Moving from Fee for Service to a Value-Based Reimbursement Model

Some people in the United States have wonderful healthcare, but many still struggle to overcome barriers to getting the care they need when they need it. Healthcare workers at all levels can point to weaknesses in our healthcare system: excessive or redundant testing, opaque pricing, and numerous barriers for patients to overcome. Politicians argue about how to pay for it.

Maybe we need to start with the question how do we fix it? What do we want healthcare to look like for ourselves as medical professionals and our patients? The overuse of medical care is a well-recognized problem in the US, associated with patient harm and costs. And our current reimbursement system incentivizes doing more procedures, tests, and surgeries which perversely results in worse outcomes.

One of the few constants in healthcare is change. We are in a time of massive change accelerated by the Covid-19 pandemic. The way we deliver care and the way we are paid for that care is evolving. The old saying, “No money, no mission” is repeated as we add more and more to the workload of nurse practitioners, physician assistants, and doctors who are asked to do the bulk of the data entry, often for the purposes of billing. Burdensome documentation is a known contributor to burnout.

In today’s world of healthcare, we as nurse practitioners must prepare for change and adapt. An awareness of what’s being proposed and what’s changing is required in order for nurse practitioners to play an active role in shaping the future.

What Are the Effects of a Fee-for-Service Payment Model?

A fee-for-service payment model incentivizes volume and quantity: the more patients seen, the more tests ordered the higher the reimbursement.

What most of us have been accustomed to is a fee-for-service payment model. A patient has a problem; they present to their nurse practitioner and are treated, for which there is a fee for that service.

What Are the Effects of a Value-Based Payment Model?

Value-based payments are meant to incentivize quality care.

Healthcare reimbursements are moving towards a payment structure where the pay will be based upon the quality of care provided. Value-based payments are meant to incentivize quality care. This reimbursement model centers on the patient’s treatment and how well a coordinated care team can improve outcomes, reduce hospital readmissions, and improve preventative care.

Government-Run Healthcare Systems: Medicare and Medicaid

There are two major government-run healthcare payment structures in the United States: Medicare and Medicaid.

As of 2019, approximately 18 percent of the U.S. population was covered by Medicare—a government-run healthcare payment model. Medicare is available for those over the age of 65. There are two parts to Medicare: Medicare Part A covers hospital care and Medicare Part B covers medical insurance. (Medicare covered share U.S. 1990-2019 | Statista).

Medicaid, by contrast, is a state-managed payment model, covering the care of lower-income adults and children. Currently, children make up about 38 percent of overall enrollment. As of 2019, around 17 percent of the US population was covered by Medicaid. As of April 2020, 36 states plus the District of Columbia have adopted the Medicaid expansion that was allowed under the Affordable Care Act commonly referred to as Obamacare (Medicaid – Statistics & Facts | Statista).

The Problems with the Current Fee-for-Model Payment System in Healthcare

The healthcare system and the payment structure we have in place are not working for everyone. The United States has had a widening mortality gap as compared to other similar countries and worse outcomes, with the exception of cancer treatment and cardiovascular disease, as compared to other similar countries. In addition to less desirable outcomes, we spend much more for healthcare than any other nation (Peterson-KFF Health System Tracker, 2020).

Over the past decade, the Centers for Medicare & Medicaid Services has introduced a number of pay-for-performance or quality-of-care models: “The federal government passed Medicare Improvements for Patients & Providers Act (MIPPA) in 2008, followed by the Affordable Care Act (ACA, but much more commonly known as Obamacare) in 2010. Then in 2012 came the Hospital Value-Based Purchasing Program (HVBP) and Hospital Readmissions Reduction Program (HRRP). Finally, we have The Medicare Access & CHIP Reauthorization Act of 2015 (MACRA), which in turn spawned the Merit-Based Incentive Payment System (MIPS) in 2019” (Value-Based Care: Pay for Performance Healthcare Model, 2021).

The Role of Nurse Practitioners in Value-Based Care

Nurse practitioners have an opportunity to reconnect with the reasons they became nurse practitioners: to care for people, to improve their health and wellbeing, and to make a positive difference in their lives. Moving from fee for service allows us to shift the focus from volume to providing better care.

It is in times of change that we have a chance to reimagine what we want for our patients and for ourselves. Shifting to a value-based payment model would allow healthcare providers to see fewer patients and focus on quality, unchaining providers from unsustainable schedules and reducing burnout.

The key will be in finding the right balance for managing complex patients and being reimbursed for the care actually provided. Quality measures should be set by those in specializations who understand what is important to improving outcomes, as well as centering the patient and their health goals.

Moving Toward a Value-Based Healthcare Payment Model

There will be potential downfalls in moving to value-based care. Those making decisions must think through how marginalized populations and complex patients will be affected as incentivizing quality may disincentivize caring for those individuals and populations.

Consequently, healthcare providers will need additional resources in order to affect the social determinants of health. Nurse practitioners working in underserved or at-risk areas cannot simply write a prescription to solve every problem or address every barrier.

Furthermore, it’s crucial to play an active role in your professional organizations and remain civically engaged, forging relationships with elected officials who enact policy through the legislative process. The voice of nurse practitioners must be heard where decisions are made.

Overall, nurse practitioners have a deep understanding of the weaknesses in our healthcare system—and certainly within our profession the knowledge and expertise to fix it.

Change is both needed and inevitable: when nurse practitioners use their unique skills and voices to advocate for themselves, their profession, their patients, and their communities, there is an opportunity to ensure all people in the United States receive high-quality healthcare when and where they need it.

A key part of that strategy is moving us towards a value-based reimbursement model to incentivize quality care.

Celeste Williams, MSN, APRN, FNP-BC

Celeste Williams, MSN, APRN, FNP-BC

Writer & Contributing Expert

Celeste Williams is a family nurse practitioner and alumna of Southern Nazarene University and the University of Arkansas for Medical Sciences. Celeste is passionate about healthcare policy, especially its effects on rural and other underserved communities. She believes more nurses belong in all levels of government and places where decisions are made. She is active in her community through her professional organizations, local political organizations, Rotary, and her church. She lives in NW Arkansas with her husband, four children, two cats, a dog, chickens, ducks, turkeys, peacocks, and a bearded dragon.