The transition from fee-for-service (FFS) to value-based care (VBC) is no longer a distant possibility but an impending reality. With the Centers for Medicare & Medicaid Services (CMS) aiming for a full shift to VBC by 2030, healthcare organizations and payers must prepare now to avoid financial penalties and thrive in a value-driven environment. While value-based care has been a topic of discussion for years, many institutions remain unprepared for the significant operational changes it will bring—not just for Medicare, but for other payer systems as well.
At Becker's 9th Annual Health IT + Digital Health + Revenue Cycle Conference in October 2024, Dr. Eric Leroux, Chief Quality Officer at Eisenhower Health, highlighted the urgency of this shift. “We’ve talked about value-based care forever, almost to the point where people are like, ‘Oh, whatever, we’ll just keep doing our fee-for-service thing,’ but that day is running out,” Dr. Leroux said. With as much as 75% to 80% of some healthcare systems’ patient mix consisting of Medicare or Medicaid, this transition will have profound financial consequences.
In particular, CMS's drive to digitize quality measures by 2030 represents a massive shift in the way payers and providers must approach care delivery. Pallavi Yadav, Director of Quality Improvement at the University of Toledo Medical Center, noted that this push is critical for hospitals that are striving to align clinical care with quality-based incentives. However, she also warned that digitization brings its own set of challenges, especially in terms of data accuracy and the potential for errors that could lead to penalties.
The Stakes of Value-Based Care
The financial stakes are significant. CMS programs like the Hospital Readmission Reduction Program and value-based purchasing can affect up to 9% of a hospital’s Medicare payments, a figure that represents millions of dollars for many institutions. As Yadav pointed out, “These penalties and rewards are not minimal anymore. They’re multiple millions of dollars.” It’s clear that preparing for the shift to value-based care isn’t optional - it’s necessary for financial stability and improved care outcomes.
However, the shift to value-based care isn’t just about avoiding penalties; it’s also about improving care for patients at a macro level. Programs like the readmission reduction initiative have already shown tangible benefits in improving quality outcomes. The challenge, according to Dr. Leroux, is to take a broad, strategic approach that doesn’t get bogged down in chasing individual quality metrics but instead focuses on building a culture of high-quality care across the board.
To support this transformation, health payers need to make strategic investments in technology that can help them align with CMS’s evolving standards and enhance their ability to work with providers in the new VBC landscape. Below are five key technology strategies that health payers should adopt as part of their readiness plan.
5 Technology Recommendations for Health Payers
- Invest in Interoperable Data Platforms As CMS moves towards full digitization of quality measures, it’s critical for payers to upgrade their systems to support real-time, interoperable data exchange. Interoperability ensures that data can flow seamlessly between payers, providers, and other stakeholders, making it easier to monitor patient outcomes, track quality metrics, and coordinate care in value-based contracts. By investing in interoperable platforms, payers can position themselves to meet CMS requirements and improve collaboration with providers.
- Leverage Predictive Analytics for Risk Stratification One of the key goals of value-based care is to reduce costly, preventable outcomes by focusing on early intervention. Predictive analytics can help payers identify high-risk members, allowing care teams to intervene before a costly event occurs. By using claims data, social determinants of health (SDoH), and clinical data to stratify patients, payers can optimize care plans, reduce hospital readmissions, and improve performance on key CMS metrics.
- Implement Robust Quality Reporting and Monitoring Tools As Yadav emphasized, data accuracy and real-time performance tracking are critical in the era of value-based care. Payers should invest in advanced quality reporting tools that automate the process of tracking and reporting on CMS’s growing list of quality measures. By using technology to streamline this process, payers can reduce administrative burden, minimize errors, and ensure they meet or exceed quality standards, avoiding the financial penalties that come with noncompliance.
- Support Provider Networks with Data-Driven Insights Payers and providers share a mutual interest in improving patient outcomes under value-based care models. To strengthen this collaboration, payers can provide providers with real-time data insights via population health management tools and care dashboards. These tools can help providers see how they are performing against quality metrics and allow them to adjust care plans accordingly. This data-driven approach not only benefits patients but also helps both payers and providers achieve shared savings in value-based contracts.
- Enhance Member Engagement Through Digital Tools Engaging members in their own care is a key component of improving outcomes and reducing costs in a value-based system. Payers should consider offering digital tools such as telehealth services, mobile health apps, and personalized wellness programs to empower members to take an active role in managing their health. These tools can help prevent costly interventions, reduce hospital admissions, and ultimately align with the goals of value-based care.
Preparing for Success
The shift from fee-for-service to value-based care is inevitable, but with the right technology investments and a proactive approach, health payers can not only avoid financial penalties but also improve care for their members. Dr. Leroux’s advice to take a holistic, cultural approach to care delivery applies just as much to payers as it does to providers. “You have to have a cultural, holistic approach to doing the right thing,” he said. By adopting these strategies, payers can ensure they are ready to navigate the changing landscape of healthcare.
At Flume, we are dedicated to helping health payers make this transition seamlessly. Our solutions are designed to support the kind of technology enhancements payers need, from interoperable data platforms to advanced analytics and member engagement tools. If you’d like to learn more about how Flume can help your organization succeed in the era of value-based care, reach out to us today.
