Value-based care leads to positive financial impacts

As the COVID-19 pandemic wanes and participation in value-based payment models grows and evolves, the foundational objective remains anchored in improving health outcomes, increasing quality of care and reducing costs to the healthcare system as a whole. This requires an integrated and holistic approach to delivering care, while further realigning incentives based on value created rather than services provided.

When it comes to financial impact specifically, physicians participating in Humana’s value-based programs made meaningful progress throughout 2021 in shifting away from non-value-based (fee-for-service) models. Higher frequencies of preventive care and lower usage of acute-care services largely led to superior outcomes.

A 2021 cost analysis shows physicians in Humana MA value-based arrangements saved an estimated $6 billion, or 20.1%, in medical costs that would have been incurred by value-based members had they been enrolled in Original Medicare.

Savings was also evident when weighed against those in non-value-based settings. Humana MA members attributed to value-based physicians incurred 0.6% less in total medical cost than had they received care from non-value-based physicians, saving an estimated $191 million.

Why it matters

Value-based care is successfully improving patient health. Better outcomes translate to financial benefits for both patients and physicians.

For example, Humana invests savings to benefit members in the form of added primary care and health plan benefits, such as lower premiums, home care, prescription delivery and healthy food cards. Those additional benefits on average amount to roughly $500 annually for members associated with value-based physicians.1

Value-based physicians also benefit from the quality care they provide. Approximately 50% of VBC physicians received a shared-savings payment from Humana in 2021. They also receive more of the overall healthcare dollar, encompassing medical claims and capitation, bonus and surplus payments—earning 14.3 cents compared to 6.4 cents for non-value-based physicians.1

Further illustrating their fiscal potential, physicians in value-based agreements with Humana earn, on average, 3 times more than Medicare’s fee schedule. Physicians in the most advanced stage of Humana’s value-based primary care continuum, global value, earn about 5 times more than Medicare’s fee schedule.1

“More and more providers are moving to value arrangements because it’s better outcomes for the patient, but I truly believe still, as a physician, that if you take care of the patient appropriately and align payments more closely with outcomes, there are added opportunities for physicians to share in savings they help create,” says Dr. Laura Scott, Executive Vice President of Population Health for Summit Health in the New York-New Jersey area. “Physician groups are starting to appreciate that.”

More and more providers are moving to value arrangements because it’s better outcomes for the patient, there are added opportunities for physicians to share in savings they help create.
Dr. Laura Scott

The way forward

Practice leaders and administrators help make the case for the value-based care, as they believe its influence in strengthening the health of their patients and the health of their practices became clearly evident amid the one-two punch of the pandemic and economic instability.

New research by the Medical Group Management Association and Humana found that practices in value-based arrangements saw total expenses increase by 16.6% on average in the past fiscal year stemming from higher inflation and increased supply costs. Still, they were able to focus on implementing programs that helped maintain margins amid adversity, thanks largely to the steady stream of income in the form of capitated payments.

“A lot of this is funded by what we’re able to generate from (value-based) contracts,” says Karl Gyden, Director of Payer Contracts for Harbin Clinic in Rome, Georgia. “We are a physician-owned organization, so we have to show return on investment for the doctors who want to pursue value-based plans.”


  1. Humana internal data

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