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Value-based payments model encourages the use of healthcare analytics

Rahul Dhingra

Value-based payment (VBP) models are changing healthcare incentives by rewarding better patient health outcomes, provider performance, and quality of care. Historically, most U.S. medical services were paid/reimbursed in a fee-for-service environment―meaning that every consultation, doctor appointment, surgical procedure, or hospital stay was treated as a siloed event for purposes of payment for services rendered.

In 2015, US Centers for Medicare & Medicaid Services (CMS) initiated a framework that ties payment to value through payment models and by putting the power of healthcare data and information technology to work.[1] CMS set a target of 50% for alternative payment from all Medicare fee-for-service payments.

Evaluating various models, traditional models of provider reimbursement do not factor in care coordination.

  • P4P reimburses providers if they meet some quality measures, but care coordination across other providers is left to the servicing providers.
  • Capitation leads to underutilization, while FFS has issues with abuse of services.

Moreover, the growth in health care expenditures is driving policymakers, employers, and public and private purchasers to explore VBP arrangements that incentivize quality and performance improvements that support efficient, cost-effective care.[2] These emerging newer models are designed to ensure the quality of care.

  • Different models have evolved over time to contain cost and drive care coordination among different entities.
  • Global payment models have the highest potential to promote the highest level of care coordination and provide quality care.
  • Episode of care is a proven and matured industry model and possibly a good start for a health plan moving away from traditional models.

Benefits of value-based payments analytics

Source: Capgemini Financial Services Analysis. 2017

As commercial insurers commit to value-based payment strategies, VBP analytics are enabling better healthcare at lower costs.[3]

Although insurers need to scale their infrastructure to support various payment models, the ability to analyze data automatically and determine optimal bundles is critical for success. Analytics can help insurers understand their value-based care partners, derive insights from patient care data, and identify the best-performing providers. Capgemini helped one of the health plans successfully set up the VBD payment infrastructure and “episodes of care” model.


In its 2018 Healthcare Trends report, Aetna suggests that data from various sources empowers decision-making and data-driven decisions help payers and providers address both national health crises and local-level health issues.[4]

Insurer Anthem was an early adopter of the strategic use of data analytics in support of value-based payments. Through a partnership with San Francisco-based HealthTech firm Castlight Health, Anthem offers its members price and quality information.. Anthem pays 58% of reimbursements to providers through value-based care contracting, including 64,000 physicians serving 5.5 million members.[5]

Last year, insurer Excellus BlueCross BlueShield partnered with analytic solutions and services company Geneia to collect data from its 1.5 million members, including patients’ interactions with providers, medications, lab test results, and the likelihood of developing a chronic disease. Excellus plans to use the information to better predict health outcomes, enhance care, and reduce costs while improving collaboration with its provider partners and ensuring the sustainability of healthcare in the community.[6]

Capgemini’s Top-10 Technology Trends in Health Insurance: 2018 report highlights how payers are collaborating with providers to deliver a coordinated healthcare experience to patients through technological support, management services, or an analytics platform.

Clearly, a successful value-based payments strategy is built upon payer/provider collaboration, sharing of patients’ health data, and IT and analytical support. VBP analytics enable insurers to identify the best-performing provider partners – and that means enhanced payer profitability and better patient care. VBP models are expected to fast-track healthcare ecosystems’ preventive care efforts, thus increasing the scope of predictive analytics as well. In fact, predictive analytics is one of the key analytics tools we have analyzed in the upcoming World Insurance Report 2018 which looks at the top digital and analytics tools that insurers are investing in to build an agile organization. Predictive analytics is poised to become particularly relevant to the insurance industry as the industry undergoes a paradigm shift from reactive compensation to proactive prevention.


[1] US Centers for Medicare & Medicaid Services website,

[2] American Hospital Association, “Trend Watch: Hospitals and Health Systems Prepare for a Value-driven Future,” November 30, 2017,

[3] Health Payer Intelligence, “Private Payers Follow CMS Lead, Adopt Value-Based Care Payment,” Vera Gruessner, October 17, 2016,

[4] Health Payer Intelligence, “Aetna Highlights Emerging Drivers of Value-Based Care,” Thomas Beaton, February 28, 2018,

[5] Health Data Management, “Anthem leverages data, technology to support value-based care,” Greg Slabodkin, June 08, 2017,

[6] Geneia website, “Excellus BlueCross BlueShield and Geneia Partner on Value-Based Analytics”, January 04, 2017, news-events/press-releases/2017/january/excellus-bluecross-blueshield-and-geneia-partner-on-value-based-analytics