November 29, 2022

This guide details multiple value-based purchasing strategies, along with considerations for employers as they consider implementation.

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Note: This resource is intended to be useful both as a standalone document, as well as the sixth part of Business Group on Health’s Value-Based Purchasing Guide. Click the link to access additional parts related to other elements of employer value-based purchasing strategy.

Virtual care is increasingly becoming a given in health care delivery, with 57% of employers planning to add additional virtual health solutions in 2023, according to the 2023 Large Employers’ Health Care Strategy and Plan Design Survey. In the same survey, 74% of respondents think that virtual care will be a significant part of the health care delivery system in the future, and coverage of virtual care is nearly universal.

Changes in billing practices, along with a growing number of ways patients can receive care, create a new, acute need for tying payment to value for virtual care.

Want to Know About Virtual Care?

Learn more about key trends in virtual care delivery in the 2021 Virtual Summit Key Insights and session recordings, as well as the Business Group’s Virtual Care Guide. These resources expand on the current state of virtual care and discuss opportunities and challenges to success with this care modality.

Paying for Value in Virtual Care: What’s Different than Brick-and-Mortar Care?

The value equation for virtual care is the same as it is for “brick-and-mortar” care; the value of virtual care increases as it improves the quality, outcomes and consumer experience of health care and decreases as costs rise. Nonetheless, aspects of virtual care differ from other models covered in this guide.

Quality measures for virtual care are nascent, evolving and challenging to measure in some cases. Quality measurement to date has been anchored in provider licensure, which represents of floor of competency, rather than high quality care. Also, the increasing use of unlicensed coaches, other non-clinical professionals, and artificial intelligence challenges even the basic assumptions of traditional quality measurement centered on physicians.
The fee-for-service (FFS) reimbursement model is particularly bad for virtual care. It is easy for providers to deliver and patients to seek an increased volume of virtual visits compared to in-person visits. Patients can receive bills for services they’d expect to be free, like sending an e-mail to their doctor or short phone calls to nursing staff, creating negative experiences and limiting effective usage. Additionally, promising uses of virtual care, such as physician-to-clinical specialist consults that weren’t possible previously could result in patients getting billed for services they weren’t present for or providers bearing the cost of those new high-value consults. All this makes it makes it more critical for virtual health payments to be tied to value.
The number of virtual care providers and the scope of what they deliver have increased dramatically in recent years, threatening to further fragment patient care. It is rare for a virtual care provider to be integrated into the patient care delivered by other virtual care providers or their brick-and-mortar clinician workflow. This may be increasing costs, confusing patients and leading to poor outcomes. This concern is mitigated in value-based arrangements, where a coordinated health care system with a common electronic health record can use virtual care as an extension of the patient’s “regular” care.
Many virtual care providers also have an ability to refer out to other employer resources in a way that is difficult in brick-and-mortar medicine. This is especially the case for virtual care vendors that were created with employer populations specially in mind. Brick-and-mortar providers operate on dozens of different technology platforms, in partnership with several health plans, and with patient populations working at hundreds of employers in a given market; their ability to refer to one specific employer’s resources is incredibly difficult.

Two Ways of Thinking About Value-Based Virtual Care

Many virtual care services are already directly contracted between employers and providers, so including elements of value-based payment may be more viable than previously thought. There are two main areas to consider regarding value-based virtual care, each with unique challenges and opportunities:

1 | Tying payments to quality, outcomes and patient experience for standalone virtual care providers. These can include things like employee assistance program (EAP)/EAP-replacement virtual visits, digital therapeutics, virtual services delivered in the home like physical therapy and others.
2 | Determining how to treat payment for virtual care services delivered by providers in other value-based arrangements, such as accountable care organization (ACO) or Center of Excellence (COE) providers.

The focus on virtual care in the first area – standalone virtual health providers – during the COVID-19 pandemic may have distracted from “traditional” value-based care approaches covered elsewhere in this Guide. But for ACOs, advanced primary care, COEs and others to succeed, they must use virtual care, as appropriate usage has a significant ability to increase access to care, improve the consumer experience, help reduce costs by delivering care outside the hospital, and improving outcomes. In any of the value-based arrangements covered in this guide, payments made to providers to help them invest in infrastructure like PMPM fees, shared savings, or capitated payments will be spent in part on increasing the capacity for delivering virtual care outside the FFS reimbursement system (e.g., answering patient e-mails promptly, referring to social services, doing physician-to-physician consults, etc.)

Ideal Elements for Value-Based Virtual Care

Employers should keep the following issues in mind when considering how they pay for value in virtual care:

1 | Virtual care is ideally delivered longitudinally, by their regular provider or coordinated with them over time.
2 | Clinicians doing virtual care, whether exclusively or as a part of their overall practice, should not be paid entirely through FFS, but instead through a salary with quality bonuses to blunt the incentive to more visits that may be unnecessary or duplicative.
3 | Clinical data generated through virtual care delivered by standalone vendors should be shared securely between the vendor, other virtual care providers and the patient’s brick-and-mortar care team.
4 | Virtual care providers should be willing to collaborate and share data, rather than compete for employee care by saying they are in the best position to treat them or that their model is proprietary.

Paying for Value in Virtual Care: What’s the Same as Brick-and-Mortar Care?

As mentioned above, the value equation for virtual care is ultimately the same as in-person care. Virtual care has the ability to improve health care quality (e.g., expanding access to mental health services to improve depression remission), outcomes like unnecessary emergency department visits, and the consumer experience. It also certainly has the ability to increase costs. When interacting with standalone providers, employers should be asking the same questions that they’d ask “traditional” provider groups, such as how they will improve value and avoid duplication or fragmentation. Similarly, they need to keep key virtual care capabilities top of mind when considering virtual care contracting with provider groups, as it is increasingly a baseline expectation of patients and a great opportunity for improving care.

Conclusion

Virtual care is no longer the health care delivery model of the future; it has arrived and isn’t going anywhere. The opportunities to leverage virtual care to expand access and improve the consumer experience of care are numerous, but a virtual care future must be tied to value for patients and employers to truly benefit from improved outcomes and reduced costs. Efficient, value- generating virtual care value is most likely best achieved as part of a broader value-based arrangement or in direct contracts that incorporate value measurements in the performance guarantee or payment arrangements.

Employer Recommendations

1 | Consider the purpose of your virtual health strategy and how you can use value-based reimbursements to incentivize high- quality care. Considerations include questions like: What problem are you trying to solve? Who is your targeted population and how will a virtual care strategy help them? What quality or cost metrics are important to you that a virtual care model can improve? How does this virtual care strategy make connections to bricks-and-mortar providers when necessary?
2 | Assess value-based care arrangements for providers’ ability to deliver appropriate virtual care. This should include expectations to deliver the same or better quality, outcomes and patient experience as any in-person encounter would for virtual-only models and appropriately incorporate virtual care in combined models.
3 | Ask how providers in value-based arrangements integrate their virtual care and in-person delivery. For virtual-first care models, this will require targeted referrals to in-person care that is connected back to virtual care providers, who may be directing the majority of a person’s care longitudinally. To have influence on the quality of care, 84% of employers believe that integrating virtual health and in-person care delivery is essential and the most important action their partners can take.¹⁸ Otherwise, the virtual health experience may lead to duplication of services, unnecessary care, wasteful spending and a fragmented care experience.
4 | Incorporate value-based payment for standalone virtual care providers that holds them accountable for outcomes and quality rather than utilization. This goes for both virtual care providers delivering a comprehensive set of services like advanced primary care, as well as targeted programs for specific conditions like musculoskeletal conditions.

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Articles & Guides

Value-Based Care

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