What Is Value-Based Care? Examples, Models, and Solutions
Value-based care is an approach to healthcare delivery where the main goal is keeping patients healthy.
It means clinicians focus on preventing illness and working with patients to build and maintain healthy habits, rather than just running more tests or billing for more visits.
The simplest way to say it?
Value based care is quality over quantity.
Most healthcare in the United States still works the old way, which is called fee-for-service. In fee-for-service, providers get paid for each visit, each test, and each procedure. More services means more money. It does not matter if the patient actually gets better or if they remain better.
Value-based care flips that. Providers earn more when their patients get good results. They can earn less when care costs a lot and patients do not improve.
What Is Value-Based Care?
Value-based care links what providers get paid to the quality of the care they give. When patients do well, providers do well.
Why do we need a new way to pay for care? Because the old way is just not working.
Americans pay more for healthcare than any other country. That should mean we are the healthiest in the world, right?
Unfortunately no. Americans live shorter lives than people in other wealthy countries. We have more chronic illness. And we have the highest rate of deaths that could have been prevented with the right care at the right time.
In short: we pay the most and get the least.
Patients feel this. When researchers asked people what they want from healthcare, four things stood out:
Care that treats the whole person
Providers who take responsibility for results
Shorter waits to get care
Payment tied to quality, not quantity
That last one is value-based care in a nutshell. People want their providers paid for making them better, not for doing more billable stuff.
Value-based Care vs. Fee-for-Service
The easiest way to understand value-based care is to put it side by side with the old way.
Neither system is perfect. Here is an honest look at both.
Fee-for-service: pros and cons
Value-based care: pros and cons
Value-Based Care Success Story
Does this actually work in real life? Yes. Here is proof.
Original Medicare (OM), also known as Fee-For-Service (FFS) Medicare or Traditional Medicare, runs the country’s biggest value-based care program, the Medicare Shared Savings Program (MSSP), and Accountable Care Organization (ACO) program.
In 2024, it had its best year ever. Nearly 480 provider groups cared for over 10 million people with Medicare. Together, they saved $6.5 billion, a new record. Three out of four groups earned bonus payments for their results, sharing $4.1 billion in rewards to those ACOs.
And here is the best part: care got better, not worse. Compared to the year before, more patients had their blood pressure under control, more had their diabetes under control, and more were screened for depression and given a follow-up plan.
Better care. Lower costs. Rewarded providers. That is value-based care working exactly as designed.
More Examples of Value-Based Care
Value-based care can sound abstract. So here are three real-life examples of value-based care in action.
Example 1: Preventing a fall
Meet a patient at high risk of falling. In a value-based program, an occupational therapist can visit her home. The OT removes trip hazards, adds bathroom safety equipment, and teaches her safer ways to move.
That one visit costs very little. But it may prevent a broken hip. A broken hip can easily cost a payer $75,000 or more by preventing things like the hospital stay, the surgery, the rehab, and the inevitable complications. One smart, low-cost visit can prevent one huge, painful, expensive event.
In fee-for-service, no one gets rewarded for preventing that fall. In value-based care, that is exactly what gets rewarded.
Example 2: Managing diabetes
A care team tracks every patient with diabetes. A nurse calls patients between office visits. She checks their blood sugar numbers, answers questions, and helps them get refills and addresses compliance barriers. Fewer patients end up in the emergency room. In value-based care, the team is paid for keeping those patients healthy, not just for those office visits.
Example 3: Staying out of the hospital
A patient goes home after a hospital stay. Within two days, someone from her care team calls. They make sure she has her medications, understands her plan, and has a follow-up visit set up. She recovers at home instead of bouncing back to the hospital. Value-based programs measure and reward exactly this: more healthy days at home.
Value-Based Care Models
A model is just the set of rules for how providers get paid. There are several value-based care models in use today. Medicare runs many of them. Private insurance companies use similar ones.
