AI’s ability to transform value-based care

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Analytics driven by artificial intelligence could transform value-based care by addressing long-standing inefficiencies and enabling providers to deliver better outcomes at lower costs.

This is among the key findings from a HealthScape Advisors report, which also highlighted the persistent challenges facing value-based care.

Despite significant investments, value-based care (VBC) has struggled to achieve its original promise of improving care quality and reducing expenses.

The industry’s perspective is that paying some providers prospectively based on outcomes – rather than retrospectively based on each service provided – tends to better support patient health and reduce overall excess spend for insurers.

WHY THIS MATTERS

The report noted one of the biggest issues with VBC is its reliance on complex financial models instead of direct provider enablement.

Over time, plans have introduced intricate reimbursement structures with numerous attribution, utilization and quality measures, frameworks which require providers to navigate conflicting metrics and analyze vast amounts of claims data.

It’s a process that often overwhelms providers, making it difficult for them to focus on improving care delivery.

“Providers are stuck navigating endless data while being held accountable for outcomes they couldn’t influence,” the report stated.

Fragmentation within health plans adds another layer of complexity. VBC program management is often spread across quality, network, and product teams, leading to disjointed efforts and inefficiencies.

AI presents an opportunity to address these challenges and bring VBC closer to its intended goals.

Moving to a Results-Driven Model

Implementation of various AI tools, backed by strategic program management could transform VBC from a fragmented, underperforming system into a streamlined, results-driven model, the report said.

Predictive analytics powered by AI could help providers transition from reactive care to proactive population health management. By analyzing patterns in patient data, AI can anticipate future health issues, enabling early intervention for chronic diseases.

Additional benefits brought by AI-driven tools could include helping providers identify high-risk patients earlier in their disease progression–allowing for targeted outreach and preventive care–or enabling early intervention, helping providers manage chronic diseases more effectively.

This shift not only improves patient outcomes but also reduces costs associated with complex treatments and hospitalizations.

The Role of Health Plans

To maximize the potential of VBC, health plans must also adopt a disciplined approach to program management, with the setting of clear, organization-wide goals essential for aligning resources and ensuring stakeholder support.
Treating VBC as a distinct product line with its own profit and loss metrics can help health plans evaluate economic benefits and prioritize high-impact models.

“A unified ‘North Star’ is critical for stakeholder alignment and resource optimization,” the report emphasized.

This approach would allow plans to evaluate both individual models and their overall portfolio to identify inefficiencies and scale successful initiatives.

“Ultimately, by improving VBC provider enablement with predictive tools and AI, plans will ensure providers have the tools that they need to succeed, focusing critical resources on the right patients, improving outcomes, and earning greater value-based incentives,” the report concluded.

THE LARGER TREND

The Centers for Medicare and Medicaid Services has said value-based care models have seen a 25% increase in provider participation from 2023 to 2024, according to Medical Economics. This includes participation in value-based care models such as Managed Care Organizations, Accountable Care Organizations and Medicare Advantage. 

The report said the global value-based healthcare market, worth $12.2 billion in 2023, is predicted to grow to $43.4 billion by 2031. It also said a McKinsey report showed companies engaged in value-based care created around $500 billion in enterprise value in 2022, a number that could rise to $1 trillion by 2027.