How digital health is challenging traditional reimbursement models

Farma Darya

Digital healthcare tools are driving us towards better reimbursement models in healthcare. The traditional fee-for-service arrangements have caused misaligned incentives across the board for patients, physicians, and payers – and proved a huge obstacle to improving care. Transactional models don’t prioritize outcomes or encourage physicians to use cost-saving measures, which only adds to overspending.

Recognizing this gap, Centers for Medicare & Medicaid Services (CMS) began to facilitate a shift towards outcome-based care by focusing on outpatient monitoring and disease management. This has led to progress in adopting new reimbursement models to move patient outcomes to the center of healthcare financial incentives, and digital health is helping to accelerate this change. The pandemic further accelerated this trend by creating an opportunity to test these services and boost adoption of digital health and value-based models. But how exactly do we define “value” in value-based care? Digital health, delivering a holistic view of patient health, can help us answer this question.

Technology has lagged in healthcare for too long. Services are unnecessarily complex, quality information can be difficult to find and understand, and communication between patients and providers has plenty of room for improvement. Lacking the infrastructure and data to support it, adoption of value-based care has fallen behind the roadmap CMS had originally outlined. But the pandemic has shifted the market, with important changes to reimbursement and payment for digital healthcare services. In turn, this has enabled innovation in healthcare technology and utilization of these services has grown significantly. These changes can give healthcare providers and payers the push needed to hasten the adoption of value-based care plans.

Digital health enables value-based care in almost every way. It facilitates a more holistic view of a patient by delivering care throughout their daily routines, providing insight between care delivery, treatment, lifestyle, engagement, and compliance. Reimbursement in value-based care models is structured around metrics that reward high patient satisfaction, outcomes, and quality. For patients, convenience, engagement, and communication are key to positive outcomes in healthcare – and are also enhanced by digital tools like remote monitoring. For payers, the data from digital healthcare tools can assist in establishing new, and better, value-based models. And for providers, tying payment to outcomes prioritizes quality of care and results.

When you can easily keep in touch with your physician at home, communication and engagement is improved. When healthcare tools are easier to use and understand, the experience and utilization will be better. And when you’re more informed and involved in your own care, you’re more likely to adhere to a treatment plan. These qualities are all cornerstones of value-based care models, delivering engagement which ultimately drive compliance and data, the two critical pieces to improved outcomes. Compliance is one of the biggest expenses in healthcare, but digital health can facilitate this by creating an environment where patients engage. Combined with healthcare tools, engaged patients deliver key data metrics that provide insights into their health and lifestyle, supporting prevention.

As value-based payment models rely on data to understand how a patient’s health progresses or worsens during care, digital health becomes increasingly useful. Digital healthcare tools are generating a lot of new data that can be used to identify benchmarks, measure progress, and establish metrics that work within value-based care contracts. Patient-generated data provides additional context that can be used for greater accuracy in clinical decision making, which is necessary to outline exactly what “value” means across conditions, services, and populations. The better the data, the better payers can structure models that outline measurements for metrics and encourage physicians to adopt them.

Before we can finish our transition to value-based payment models, we need to enable reimbursement that works for new healthcare technology like remote patient monitoring and telehealth tools. We saw that recent changes in reimbursement for digital healthcare was the true catalyst for innovation. As Medicare established payment parity for telehealth as a response to Covid-19, its use skyrocketed and funding for digital healthcare was at an all-time high. Reimbursement for telehealth services are now the same as in-person visits, encouraging widespread adoption and utilization. And CMS continues to introduce new codes to support remote patient monitoring, telehealth, and digital therapeutics, among others. As this trend in reimbursement persists, we will see continued innovation in digital health and remote patient monitoring with a focus on outcomes, accelerating our shift to value-based care.

I’ve seen firsthand how CMS has promoted the shift to outpatient monitoring. This has been done by increasing reimbursement for outpatient procedures through ASCs and remote monitoring solutions as compared with in hospital procedures and monitoring. The benefits are clear as we have seen patients receive faster diagnosis, get into the clinic before adverse events occur, and an overall increase in diagnoses through longer term data collection.

Understanding how digital tools can work within value-based care models needs to be a priority for all stakeholders. Value-based care is better equipped to facilitate treatment of costly and challenging conditions like chronic illnesses, and digital healthcare tools are better equipped to manage them. Working together, they can promote efficient use of new healthcare technologies that encourage preventative care. Ultimately, value-based care supports a holistic view of patient health and helps digital health reach its transformative potential.

Photo: JamesBrey, Getty Images

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