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Healthcare costs are rising – for both health plans and their members. More than ever, real, sustainable solutions are needed to help make costs manageable.
One proven approach is value-based care, where models reward providers for delivering high-quality, efficient care rather than for increasing volume. Value-based programs have shown real impact in reducing costs and improving outcomes, particularly in primary care.1
But primary care represents only a small fraction of total healthcare spend (4%).2 The vast majority of costs reside in specialty care, where variation in treatment patterns, testing, and site-of-care decisions remains high. The question now is: what impact can value-based principles have on specialty care, where the greatest opportunities for improved outcomes and cost management truly exist?
Therapy Costs Reduced 30% Through Value-Based Care
Specialty care includes healthcare services provided by non-primary care specialists in fields such as cardiology, ophthalmology, dermatology, sleep, and more. In outpatient therapy (physical, occupational, and speech), we’ve shown that value-based principles can produce significant savings. Health plans implementing our model for PT, OT, and ST typically realize savings up to 30%.
We achieve these results through two key strategies:
- Clinical Efficiency: Through optimized, outcomes-focused treatment plans, Health Network One (HN1) delivers 10% to 20% in clinical savings – without cutting reimbursements or denying care.
- Administrative Relief: As a fully delegated partner, we handle credentialing, claims processing, utilization management, and provider training, reducing the administrative burden and lowering costs by an additional 5%–10%.
Fee-for-Service Fuels Rising Specialty Care Costs
Today, the predominant payment model within specialty care is fee-for-services (FFS), which pays providers a fee for each delivered service. With an increased prevalence of chronic illnesses, the number of visits per member across all disciplines is trending upward. Therefore, under an FFS payment model, per-member per-month (PMPM) spending is skyrocketing.3
For example, one health plan reported a 41% increase in visits per member for outpatient therapies since 2019. This drove PMPM costs up a staggering 140% across that same time period. Such tremendous increases like these can cripple a health plan.
Traditional Cost Controls Are No Longer Working
To combat rising costs, health plans often rely on familiar tools, such as heavy utilization management, reimbursement cuts, and narrowed networks. While these efforts may offer short-term financial relief, they also generate provider frustrations and care delays. Ultimately, long-term savings are rarely achieved.
As traditional levers lose effectiveness, value-based specialty programs are becoming an essential strategy for aligning payment with meaningful member improvement. Rather than incentivizing more visits, value-based care incentivizes optimal care plans.
Episode-of-Care in Outpatient Therapy
Value-based care has proven especially effective in outpatient physical, occupational, and speech therapies. At HN1, we use an episode-of-care model, developed by our therapy experts, to align payment with outcomes rather than volume.
Using widely accepted standardized assessments, the HN1 team and providers agree on an impairment level for each case and set goals for improvement. Instead of being paid per visit, providers receive a single, bundled payment for delivering the care needed to help each member improve. This approach rewards efficiency and quality, not quantity.
The strategy also creates value for everyone. Health plans pay for measurable outcomes; providers earn fair, outcomes-driven payment; and members receive care focused on meaningful improvement.
In our recent webinar, The Future of Specialty Care is Value Based, we discussed value-based strategies and the episode-of-care model in more detail. Joining us on the webinar was nationwide outpatient therapy provider CORA Physical Therapy, who shared insights into how providers respond to this model.
To discover how value-based care offers a smarter, more sustainable solution for controlling costs, watch the webinar on demand today.
- https://link.springer.com/article/10.1007/s40258-023-00790-z
- https://healthcostinstitute.org/hcci-originals-dropdown/all-hcci-reports/4-of-health-spending-goes-to-primary-care
- https://www.healthsystemtracker.org/indicator/spending/per-capita-spending/#Average%20health%20spending%20by%20race/ethnicity,%202021