value based healthcare contract

Patient, Provider & Payer: The 3 Ps of Value-Based Healthcare

Learn about the 3 Ps of value-based healthcare: patient, provider, and payer.

Value-Based Healthcare Overview

Value-based healthcare represents a shift in how healthcare is delivered in the United States. According to the Centers for Medicare & Medicaid Services (CMS), value-based healthcare programs reward health care providers with incentive payments for the quality of care they give to people with Medicare. Payers who offer value-based contracts reward providers for delivering better care to patients and patient populations at a lower cost.

Payer contracts that offer rewards to practices and providers for quality and low utilization represent a shift away from the fee-for-service (FFS) payment model towards a value-based care model. In many cases, it may not be a total departure from FFS, but a blended rate model. This could also include a PMPM capitation.

contract payer

Value-based healthcare contracts represent an agreement between a provider and payer that the provider will be rewarded if they help keep a patient in a state of wellness and meet certain benchmarks on value-based care measures. Both CMS and a variety of commercial payers currently offer value-based healthcare contracts.

The major entities in value-based healthcare are the patient, the provider, and the payer.


Providing high-quality care to patients is one of the main goals of the shift to value-based healthcare. When patients receive health education, preventative care, and follow up calls, there’s a lower chance they’ll end up in the emergency room or let a disease state spiral towards more costly interventions. Emergency room visits are incredibly costly and taking steps to ensure a patient’s healthy and educated can prevent that.

This is where value-based healthcare contracts come in. Each contract is different, but each one rewards providers for taking steps to engage their patient populations and lower healthcare costs. Value-based contracts help steward care coordination and avoid high utilization with their terms. For example, many contracts ask providers to be open on Saturdays or two late night weekdays. This helps increase patient access to care with their primary physician and avoid ER visits. There also may be requirements to create care plans for patients with complex needs.

When patients have an understanding of health topics and are educated about health issues they may have, they can be more effectively and efficiently managed. CMS has offered Chronic Care Management (CCM) at a reimbursable rate. This varies by state but can be $40 - $60 per month for each patient, as well as Remote Patient Monitoring (RPM). Commercial payers offer care coordination payments as well around diabetes and high-risk patients so that physicians are incentivized to invest in the extra time or care services needed to quell costly disease progression. This could cut down on unnecessary office visits and make a patient feel as though they are part of their healthcare team. This can also prevent emergency room visits that aren’t a medical necessity and even death.

Ultimately the patient focus is on providing higher quality care at a lower cost to the patient and payer, whether through CMS or commercial contracts. When patients are encouraged to take an active role in their own care, everyone benefits.


Providers deliver care to their patient populations. They can be individual providers or part of a larger organization such as hospital, accountable care organization (ACO), or clinically integrated network (CIN). The providers also engage with payers to select value-based contracts and which measures they want to report on. By hitting benchmarks on selected measures, providers can receive reimbursements from the payers, both commercial and CMS (if they serve an eligible patient population).

value based healthcare contract

Providers can help lower the costs of healthcare by implementing workflows and practices to manage their patients. This is why it is key that providers understand their patient populations.

Educating patients encourages them to take an active role in their health. Resources such as “Ask Me 3” and “Aunt Bertha” empower patients to this effect. Understanding their symptoms and health before making an appointment or going to the emergency room can save time and money.

Taking the time to engage with a patient’s family and/or caretaker can also be beneficial. When a patient’s relatives or caregivers have a full understanding of the health issues their loved one is facing, they’re better prepared and equipped to address health-related incidents that may occur. Follow-up and check-in calls with patients also help patients manage their care and avoid costly emergency room visits.


The contract Payer is the entity that issues the value-based healthcare contract. Payers set the benchmarks for each measure and the amount of money that can be reimbursed to a practice for their performance on different measures. Payers can be federal (CMS) or commercial. More commercial payers are starting to offer value-based healthcare contracts.

Payers incentivize providers with reimbursement payments for reaching certain benchmarks in the measures on their contracts. Typically these measures are aimed at providing a higher quality of care to avoid expensive emergency room visits. This frequently includes a focus on preventative care. Some measures also encourage providers to follow up with patients after appointments or after procedures.

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