Value-Based Reimbursement, Financial Risk in Healthcare


In 2020 based on the data that the Health Care Payment Learning and Action Network(LAN) provided, most of the healthcare payments that were made were somehow closely connected with the quality or value of care. LAN’s new data indicate the adoption of value-based reimbursement in 2019 and 2020 made progress. Though it has taken some time the healthcare industry has finally been able to reach a milestone with the adoption of value-based reimbursement. 

Manziel Law Offices understand the risk involved in value-based reimbursement. Since the providers have been dealing with the pandemic for the last two years the progress has been slow. When you compare the value-based reimbursement adoption in the healthcare system it has been faster in some parts than the others. 

In this post, Lisa Manziel wants to discuss the value-based reimbursement, financial risk in health, some business lines that are already making waves with it.

Medicare Advantage and Traditional Medicare Are Making Progress

According to the AMP measurement report, the business lines that are spearheading the value-based reimbursement are Medicare Advantage and Traditional Medicare. The percentage of Medicare Advantage and Traditional Medicare payments in 2020 that were precisely fee-for-service are 38% and 15% respectively. The percentage of value-based reimbursement in two-sided risk alternative payment methods significantly increases on both Medicare Advantage and Traditional Medicare. The percentage of payments in two-sided risk models in Traditional Medicare increased from 20.2% in 2019 to 24.2% in 2020 while that of Medicare Advantage increased from 28.6% to 29.3%.

Medicaid was not left out with the progress despite there being a little increase in fee-for-service payments. The adoption of value-based reimbursement helped to increase the percentage of payments from two-sided risk to 14.5% in 2020 which was at 10.6% in 2019. 

The 62% of the lives represented in the data presented by LAN are private payers, still, 51.5% of payments made by them were from fee-for-service while only 10.8% were from two-sided risk models. Also, most of the payments that private prayers made to providers in 2019 were in connection to two-sided risk models. About 53.5% of payments were also from fee-for-service based on the report that was provided.    

Accelerating Value-based Reimbursement, Risk Adoption

Industry experts that were at the LAN summit 2021 also agreed with the APM measurement report that there was a delay in the adoption of value-based reimbursement. Though, it is expected that this year the adoption of risk-based accelerates and the coming year. From the survey that was made of payers about 87% of them that participated think the activity of alternative payment model will increase. Most of them agreed that the adoption of value-based reimbursement improved care coordination will produce affordable care and increased quality. 

Some of the barriers to the adoption of value-based reimbursement according to the payers include the provider’s ability to operationalize models, their readiness, interest, and the willingness to assume financial risk. When you consider those that are to decide the value-based being rolled out you will discover is those rich people who are comfortable with the healthcare system of transaction. It is quite obvious that value-based care is better than volume-based care but the lack of courage from the leaders is one of the problems. 

Realizing the urgency of adopting value-based care and having the courage to do so is what most leaders need. The partnership level between payers and providers has experienced increased growth and more providers want to move into risk management. For providers to later get on board with the downside risk and the valued-based reimbursement, there is a need for payers to offer the right combination of rewards. The provider has not been able to participate well in the medicare shared savings program due to the financial risk and other alternative payment models in it. 

For more clinicians to be attracted there have to be less downside and more upside if not large insurance companies and private equity will be leading. Simply because they have money to spend and understand the risk involved. Primary care practices that don’t have enough resources to implement risk-based will have problems and if nothing is done on time private equity and large insurance companies will start dictating how things will be done. To make any necessary changes in value-based care and reimbursement there will be a need for people that truly believe in it 


In case you need any help or advice on reimbursement issues Lisa Manziel will be willing to help. You can as well visit us at Manziel Law Offices for more clarification about the value-based reimbursement, financial risk in healthcare. Manziel Law Offices looks forward to discussing with you about healthcare and insurance difficulties today. The adoption of value-based care will be more beneficial to the healthcare system as long as the leaders can take that bold step of implementing it.