A value-based reimbursement model leads to a greater focus on patient outcomes, while strengthening the financial security of NMHS.

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Health care reimbursement, or the payments we receive from payors like insurance companies, makes up our revenue as a health care system.

Before we dive into this complicated topic, let’s clear up a common misconception. North Mississippi Medical Center is a “not-for-profit” organization.

As a not-for-profit, we have a mission to continuously improve the health of the people of our region. One of the ways we do that is by providing service to patients who do not have any insurance at all. In fiscal year 2023, we spent about $28 million to provide services to uninsured patients. We also provided about $51 million in uninsured discounts for people with low or no insurance. That’s different from a for-profit system because we honor our mission by providing care regardless of a patient’s ability to pay.

However, we still need to generate income so we can invest in people, services and technology to care for patients. Without that income, we wouldn’t have the funds available to fulfill our mission.

For-profit organizations, on the other hand, return their profit to shareholders. It’s an important distinction.

Our current model is mostly a “fee-for-service” basis, which means we are paid by insurance companies based on the number of services we provide. Our costs to provide care have continued to increase because of labor shortages, supply chain disruptions and inflation. The fee-for-service revenue model is not keeping pace with our costs. In 2023, the cost to provide care increased 7% more than our revenue. That is not sustainable for us nor for the patient who is paying the insurance premiums.

The incentives for “value-based” models, however, are vastly different. Value-based reimbursement is focused on good outcomes for the patient, providing a consistent standard of care and controlling the cost of providing that care.

Value-based care helps to manage costs, and therefore, the premium cost for insurance coverage for our patients. We have a target for a total cost of care, which is beneficial for us and for the patient, because we are providing the best care at the lowest cost. This model is expected to lower insurance premiums for the patient accordingly.

There are two types of value-based models:

Shared savings: We set a cost target to deliver care for a set population. If we are able to deliver the care at a cost lower than the target, we get to share in those savings with the payor.

Full-risk model: If the target is not met, we have to reimburse the insurance company. There’s a higher reward for us, but it could also increase our expenses if we cannot deliver targeted results.

As a system, we have had experience in both models, so we are prepared to be successful as we change how we are reimbursed.

We have experience with a Medicare Accountable Care Organization, which is a shared savings model. We did not get to negotiate what targets we were measured against. However, with our provider network, we were able to provide results that saved Medicare over $25 million. We were able to share in some of those savings – about $8 million in total.

Recently, we launched a new relationship with Aetna, where we are using the “at-risk” model. Because this is full-risk, we can share in the benefits if we meet the targets, but we might have to write a check back to Aetna if we do not meet them. This partnership is a Medicare Advantage plan, which offers more benefits to the patients. We began this relationship in January, but, because of our experience and our success in value-based products, we are confident that we will be able to deliver that care at a lower price point, and ultimately capture more of the savings we are able to provide.

We feel that the value-based model better supports our mission. As part of these plans, we collect data, which shows us how well we are doing at improving the health of our patients. We look at things like if they are taking their medication as prescribed, having their regular wellness visits or having any additional health problems. With this information, we can support patients and ensure they are receiving the best care for them, which can prevent further complications.

The value-based model better aligns the interest of the patient, the payor and the provider, which should lead to better access to the right level of care, higher quality of care, better patient satisfaction and lower cost of care.

As we continue to demonstrate that we can provide quality care at a lower cost, we will better be able to direct more patients to the services that we offer, which also supports the A (access) and G (growth) components of the A. G.R.E.A.T. Redesign Strategy.