Here is a simple look at the main value-based care models in the United States today:
Model | How it works, in one line |
|---|---|
Accountable Care Organizations (ACOs) | Providers team up to care for a group of patients. Keep them healthy and lower costs, and they share the savings. Medicare’s version is the Shared Savings Program. |
Bundled payments (episodes of care) | One payment covers all the care for one health event, like a knee replacement. Teams that help patients recover well come out ahead. |
Primary care models | Doctors’ offices get extra monthly payments to build care teams that catch problems early. |
Capitation (full risk) | Providers get a set monthly payment for each patient, always tied to quality. They must show good results, not just do less. |
Medicare Advantage arrangements | Private Medicare plans pay many provider groups based on quality and total cost of care. |
Medicaid and commercial programs | State Medicaid plans and private insurers run their own versions of the models above. |
In every model, the same idea holds: good results and smart spending earn rewards. Want a deeper look at each model and what it means for therapy? Read: How OT and PTs Win in Value Based Care.
Value-Based Care Solutions
So what makes value-based care actually work? A few key solutions come up again and again:
Care teams. One doctor cannot do it all. Teams add nurses, pharmacists, therapists, dietitians, and behavioral health providers. Everyone works at the top of their training.
Care coordination. Someone makes sure all of a patient’s providers share information and follow one plan. No more mixed messages or repeated tests.
Data and technology. Electronic records and data tools help teams spot which patients need help before a crisis — not after.
Patient engagement. Patients are partners, not passengers. Engaged patients understand their conditions, ask questions, and reach out early when something feels off.
Value-based Care Companies
When people search for “value-based care solutions,” they often find companies. A whole industry has grown up around value-based care. Some companies deliver care themselves. Others help doctors’ offices make the switch. Here are a few well-known examples. They are not endorsements, just a map of the landscape:
Company | What they do |
|---|---|
Helps independent primary care practices join and succeed in ACOs. Its ACOs saved Medicare over $1 billion in 2024. | |
Partners with physician groups to move senior care into full-risk value-based models. | |
Full-risk primary care for seniors with complex health needs. | |
Value-based care for Medicaid and lower-income communities. | |
Technology and support that helps medical groups run value-based programs. |
You may also see companies selling “value-based care solutions” software. This refers to tools that track quality, cost, and patient risk. They can help. But tools alone do not improve health. People do.
And that brings us to a solution hiding in plain sight: therapy and mental health care.
Therapy and Mental Health as Solutions for VBC
Here is my honest take as a physical therapist who works in value-based care every day: therapy and mental health care are some of the best value-based care solutions we have.
Occupational therapists, physical therapists, speech-language pathologists, and mental health providers do exactly what value-based care rewards:
OTs prevent falls, make homes safer, and help people stay independent in daily life.
PTs restore movement and strength, manage pain without surgery or opioids, and keep people active.
SLPs help people communicate and swallow safely — preventing dangerous problems like aspiration pneumonia.
Mental health providers treat depression and anxiety, which make every chronic condition harder and more expensive to manage. That is why depression screening is a core quality measure in value-based programs.
All of us train caregivers, support chronic condition management, and keep people out of hospitals and nursing homes.
Every one of those things improves lives. Every one of them also prevents big, expensive health events. That is the definition of value.
Here is the frustrating part. In fee-for-service, therapy payment has never matched therapy’s value. Payment rates are set through a system where a committee of physicians assigns a value to every billable service. Therapy services have always been valued low in that system, and far lower than the real-world savings they create. (Want the full story? See our guide on how OTs and PTs get paid.)
Value-based care changes the math. When payment follows results, a $200 professional home safety visit that prevents a $200,000 hip fracture and recovery journey is no longer “cheap therapy.” It is one of the highest-value professional services in all of healthcare.
This is truly a shift where therapists belong at the table. If you want to go deeper, start with our podcast course OT and Value-Based Care, our 2026 Therapy Reimbursement Guide, and our 2026 Advocacy Playbook for OTs and PTs.
