The shift to value-based care in the U.S. has been slow in coming, in large part because providers have continued to cling to the traditional “fee for service” healthcare model that historically has worked well for them.
The shift to value-based care (VBC) in the U.S. has been slow in coming, in large part because providers have continued to cling to the traditional “fee for service” (FFS) healthcare model that historically has worked well for them (if not always for the patient). Plus, it’s how they’ve always done business.
But the inefficiencies and inflexibility of FFS were laid bare during the COVID-19 pandemic. Providers suddenly were confronted with the jarring reality that, under a fee-for-service reimbursement model, no service means no fee. Revenues plunged as patients canceled elective surgeries and clinician offices restricted hours and patient volume.
In contrast, value-based care models reimburse providers for delivering better outcomes for patients and populations while reducing costs. The emphasis is on quality care, not quantity.
Key to making VBC work are technologies that enable clinicians to personalize care plans for treating each patient’s unique health risks. Fortunately, huge gains are being made in the areas of genetic testing and precision medicine, which allow clinicians to use a patient’s genetic makeup and other molecular data in the course of providing care.
VBC is especially promising in helping providers treat patients with chronic diseases. The Centers for Disease Control and Prevention (CDC) estimates that 90% of the country’s $3.8 trillion in healthcare spending in 2019 went toward treating people with chronic and mental health conditions.
It’s no wonder why: Recent research shows that 51.8% of adults in the U.S. have at least one chronic condition (such as heart disease, cancer, stroke, chronic obstructive pulmonary disease or diabetes), while 27.2% have two or more chronic conditions. Another study shows that more than half of older U.S. adults have three or more chronic diseases.
And that’s when things get expensive. A Rand Corp. analysis concludes that while Americans with five or more chronic conditions comprise only 12% of the population, they account for 41% of total healthcare spending in the U.S. Based on total healthcare spending in 2019, that’s an astounding $1.56 trillion a year.
As the U.S. population ages, the total number of people with chronic diseases – and the costs associated with them – in turn will rise. PFCD projects the total cost of chronic disease (both in terms of medical expenditures and lost worker productivity) in the U.S. from 2016 to 2030 will reach $42 trillion. PFCD also estimates that 1.1 million American lives could be saved annually through better prevention and treatment of chronic disease, reducing healthcare spending by $418 billion each year through 2030.
Better prevention and treatment, however, can only be achieved through VBC payment models that reward quality care along with the use of technologies such as precision medicine, advanced genetic testing and pharmacogenomics.
Through targeted genetic sequencing, clinicians can spot changes in an individual’s chromosomes, genes or proteins. With this information, clinicians can identify those patients most at risk of developing a chronic disease before that condition develops or progresses and requires more expensive care in the long term. Further, early genetics testing can motivate at-risk patients to make lifestyle changes (such as quitting smoking or getting more exercise) or take medications prescribed to control their chronic conditions.
Let’s say targeted next-generation sequencing (NGS) testing panels from a clinical lab show that a patient is at risk for hypertension. Clinicians can use this information to work with the patient on lifestyle changes and strategies to control their blood pressure.
In addition, providers might want to prescribe a medication for that patient based on NGS results. This is where pharmacogenomics is proving invaluable. Pharmacogenetic (PGx) testing can reveal genetic variations that affect a patient’s response to specific medications. These insights save time and money because clinicians don’t have to experiment with different medications.
Knowing precisely which medications to prescribe to a patient also minimizes potentially adverse drug reactions. Reducing adverse drug reactions can reduce medication nonadherence, which is when patients don’t take the medications prescribed by clinicians for chronic conditions, illnesses, and other disorders, often out of fear of harmful or debilitating side effects. “Medication nonadherence accounts for billions of dollars in avoidable health care costs, millions in avoidable inpatient hospital days, and thousands of avoidable ED visits,” the CDC writes.
Beyond enabling personalized treatment plans for individual patients based on their unique genetic composition, precision medicine and genetics testing provide data for medical researchers to better understand chronic diseases, which over time will lead to improved prevention, diagnoses, and treatment.
The American Medical Association (AMA) has been advocating for several years that precision medicine and genetics testing are essential components of value-based care models. While there remain barriers to large-scale adoption of precision medicine and genetics testing, the benefits of these technologies – along with VBC models that emphasize prevention and holistic care – are becoming increasingly undeniable. It will only be a matter of time before VBC, precision medicine, and genetics testing will enter the mainstream of healthcare.
Ron King is the CEO and Managing Board Member of Tesis Biosciences. King is a seasoned healthcare executive with more than 25 years’ experience in the healthcare industry.