A Beginners Guide To Value Based Reimbursement: Five Things You Should Know

  1. Behavioral Health Is In Transition From Volume Based Care To Value Based Care

Healthcare reimbursement models have shifted away from volume-based care, sometimes called fee-for-service, where a provider is paid a fee for each service rendered. The current trend is toward value-based care, defined as reimbursement that is directly linked to performance on cost, quality, and the patient’s experience of care.

This transition is already well established in physical health where, for instance Medicare has shifted almost 90% of payments for hospital visits into value-based models. While the numbers are not as robust in behavioral health, the percentage of value-based reimbursed care does continue to grow. Despite this growth, there are still many within the behavioral healthcare continuum that have not fully embraced the model. However, the transition is inevitable and one way to prepare is to understand the basic language and models of value- based care. Let’s start with terminology.


    1. Know Your VBR Payment Model Terminology

Know your reimbursement structures and the associated level of risk assumed by the provider organization, listed below in ascending order from low risk to high risk:

  • Performance-based Contracting-Contracts in which payment is linked to provider performance and require providers to undertake specific activities or meet certain benchmarks for services. These contracts may include incentives and penalties, caseloads and Pay for Performance.
  • Bundled & Episodic Rates-A single bulk payment for all services rendered to treat an individual for an identified condition during a specific time period. These payments also include case rates.
  • Shared Savings-Supplemental payments to providers if they successfully reduce health care spending for a defined patient population relative to a benchmark. The payment is a percentage of the net savings generated by the provider.
  • Shared Risk-An arrangement of shared financial responsibility between payer and provider that allows for cost control, efficiency of service use and quality. In this arrangement, both financial savings and losses are shared.
  • Capitation– A payment arrangement for health care service providers that pays a set amount for each enrolled person assigned to them, per time period, regardless of whether the person receives services during the period covered by the payment.
  • Capitation + Performance-based Contracting-This payment arrangement adds performance-based contracting as a supplemental incentive to a capitation contract.


  1. Develop an Incremental Plan For Risk With Payers

As noted above, the type of payment arrangement you choose will assume a certain level of financial risk for the provider. That level of assumed risk can be small, medium, or high as illustrated below. The upside of assuming risk is a higher payout for the provider. Of course, the downside is the potential to lose money.

  1. Assess Your Organization Readiness

Carefully assess your organization and determine the gaps in value-based care. OPEN MINDS has developed an online readiness assessment tool, sponsored by Carelogic. This tool offers you recommendations in your planning process in the following domains:

  • Provider Network Management – Strategies to enhance provider networks
  • Clinical Management & Clinical Performance Optimization – Data analyzed to drive clinical decision making
  • Consumer Access, Service Engagement – Processes to empower consumers and create engagement
  • Financial Management – Revenue cycle management and accounting procedures to support contracts
  • Technology & Reporting Infrastructure – Data leveraged to gain insight
  • Leadership & Governance – Alignment of strategy with infrastructure and resources

By Joining the Value Based Care for Behavioral Health online community, you have free access to the VBR Readiness Assessment. The assessment is available now at https://vbcforbh.com/vbr-assessment/

  1. Prepare for Challenges During Your Transition
  • Create a transition plan for your clinical and financial operations to support value-based care. Plan capital expenditures over time.
  • Identify patient experience and clinical outcome indicators that align with the expectations of your payers.
  • Establish evidence-based care, aligned with workflows, data entry and outcome reporting.
  • Adopt interoperable electronic health record systems and effective data analytics tools.
  • Eliminate waste, streamline workflows, rightsize staff, and align supplier contracts to reduce costs.

Even if Value Based Reimbursement (VBR) is not immediately imminent in your region, it is on the horizon. Prepare now by measuring and improving patient experience and patient outcomes. Begin to demonstrate improvement in the quality and efficiency of care that your organization provides. Your pathway to value-based care will improve the health and satisfaction of your consumers and the financial effectiveness to your organization.