Making Value-Based Care Work in a Rural Setting: Three Factors to Consider

The transition to value-based care (VBC) is well under way, and accelerating rapidly. According to the Health Care Payment Learning & Action Network (LAN), 41% of U.S. healthcare payments in 2021 stemmed from value-based reimbursement models, with an additional 20% of fee-for-service payments tied to value or quality in some manner.

Traditional Medicare and Medicare Advantage are leading the way, driven largely by the Medicare Shared Savings Program, which rewards participating accountable care organizations (ACOs) for delivering high-quality, high-value care. CMS also provides specialty VBC programs that reward providers with incentive payments for the quality of care delivered to Medicare members.

For rural healthcare organizations, participation in value-based payment agreements has often been limited by eligibility restrictions, low patient volumes, and a lack of financial stability required for risk assumption. For example, critical access hospitals and federally qualified health centers are exempt from some federal programs, such as the Merit-Based Incentive Payment System (MIPS) that is a part of Medicare’s Quality Payment Program, due to a low-volume threshold.

To combat barriers to entry for rural providers who wish to participate in VBC, the Center for Medicare & Medicaid Innovation (CMMI) has created several regional models and programs used as a template by many Medicaid and commercial payers to create VBC contracts. These typically address three main concerns:

Reflecting rural patient population and volume

Residents of rural communities have a greater overall incidence of disease and disability as compared to urban residents, and are more likely to die from heart disease, cancer, and respiratory disease. In addition to facing limited access to healthcare specialists, rural residents are also less likely to be insured and more likely to live in poverty.

To attract rural providers, a successful VBC model should recognize the differences in rural patient populations and case volumes by region.  Sophisticated population health management and advanced data analysis are often not feasible for rural providers with limited resources. By incentivizing team-based, whole-person care, VBC models can have a positive impact on both cost and outcomes in rural communities.

For example, one randomized clinical trial found that the use of home-based nurse care coordination program focused on medication self-management for elderly Medicare patients resulted in a net cost savings of $296 per beneficiary per month. Another study found that a bundled acute care intervention, which paired early discharge planning, patient education, and medication management with follow-up services, decreased ED use for Medicaid patients, saving $4,295 per episode.

Establishing a data-driven culture  

Rural healthcare facilities rarely have access to the IT infrastructure required for effective population health or financial risk management, and performance data is often delayed or absent. These limitations can make it difficult to improve outcomes and reach expected parameters for traditional VBC models. Adjusting model expectations based on limited data reporting and analysis capabilities can increase the likelihood of VBC program participation for rural providers.

In December 2020, the Center for Rural Health Policy Analysis co-hosted a virtual summit of rural participants in VBC models to identify critical program elements. To increase data-driven decision-making, the participants recommended that rural facilities provide “timely and actionable performance data to allow appropriate participant responses designed to improve outcomes.”

Patient movement data can provide an immediate source of performance data without requiring additional staff for data collection and reporting. Motient’s Mission Control dashboard reflects all aspects of patient movement, including time-critical diagnoses, wait times, resource utilization, vendor relationships, service line analysis, and system leakage. This system transparency allows healthcare organizations to assess operational performance in real time and identify new opportunities to improve system-wide management.

Establishing standardized protocols for how interfacility patient transfers are handled can also enable higher quality care choices, as it streamlines the decision-making process. By implementing objective means of assessing patient acuity and risk, care teams can make better decisions for emergent patients. In a Deloitte Insights survey on VBC, less than half (46%) of physicians report following clinical pathways adopted at their organization. The authors recommend that facilities build their care management capabilities, such as risk stratification and care navigation, and provide physicians with intuitive, easy-to-use tools for decision-making.

Ensuring limited financial risk

Rural healthcare organizations are typically under-resourced, both financially and in terms of staff. A successful VBC model will recognize that rural facilities cannot assume too much financial risk, and will delineate the differences between variable costs, which are directly attributable to patient care, and fixed costs, which are required to support patient care regardless of case volume.

Reduced utilization and the avoidance of low-value care will only impact a facility’s variable costs, which are likely to represent a small percentage of a rural facility’s overall expenditures. Even if some degree of financial risk is mandated, a successful VBC model for rural facilities will link that risk to performance outcomes other than cost savings.

Rural facilities seeking to enter into VBC agreements will need to ensure that their care teams can control the measures of performance on which they are being evaluated. With careful planning and model selection, rural hospitals and health clinics can begin earning incentives for the quality care they deliver.

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