The gestalt of value-based care

November 17, 2021 / By Matthew Ferrara

Gestalt is defined as: “Something that is made of many parts and yet is somehow more than or different from the combination of its parts.” 

Long ago, I remember attempting to wax philosophical, and used this term to describe our attempts at managing the many moving pieces of a vast, complex social services/health care system. It fell flat at the time, but I have again warmed up to it, and figured I’d give it another whirl as it relates to value-based care.

As a former Medicaid agency director of quality oversight, I’m both pleased and humbled by the part I was able to play in helping one state bring value and quality to the beneficiaries served in my state. State Medicaid programs are laboratories for experimentation, and information gleaned from best practices within states can help inform and shape this complex and evolving effort. 

While there are many successes around the country, overall progress has been uneven, and results have been somewhat mixed[i]. It’s just not as simple as changing payment incentives; there are many factors that can impede or facilitate progress. 

While some of these may seem obvious, here are a few things that I learned from my experience:

Lay the groundwork, educate

Medicaid programs include health plans and providers with varying levels of sophistication and infrastructure. The move to value-based care is a paradigm shift, which can easily be viewed differently by health plans and providers, or met with resistance. It can be incorrectly viewed as a strategy to simply extract dollars from the health care system rather than a way to better align payment incentives toward good health care. Conveying the true essence of this effort is a pathway to rewarding innovative, efficient, high quality, patient-centered care is essential.

Determine what to measure, risk adjust when possible 

States often have many measures, sometimes creating a muddled set of priorities or even measurement overload. Having reliable data that points to important areas of needed improvement can help drive consensus on priorities and mitigate measure fatigue. Strong patient-level risk adjustment enables segmentation of the population based on relative risk and ensures fair comparisons when evaluating utilization and costs. Emphasizing outcome measures distills measurement down to a manageable set of measures. For example, use of 3M™ Potentially Preventable Emergency Department Visits (PPVs) and 3M™ Potentially Preventable Hospital Admissions (PPAs) provide important signals that are indicative of good health care. Patient engagement, access to providers, effective and efficient provision of services by the providers, and coordination/communication among providers are all key activities that, if done well, reveal themselves in risk-adjusted rates of PPVs or PPAs.

Outcome measures can also be used to balance against process of care measures. For example, if a Medicaid agency is interested in seven and 30 day follow ups after mental health hospitalization (very important process measures), then using these measures in tandem with 3M™ Potentially Preventable Readmissions (PPRs) also enables risk-adjusted insight into a key outcome–mental health and/or substance use disorder related readmissions to inpatient settings or to the emergency department. The process and outcome measurements enable a richer view into 1) the availability of care post-discharge and 2) the effectiveness of care provided during the post-discharge visit.

Targeting these potentially preventable events also identifies waste in the health care system, which can be removed or redeployed towards patient-centered cost effective services and supports. In Texas Medicaid and Children’s Health Insurance Program (CHIP) in 2019, there were almost $1 billion in costs for PPVs, PPAs and PPRs within managed care[ii] (roughly 4 percent of Medicaid health plan premiums). While not all of these high cost events were totally preventable, even if just 10 percent of these events were avoided, that would translate into $100 million in high cost care avoidance, with some savings redeployed to more patient-centered, cost effective interventions.

Align core metrics across different initiatives 

Most state Medicaid programs leverage the health plan model to deliver health care to eligible populations. Within this approach, states sometimes employ directed payment strategies to make payment increases to certain providers through health plan capitated payments. These states often have smaller fee for service programs for populations or services excluded from managed care. Weaving a common core set of outcome measures through initiatives and programs creates a needed synergy and focus.

Use data/data analytics to support and inform value-based care

Value-based care catalyzes the business need for transforming data into information for better decision making and as vital tools for success. Value-based care should also lead to greater data democratization among stakeholders to facilitate provider, health plan and overall Medicaid program success. Expanding access to useful data sets beyond health care administrative data (electronic health record (EHR), health information exchange (HIE), functional assessments), encouraging and/or incentivizing use of Z codes or capturing other social risk data are all important pieces of information in understanding the whole person, relative risk and in developing more effective interventions.

Cultivate a “partnership” mentality

While competition in health care will always exist, value-based care promotes increased collaboration among states, payers and providers, based on individual self-interest, but also collective interest. A partnership mentality also tends to support the rapid identification and removal of unnecessary administrative barriers to achieving effective value-based care.

Use non-financial as well as financial levers 

One effective approach to drive higher Medicaid program value is via public reporting. While it may have somewhat limited utility for a Medicaid recipient, it’s important to providers and health plans, as well as state Medicaid programs and legislators. It serves as a tool for Medicaid agency staff to understand where there may be areas of needed improvement as well as areas of excellence. Public comparative performance data that is accessible and easy to interpret conveys transparency and promotes accountability, which are key features in a value-based care environment.

Additionally, establishing performance-based recognition programs and spotlighting successes/best practices don’t require huge resources, but are meaningful to health plans and providers as they promote themselves. These programs provide positive signals for the health care community and reinforce priorities. 

Align incentives from top to bottom

Value-based care works well when all parties are aligned in achieving the best outcomes. What is good for an enrollee should be good for a provider, which should be good for a health plan, which should be good for the state Medicaid program and the taxpayer. 

Effective value-based care is like a machine, with different components moving in concert with one another to support a greater goal: Better services and supports, healthier people and communities, and smarter spending. It’s a huge lift.

Matt Ferrara is a program manager within 3M regulatory and government affairs. He served in Texas Health and Human Services for 21 years and retired in 2019.


[i] https://www.fiercehealthcare.com/payer/cmmi-director-finds-mixed-results-for-bundled-payment-models-high-marks-for-total-cost-care

https://www.rand.org/pubs/periodicals/health-quarterly/issues/v4/n3/09.html

https://www.healthaffairs.org/do/10.1377/hblog20210607.230763/full/

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5378385/

[ii] https://thlcportal.com/ppe/ppetrends. Includes Medicaid managed care and CHIP