Why Value-Based Care Matters for Therapists
You might be thinking: “This sounds nice, but my clinic still bills fee-for-service.” Fair. Most therapy still does. But value-based care is growing every year, and it will shape your career. Here is why it matters for you:
New jobs and new roles. Value-based teams need people who prevent problems and help avoid high-cost care. That is us. Therapists must join primary care teams, ACOs, and home-based care programs.
New ways to get paid. In value-based programs, your worth is not capped by billable units. Your results and the savings they create count.
A seat at the table. Value-based organizations are deciding right now which services to invest in. Therapists who understand value-based care can make the case for therapy.
A head start. You can prepare today. Track your outcomes. Learn the terms in this article. Show, with simple numbers, how your care keeps people healthy and home.
Quality and Outcomes, Made Simple
Value-based care runs on one big question: is the care working? Quality measures are how we answer it.
A quality measure is like a report card for healthcare. Some examples:
How many patients had good blood pressure control?
How many patients went back to the hospital within 30 days?
How many patients say their care improved their daily life?
In value-based care, quality scores help decide payment. Clinicians with strong results can earn more. Clinicians with poor results can earn less. That is the heart of the whole system: measure what matters, then reward it.
For therapists, this is good news. The long-term outcomes we help patients achieve, like improved function, safety, independence, and quality of life, are the outcomes patients truly care about most.
What’s Next: Digital Quality Measures
One bonus term is worth knowing, because it is the future of how quality gets measured: digital quality measures, or dQMs.
Today, a lot of quality reporting is clunky. Staff members pull information out of charts by hand, or quality gets estimated from insurance claims. It is slow, expensive, and often out of date.
A digital quality measure is different. It uses data that technology can pull automatically from electronic health records and other digital systems. No hand-counting. The results can be faster, more accurate, and closer to real time.
Medicare has set a goal of moving all of the quality measures in its programs to digital ones. That change is underway right now.
Why should therapists care? Two reasons:
Your documentation becomes the data. If your notes clearly capture your patients’ outcomes, those outcomes can count toward quality scores.
Quality scores affect payment. As digital measures spread, showing good results will matter more and more to how therapy gets paid.
Where to Learn More
There is so much more to learn about value-based care. Here are my favorite starting points:
CMS: Value-Based Care Basics — Medicare’s own plain-language explainer. (2 min.)
NAACOS: What is an ACO? — A short video on the most common value-based model. (5 min.)
Fee-for-Service Healthcare Is Making Us Sick — The case for why value-based care is better for everyone. (3 min.)
United States of Care: Patient-First Care Principles — What patients say they actually want. (5 min.)
Timeless Autonomy — My health policy newsletter for healthcare professionals.
And from OT Potential:
Glossary of Terms
Value-based care makes big-picture sense, but it does require us to get learn some new terms and concepts. Here are some of the most important ones for you to learn, as you explore this exciting shift in health care.
