In America’s healthcare system, doctors and hospitals treat patients and health insurers help pay for those medical services.

Sounds simple, right?

 But the simplicity of this arrangement – commonly called “fee-for-service” – typically means healthcare providers are paid based primarily on the volume of tests, treatments, procedures, and other services, regardless of the outcome for the patient. Historically, the fee-for-service model typically lacked any connection to quality health outcomes or patient satisfaction.

Fortunately for patients, payment arrangements are evolving to reward healthcare providers for measures that had been missing from the equation – quality, satisfaction, and appropriate cost. These alternative payment models are often called “value-based care.”

Today, about 60% of healthcare payments are associated with or impacted by a value-based model.

Capital Blue Cross advocates for and uses value-based models with providers, rewarding them based on how much they help patients improve their health, while using data-driven decisions to continually improve care.

“Value-based care emphasizes getting the right care at the right place at the right time,” said Dr. Jeremy Wigginton, Chief Medical Officer at Capital Blue Cross. “It gives healthcare providers incentive to put patient satisfaction and quality of care ahead of quantity of care, which tends to drive better health outcomes at a lower cost.”

Capital Blue Cross is a leader in value-based arrangements. In 2011, we were the first insurer in our market to introduce Accountable Care Arrangements (ACAs), which hold primary care physicians (PCPs) accountable for providing high-quality care to our members. In addition to ACAs, we have other  PCP value-based arrangements under the QualityFirst umbrella, including Medical Neighborhoods and the Primary Care Recognition Program.

In 2015, the Blue Cross® Blue Shield® Association (BCBSA) introduced Blue Distinction® Total Care (BDTC), linking local Blue Plan’s value-based programs, like our ACAs, across the country. This allows Blue Plan members to receive high-quality care wherever they live.

Capital also has partnered with regional health systems like UPMC and the Lehigh Valley Health Network to create value-based arrangements.

Employers are starting to take notice of the benefits of a value-based payment model – including healthier employees and fewer missed work days. About a third of employers said they were integrating value-based care into their employer-sponsored insurance, according to a 2024 survey.

Healthcare outcomes are proving value-based care’s impact.

Walmart reported that employees with diabetes saw a 24% reduction on average in HbA1c levels and an 11% drop in total cost of care using a value-based care model. Boeing said spending for participants decreased by 14%, and emergency room utilization dropped 11% when it moved to value-based care.