There are three main payment models that fall under value-based care (VBC):
The first is a shared savings model. This is the model that most ACOs (Accountable Care Organizations) fall into.
Throughout the year, shared savings looks like your typical fee-for-service model. But, at the end of the year, a reconciliation takes place. If a provider’s healthcare expenses fall below a certain benchmark, this results in savings. These savings are then shared between the payer and the provider.
The shared risk model is similar to shared savings. It’s fee-for-service throughout the year with a reconciliation. But, if a provider’s expenses are above the benchmark, they are then at risk for losing that revenue.
With both shared savings and shared risk models, there are certain quality benchmarks that can be met. If those are achieved, the provider receives bonuses as incentive payments.
Then, there’s the third model of value-based care, capitation. Health Maintenance Organizations (HMOs) fall into this reimbursement model. This is where the provider is given a fixed fee per member over a certain period. It’s typically a per-member per-month reimbursement model.
The provider must service that member using the allotted capitation. By utilizing that per-member per-month payment model, members with higher disease factors might be seen more often.
With this model the provider is more at risk for loss of revenue if they have a very sick patient population, but can expect higher returns if they keep their population healthy.
Subscribe to our YouTube channel for more VBC, data platform, and healthcare content.