Term & Acronym | Definition | Example/ Context |
Value-based care (VBC) | Healthcare delivery model where providers are paid based on patient health outcomes rather than service volume | Payment linked to reduced spend over the course of a period of time and maintaining or improving “quality.” Examples are: reduced hospital admissions and readmissions, reduction in unnecessary medical specialty care, reduction in unnecessary advanced imaging, improved early detection and treatment of illness. Improvement in quality metrics may include improvement in process metrics or outcomes metrics, and may start off as a “pay-for-reporting” structure. |
Quality measures | Standardized metrics used to evaluate healthcare provider performance and patient outcomes. Performance on quality metrics will determine qualification for financial performance rewards | Patient-reported outcomes measures (PROMs), HgBA1C control for diabetics, more days at home per year for patients with multiple chronic conditions, blood pressure control for patients with hypertension, etc. |
Accountable care organization (ACO) | Groups of providers (physicians, hospitals, home health agencies, FQHCs, etc.) who make a formal agreement with a payer(s) to collaborate and coordinate on managing a population of patients | Patients are assigned to a physician or APP based on choice and/or historical claims. All providers accept responsibility for managing those patients in a patient-centered, high-quality way with the goal of reducing total cost of care across the care continuum while improving quality and the patient experience |
Population health | Managing the health outcomes of a defined group of people and often includes reducing health inequities | Strategies to improve pop health include, for example, individual behavioral strategies, disease prevention and early detection strategies. Population health outcomes examples: increased life expectancy, decreased obesity rates, earlier detection and treatment of certain cancers. |
PMPM | Per member per month; refers to the expected cost of managing the health and healthcare of a population month over month. It’s used in determining benchmarks and target spend over a calendar year with one payer | The amount per member per month is determined by the payer and is based on inputs and claims data on each person, commonly based on each individual’s prior year claims data and medical “risk adjustment” scores (prospective), after the end of the year (retrospective), or concurrent (during the year—this is the least common and used generally in carve-outs of the population, like ESRD patients and seriously ill beneficiaries). |
Episodes of care | Models that hold providers accountable for cost and quality over a defined period of time. The time may be a fixed time, after a procedure, after an illness, for treatment of a specific disease, etc. | Sometimes these are defined as “bundled” payments, and other times they are defined as a disease specific model, like oncology care. In some programs, all providers who care for the patient in an episode are paid as they normally would be paid, and then the payer reconciles per-episode, per patient performance (cost and quality) after the episode and all claims are submitted. In that case, the provider who “took the risk” for the episode would either earn shared savings if they saved money and maintained or improved quality, or would owe the payer money if spend was higher than expected and/or quality worsened. In other cases, payment is made to one provider who is responsible for paying downstream claims to other providers. the “at risk” provider determines how to reward or “punish” other providers for performance. |
Access to care | The ability to enter the healthcare system to receive needed health services of any kind. Includes affordability, availability, being able to physically or technologically reach care | One of the barriers to optimal health outcomes is lack of access to care. Without access, individuals often don’t receive care until it’s an emergency. In some areas, there isn’t sufficient available care. In some cases, there’s available care, but some individuals can’t access it. Expanding access is a driver of value in healthcare and health outcomes. |
Primary care models | Alternative payment models designed for primary care provider participation. | Medicare has had several. Comprehensive Primary Care (CPC), then CPC+, and now Primary Care First, and just started = Making Care Primary. All of these are Innovation Center Models. This is only a partial list. |
Care coordination | Organizing care and care activities across providers. Important for delivering safe, patient-centered and evidence-based care. Essential for optimizing outcomes, especially in those with multiple conditions. | Coordinating medication and treatment choices for a condition that’s being managed by more than one provider, avoiding duplication and confusion, sharing information about progress, etc. Primary care providers are often the quarterbacks of their patients’ care but in FFS, there is no incentive to share information back from specialist to PCP. |
Capitation | Paying providers a set amount per month, regardless of services actually rendered. | This takes many forms. The original capitation disincentivized patient visits. Capitation in the context of VBC is different. It can be a set monthly fee for services without billable codes or to provide any of a handful of services, but those services must be provided. It can be a monthly payment per patient that exceeds historical spend to fund team-based, advanced primary care activities and make it more likely the practice will help patients avoid high-cost spend. In VBC, payment is always linked to quality metrics. |
