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Understanding Value-Based Care

What Is Value-Based Care?

Value-based care (VBC) prioritizes quality over quantity, unlike the traditional fee-for-service model. A VBC model requires integrated care from a team of providers and hospitals to deliver preventive wellness services and treat chronic conditions. These coordinated care teams focus on increasingly improving the quality of care across the American healthcare system for individuals and underserved populations at a lower cost.   

Why Value-Based Care Is on the Rise

The U.S. spends exponentially more than other high-income countries on healthcare yet reports the highest mortality rate, chronic conditions, and preventable disease. Life expectancy rates at birth are the lowest in the U.S. than in other countries that spend less of their GDP on healthcare, especially for minority populations.

The U.S. is also the only country among its high-income counterparts not to offer universal healthcare. As a result, Americans visit the doctor far less than in other developed countries. Providers and healthcare institutions are increasingly interested in VBC to bridge the gaps in care, equity, and affordability built into the existing fee-for-service system. 

How Does Value-Based Care Work?

Through a value-based care model, physicians and hospitals are rewarded for providing excellent care and delivering results instead of simply being paid retroactively for services rendered. By investing in research and human and technological resources, VBC teams aim to make collaborative healthcare the new normal in the industry. 

Value-based care can enable patients to experience earlier detection of preventable diseases and utilize a broader spectrum of health and wellness services. Providers share in developing a care plan for their patients instead of simply being compensated for a single service. Benefits of VBC may also include related social, community, and mental health programs to improve a patient’s quality of life. 

How Is Success Measured in Value-Based Care? 

Value-based care models incentivize key measures of success among healthcare organizations. Providers who fail to meet these standards may forfeit some of their bonus income or lose funding from payers like Medicare or private insurers. The three primary points of accountability include:

  • Quality: This metric evaluates a provider’s ability to deliver ethical, patient-centered care with respect and dignity. It also measures qualities like evidence- and results-based efficiency, safety, and timeliness.  
  • Cost: Value-based care organizations can actually earn more by reducing unnecessary medical expenses. VBC models focusing on preventive care can help reduce the need for especially costly services like emergency room visits and hospital admissions.
  • Equity: Historically, marginalized groups, including people of color, have experienced limited access to high-quality health care and, as a result, suffered poor health outcomes. Value-based care providers must promote inclusivity and address any disparities in coverage due to race or ethnicity.     

Models of Value-Based Care

Though VBC models are still emerging as alternatives to the traditional fee-for-service system, the following variations have been the most prominent so far: 

Patient-Centered Medical Home (PCMH)

The PCMH model refers to a symbolic “home” where patients can receive primary care from a whole practice of providers. PCMH care focuses on holistic healthcare tailored to individual patients. Treatment must adhere to the following core aspects: accessible care, comprehensive care, coordinated care, patient-centered care, and quality care. 

This option best suits an elderly or chronically ill patient with a tendency toward comorbid conditions who require frequent medical care and services. PCMH is not affordable or accessible for every patient since it requires careful coordination of all doctors at the practice. Patients may experience PCMH challenges if any of their specially trained providers relocates or retires.

Accountable Care Organization (ACO)

An ACO represents a whole “neighborhood” of care team professionals, whereas PCMHs operate within a single “home” or medical practice. Providers within an ACO share data and medical records to coordinate care for their patients. While information-sharing is necessary for an ACO, it might not suit patients with specific privacy concerns.

Patients are also subject to membership in an ACO if their primary care doctor is in this network, which could deter patients who would rather see their doctor individually outside the ACO “neighborhood.” ACOs emphasize financial incentives and cost-sharing among providers to keep costs low.

Bundled Payments

Bundled payments comprise a non-traditional billing system in which patients pay a lump sum for all facets of their coordinated care or treatment rather than for each service. Providers and hospitals agree to accept a fixed amount for a whole “care episode” or event.

Bundled payments are meant to incentivize high-quality, coordinated care among participating providers at a reasonable, predetermined cost. Medicare, Medicare Advantage, and Medicaid, as well as some commercial insurers, utilize bundled payments. 

Is Value-Based Care More Affordable For Patients?

Increased affordability is one of the primary benefits of VBC, next to improved care quality. There are various value-based payment alternatives to the fee-for-service model, including population-based and episodic payments. Each of these options contains its own subcategories like all-payer, capitation, or direct-contracted payment models.

