coordinate care, leading to more cost-effective treatment options and potentially higher quality patient care.

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Current Adoption in the Commercial Insurance Space

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VBC is already expanding rapidly within the commercial insurance industry. The Health Care Payment Learning and Action Network (HCP-LAN) aims to double the adoption of two-sided risk alternative payment models, and forecasts a steady increase in VBC payments from commercial payers to providers in the coming years: from 12.7% in 2021 to 25% in 2024, and 30% in 2025¹. Large employers like JP Morgan Chase have invested heavily in innovation around value-based care, care navigation, and the use of advanced analytics, helping to pave the way for employer sponsored healthcare.

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Primary Care: At the Helm of Value-Based Care

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A NEJM Catalyst article called Changing How We Pay for Primary Care² focuses specifically on the role of primary care providers (PCPs) in improving the health of Americans, and how more appropriate incentives could help. Even though primary care only makes up a small fraction of total cost of care, PCPs direct up to 90% of total health care costs through referrals, tests, procedures, and hospital admissions—making them critical in fixing the problem.

The article also describes the dual role that PCPs play within the healthcare ecosystem: (1) establishing trust between patients and providers, which enables delivery of high-quality care, and (2) acting as stewards of healthcare resources. This makes PCPs essential to any effort to improve the quality and efficiency of care through VBC. In practical terms, PCPs are well-positioned to partner with payers in several capacities:

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• Coordinating patient care: This includes working with specialists, hospitals, and other providers to ensure that patients receive the right care at the right time. This helps to avoid unnecessary services and duplication of care.

• Managing chronic diseases: Chronic diseases, such as heart disease, diabetes, and cancer, account for a sizable portion of healthcare spending. PCPs have the skills and experience to manage these diseases effectively, and can help patients develop and follow treatment plans that keep them healthy and out of the hospital.

• Providing preventive care: Preventive care is essential for maintaining good health and avoiding costly medical complications. PCPs provide preventive services, such as vaccinations, screenings, and counseling, that can dramatically reduce overall costs and improve patient outcomes.

• Educating patients about their health: Educating and empowering patients is essential for promoting engagement and adherence to treatment plans. PCPs build relationships of trust with their patients, which helps to create a supportive environment for health and healing.

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PCPs and their practices also benefit directly when Value-Based Care is implemented. The financial rewards they receive for improving outcomes and reducing costs can lead to more stable revenues. It’s also well-established that providers suffer less burnout under VBC models—especially when investment in VBC exceeds 75%, according to a recent study by Elation Health and the American Academy of Family Physicians³. The study also notes that larger practices or those with network ties found VBC management easier. These incentives encourage a shift from volume to value, promoting a proactive, patient-centered approach to healthcare that aligns with PCPs’ foundational role in the health of the communities they serve.

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The Appeal of Value-Based Care for Self-Insured Employers

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For employers, a VBC model for primary care consistently improves employee satisfaction, health outcomes, and reduces costs. Here are four examples:

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• “99% of employees reporting being ‘satisfied’ or ‘very satisfied’” – CHG Healthcare and Marathon Health

• “Employees with diabetes, for example, saw a 24% reduction on average in HbA1c levels.” And “patients saw an 11% reduction in total cost of care” – Walmart and Included Health

• “Preliminary data over a nine-month period indicates that per member-per-month spending for participants has decreased by 14%, ER utilization has decreased by 11%” – Boeing

• “Employers save an average of 25% on their employees’ total cost of care” – Milliman and Premise Health

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Self-insured employers can play an influential role in the value-based care (VBC) landscape and stand to gain through several strategic actions:

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• Designing VBC-Focused Health Plans: Employers can supplement traditional insurance models by incorporating VBC principles into their health plans, emphasizing wellness and disease management programs that can improve overall employee well-being and productivity.

• Negotiating Direct, Value-Based Arrangements: By negotiating VBC agreements directly with providers, employers can leverage their scale to create contracts that focus on quality and cost-effectiveness. This benefits both employers—in managing healthcare spend—and employees—in receiving better care.

• Encouraging Wellness and Prevention: By offering incentives for healthy behaviors and using preventive health services, employers can foster a healthier workforce, which translates to reduced costs and increased engagement.

• Utilizing Claims Data: Self-insured employers can analyze trends in aggregated healthcare claims data to guide wellness initiatives and benefits design, respecting privacy while promoting a healthier work environment.

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Through these approaches, self-insured employers become active participants in VBC, helping them manage costs effectively while enhancing the health outcomes and satisfaction of their employees.

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Barriers to Adoption for Self-Insured Employers

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The transition to VBC is not without its challenges. Some of the most common include:

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• Provider Distribution: Access to VBC providers can be limited, especially in certain geographic areas. Employers could contract with multiple VBC providers on their own, or partner with groups like Aligned Marketplace to bring a national network of value-based advanced primary care to their plan members.

• Contract Complexity: VBC contracts can be complex, and employers need to have a good understanding of healthcare economics and outcomes-based payment models to negotiate effectively with their insurers.

• Economic and Incentive Models: Establishing shared savings, capitation rates, and other incentive models requires a delicate balance to ensure alignment between payers and providers.

• Measuring Quality and Performance: Employers need to invest in robust data analytics to effectively monitor provider performance and ensure they meet the agreed-upon care standards.

• Provider Risk Aversion: Some providers may be hesitant to adopt VBC models due to the financial risks involved. They may, for example, be concerned about having to repay Medicare for excessive costs if they fail to meet certain performance metrics.

• Lack of Data and Analytics: Employers may need to invest in new data analytics capabilities to effectively measure and monitor provider performance under VBC models.

• Culture Change: The transition to VBC requires a cultural shift from traditional fee-for-service models to a focus on value and collaboration. This requires that employers work with their employees and providers to create a culture of shared accountability for healthcare outcomes.

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Aligned Marketplace: Streamlining Adoption of Value-Based Care for Self-Insured Employers

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Aligned Marketplace provides employees and dependents of self-insured employers with membership in a curated national network of the best performing, value-based, independent advanced primary care providers. For employers, the engagement is managed under a single contract, to keep administrative burden low. For providers, economic incentives are aligned to prioritize patient outcomes and reduce overall cost of care.

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Adopting VBC can be complex, but the potential rewards for self-insured employers are substantial. And significant cost savings are just the beginning: a shift toward VBC, in partnership with Aligned Marketplace, can position employers not only as stewards of their resources, but as champions of employee health and experience.

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