Health information exchange | AKA “HIE,” is a system, often statewide, that allows for securely sharing and accessing a patient’s medical information. It is regulated by the the Assistant Secretary for Technology Policy (ASTP)/formerly Office of National Coordinator (ONC). It involves sharing information in a timely way. | The goal of HIEs is to improve the speed, quality, safety, and cost of patient care. It isn’t a substitute for care coordination, but is critical for timely information sharing to facilitate the right care at the right time in the right place and improves the completeness of patient records. Blind spots in care across the continuum and over the course of the year are barriers to high-quality, patient-centered care. |
Patient engagement | Active patient involvement in their own care and in successful management of chronic conditions. It’s also important in preventive care and early identification of diseases. | Americans are used to seeking care in reaction to illness or injury. And it’s common in chronically ill patients, especially when the illness is at least partially related to lifestyle/behaviors, not to comply with or even fully understand how to manage their conditions and when to seek help before it’s emergent. An engaged population of patients sees their PCPs as their medical and healthcare “home,” and has a good relationship with their care teams. For patients with chronic illness, strong patient engagement increases the chances they will work with care teams to manage their conditions and reach out proactively when they have questions or problems. |
Clinical pathways | Standardized, evidence-based care plans that outline the best practices for managing specific conditions. | This is particularly important for highly-variable care, either by condition or by particular specialists of the same kind being involved in a patient’s care. They support the activities of team-based care professionals like registered nurses, who are often the ones helping patients carry out their care plans |
Health equity | It’s a term used when everyone can attain their full potential for health and well-being, regardless of other inequities like disability, demographics, health literacy. | It’s determined by the conditions in which people are born, grow, live, work, play, and age. In VBC programs, health inequities influenced by modifiable factors are opportunities to intervene and address non-medical drivers of health. There is no mechanism for doing this in FFS and no incentive, either. |
Chronic care management | Services that help patient manage their chronic conditions more effectively. CCM is a billable service, added to the physician fee schedule in 2015. | May be provided by clinical staff in a care team, but must be billed by a physician, nurse practitioner, physician assistant, clinical nurse specialist, or certified nurse midwife only. In ACOs, it is commonly provided by nurses. CCM services are usually not face-to-face. |
Risk adjustment | Methodology for determining payments by payers that’s specific to the risk of the population. “Risk” is determined by specific diagnoses that have been linked to a higher risk of spending. | In VBC programs, every patient is assigned a “risk adjustment factor” comprised of the total score of medical diagnoses determined by the payer to “map” to potential spending. The highest are for end stage diseases. It’s crucial that participants see their patients annually to determine their “risk.” Only some diagnoses have an associated risk, or “hierarchical condition category.” Some ICD.10s have them and some don’t. Some are for just acute issues, but most are for chronic and persistent conditions. The per member per month dollar amount associated with each patient is determined by their risk adjustment factor, or “RAF.” |
Participating provider | Common term for a provider in a contract to participate in a VBC program with a payer. | In the Medicare Shared Savings Program (MSSP), all the physicians and advanced practice providers in each TIN are the participating providers. |
Patient attribution | The method used in a VBC program to determine which patients the participating providers are responsible for. This is commonly done through claims, and some programs allow voluntary attribution to a provider. | The attributed patients will each have their own RAF (see “risk adjustment”). If a patient’s conditions weren’t captured, they won’t have a RAF associated with medical conditions. Only their demographics will contribute to their weight for contributing to a program’s per beneficiary per month benchmark. It was developed to avoid “cherry picking” patients in Medicare Advantage. |
Conclusion
Value-based care is a win-win-win.
It is a win for patients, because they get the right care at the right time.
It is a win for clinicians, because they are rewarded for quality, not volume.
It is a win for payers, because the right care at the right time saves money.
And it may be the biggest win of all for therapy. For the first time, the way we get paid is starting to match the value we create.
I hope this post has left you excited for this new reality.
Contributors
Dana Strauss
PT, DPT
Dana Strauss is a Doctor of Physical Therapy with 15 years of clinical experience who transitioned into population health and public policy. Today, she leads Value-Based Care (VBC) and Medicare policy for a Fortune 10 company, managing the organization's relationship with CMS and the CMS Innovation Center (CMMI). An expert in alternative payment models and healthcare strategy, she serves on the NAACOS Policy Committee, the Board of Moving Health Home, and co-leads Accountable for Health's Specialty Care Committee.
She is deeply passionate about designing innovative policy incentives to improve life for complex and seriously ill populations. Believing that PTs and OTs are the most undervalued assets in traditional healthcare, Dana is on a mission to elevate these professions and ensure they are positioned as vital drivers of success in the new paradigm of value-based care.
