The Intersection of FFS and VBC Medicine: The Medical Office

08/03/22 | Featured

by Jonathan Hart, MD MBA

A misconception exists that physicians must choose between practicing fee-for-service (FFS) medicine and Value-based Care (VBC). We often hear the phrase "a foot in two canoes" to represent the perceived need to abandon one watercraft for another identical one in their move to VBC, the notion being you can't simultaneously be in both payment models, and you need to choose. This perception can be paralyzing when considering making a business move within one of these practice / delivery models.


In my book, Value in Healthcare: What is It and How Do We Create It, I dedicated a chapter to this concept, noting that it’s more like having one foot in a canoe and the other in a helicopter. As the helicopter in this analogy, VBC is a form of transportation, like a canoe, but one that’s more complex, potentially more efficient and effective, as well as potentially more dangerous. The good news is that using the helicopter helps you in many of the same ways the canoe did, only better, and proper application of VBC principles improves the work done in the FFS realm.


Interestingly, most health organizations successful in VBC have not completely abandoned FFS medicine. As they’ve matured in VBC, they often realize the net income potential in VBC eclipses FFS medicine while rendering better patient outcomes. However, they still participate in the FFS world, notably with their straight commercial contract patients. VBC when the payer cooperates and FFS when the margin is too slim.


 The intersection point of FFS and VBC

An interesting intersection point of FFS and VBC medicine exists in the medical office, where a symbiosis can occur. Some workflows that can increase FFS revenue have also been shown to be of benefit to VBC and can be leveraged for VBC’s success. Specifically, these are: Annual Wellness Visits (AWV) for Medicare, Annual Preventive Visits (APV) for Commercial Plans, the CMS Annual Preventive Physical Exam for Medicare Advantage (APPE), HEDIS measures, and Advanced Care Planning (ACP).

All of these, except HEDIS, can directly increase FFS billing for any practice. If a practice or organization owns ancillary services, the diagnostic and screening tests tied to many HEDIS measures would also add to FFS revenue.

Here’s the beauty – all these activities and workflows also improve a practice’s position in VBC!

In the next few articles, we’ll look at each of these workflows and processes in detail and demonstrate the benefits they bring to both FFS and VBC medicine. You’ll then be able to see that accurate and timely identification of these opportunities can help a practice regardless of their point on the reimbursement continuum – from straight FFS to full-capitation VBC – with benefits seen in both payment models.