These alternatives to the existing single-payer and fee-for-service models test the potential of ideas like sharing gains—and losses—among providers or assigning a fixed cost per patient. Incentivizing VBC can lower the overall costs of healthcare in the U.S. by requiring

fewer hospitalizations and emergency room admissions due to a focus on preventive care.

Should You Try Value-Based Care?

Any form of standardized healthcare has its rewards and drawbacks; however, you may be especially suited to try VBC if you seek a wholly different treatment approach.


  • Patients are the focus of value-based care systems, not profits
  • VBC models emphasize preventive care to keep patients well and diminish chronic illness
  • Providers share research and patient data across the network to assess risks, improve care practices, and increase the efficiency of healthcare operations
  • Insurers require high-quality standards and pay claims based on the quality of care
  • Value-based models stress patient engagement with a “quality over quantity” approach
  • Vendors and third-party suppliers (such as medical equipment manufacturers and pharmaceutical companies) can also benefit from a patient-centered approach 


  • Providers often treat larger patient loads, and their resources may be overextended
  • Doctors may be required to provide wellness services outside of their area of expertise 
  • VBC may force providers to endure stricter schedules and longer hours
  • Some healthcare practices may lack the organization and management skills required to meet the necessary quality benchmarks and, as a result, owe steep penalties
  • Some care communities may experience a lack of transparency in the data-sharing process and difficulties using and understanding data-reporting technology tools

How to Find a Value-Based Care Program

Since traditional and VBC mainly differs in how providers are paid, patients may not notice much change to the administrative side of enrollment. Follow these steps to find and sign up for value-based care. 

  1. Contact a representative for your private insurer or Medicare plan: The best way to understand your specific options for joining a value-based program is to go straight to the source. Contact a Medicare representative through or call, email, or visit a sales representative for your private insurer to discuss VBC. 
  2. Explore your insurer’s value-based care reports: Your insurance provider should publish or post a report of its value-based care outcomes, including rates of success for wellness and prevention programs, estimated costs, and payment structures. This may also include examples of episode-based models for common events and procedures. 
  3. Prepare to switch plans or enroll in value-based care before the deadline: VBC providers typically abide by the same enrollment terms as traditional policies. You may need to wait until Medicare’s annual enrollment period to switch coverage unless you qualify for a special enrollment period or contact your private insurance provider for specific enrollment deadlines.  

Telemedicine and Value-Based Care

Healthcare providers are leveraging technology to extend the reach of value-based care. Telemedicine enables VBC team providers to treat patients in any geographical area. Broader access through telehealth appointments is especially convenient for both parties.

Telemedicine can also help lower costs, an essential aspect of the VBC model. Other tools, including smartwatches and new medical records technology, can further enhance value-based care by increasing the success of preventive treatment and data-sharing among healthcare communities, respectively. 

All in All

A VBC model holds quality at a higher premium than quantity in healthcare systems. Value-based care prioritizes health and wellness in an effort to reduce the need for expensive and unsustainable hospitalizations and critical care, which also drives costs down. Providers must meet ongoing performance benchmarks or pay penalties for missing the mark. 

VBC is gaining traction among both providers and patients who may feel disillusioned by the current state of healthcare in America. While still an emergent concept compared to traditional plans, the value-based care model aspires to improve the overall health of participating patients and help all parties involved save money on medical costs. 

Frequently Asked Questions

Day-to-day interactions in a VBC care plan might include input from more than one physician on your care team since this model requires collaborative care. Patients may also take advantage of more telehealth options, which can help increase access and cost savings. 

In addition to general wellness and non-critical healthcare, VBC effectively addresses specialties like surgery, pediatrics, psychiatry, and chronic illnesses. Value-based care models may simply treat these specialties as individual care episodes or events.

Pharmaceutical companies can also benefit from a shift toward VBC care models. Like their collaborative value-based care team peers, pharmaceutical companies earn rewards for delivering results and yielding positive patient outcomes. Pharma shares in the risk of being reimbursed only if the quality of the care they provide is up to par.   

The integration of mental health services into the value-based care model marks a significant change from traditional healthcare. While some fee-for-service plans do include adjacent mental health options, VBC bundles it into a holistic treatment plan, tying the intrinsic value of mental wellness to a patient’s overall physical health and quality of life.

Supporters count adaptability among the many benefits of value-based care. Incorporating telehealth and other technological tools enables VBC care models to transcend different demographics and geographical settings, including isolated rural communities. Value-based care also suits urban patients with direct access to each member of a care team. 

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