Payment & Delivery Models

7 keys to success with value-based care pay arrangements

Georgia Garvey , Contributing News Writer

In a national health care landscape increasingly turning to value-based care, the AMA and other major stakeholders in medicine have released a playbook of best practices to successfully develop and participate in value-based care payment arrangements. The guidance is sourced directly from the experiences of physicians, value-based care entities and health plans across the country.

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The AMA, in cooperation with the health insurer trade group AHIP and the National Association of ACOs, lays out in the document (PDF) how to create successful and sustainable payment arrangements to encourage the ongoing growth of value-based care (VBC) in the U.S. In 2023, the collaboration’s first playbook (PDF) highlighted how best to advance data sharing in value-based care.

“Getting important aspects of value-based payment right is crucial for continuing to advance physicians’ success in helping their patients achieve good health outcomes in these models,” said AMA President Jesse M. Ehrenfeld, MD, MPH. “This playbook reflects input from physicians in an array of practice settings on their lessons learned for patient attribution and financial risk and benchmarking. It will be a valuable resource for both those with experience in value-based care and those who are just getting started.”

No single best approach

The new playbook—“Creating a Sustainable Future for Value-Based Care a Playbook of Voluntary Best Practices for VBC Payment Arrangements”—largely focuses on “total cost of care” models, though many of the best practices are applicable to other types of value-based care payment models, including episode-based models and medical home models.

The playbook is intended to help current and future participants in value-based care models such as physician groups, health plans, employers, payers and value-based care entities such as accountable care organizations (ACOs). Recognizing that there is no single ideal approach for value-based care payment arrangements, best practices are designed to be voluntary and flexible.

The insights on success with value-based care payment arrangements are organized into these seven domains:

  • Payment attribution—determining which patients and associated medical costs that physicians or entities are held accountable for.
  • Benchmarking—setting financial targets to compare spending over a period of time.
  • Risk adjustment—accounting for the relative sickness or complexity of patients.
  • Quality performance impact on payment—determining how to financially hold entities accountable for performance on a set of quality metrics.
  • Levels of financial risk—assuming an appropriate level of financial responsibility for improving the health outcomes and costs of caring for patients.
  • Payment timing and accuracy—structuring how and when funds flow in value-based arrangements. 
  • Incentivizing for value-based care practice participant performance—considering how to educate and reward participant performance in achieving the collective goals of payment arrangements.

The playbook highlights several case studies throughout, including physician education efforts undertaken by Virginia Mason Franciscan Health System to encourage value-based care efforts through direct incentives. For example, physicians are educated on the organization’s VBC payment arrangements with health plans including expected quality activities and the reasons behind them.  

Virginia Mason Franciscan Health System is a member of the AMA Health System Program, which provides enterprise solutions to equip leadership, physicians and care teams with resources to help drive the future of medicine.

Succeed with value-based care