Op-ed: Stop saying value based. Start saying earned

Fifteen years of value-based care panels. Walk any trade show floor and you'll hear it a dozen times before lunch. Yet nearly every dollar in HME still moves the way it always has: per unit shipped, per month rented, whether the patient got better, got worse, or ever took the equipment out of the box.

I've stopped believing we're doing it wrong. I believe the structure of the payment system itself is the problem.

"Value-based" describes how a payment is calculated. "Earned" means you have to deserve it. If patients do better, you make more. If they don't, you make less. That's the whole difference.

Look closely at most arrangements called value-based and you'll find plain old fee-for-service underneath, with a quality bonus stapled on. Hit the target, get a little extra. Miss it, lose nothing. Everyone still gets paid for volume, but the phrase lets us feel like something changed. A payment model with no downside isn't a payment model. It's a press release.

Think about what that does. The work that actually helps patients – teaching someone to use their equipment, refitting a mask, coaching a new CPAP user through the first month, getting oxygen set up fast after a hospital stay – costs money and earns nothing. So, the smart business move is to skip it. The companies that skip it grow the fastest and buy the ones that don't. Barely half of CPAP patients stay on therapy, yet the resupply boxes keep shipping and billing on schedule. CMS pushes back with the only tools fee-for-service gives it: audits, prior authorization, competitive bidding. We complain about the audits, while defending the payment system that makes them necessary.

Does paying for results actually work in HME? Someone already ran the experiment, in our least glamorous category. Texas Medicaid plans stopped paying for incontinence supplies by the unit and started paying for patient results. Supply spending dropped about 20% – that gap was the waste, quietly billed every month. One plan found about $4.5 million in medical savings in six months, with hospital admissions down 63% for pressure ulcers, 44% for urinary tract infections. An honest caveat: Most of these numbers come from the supplier itself, without perfect studies behind them. Fine. Cut every number in half. The story holds. Four national Medicaid plans have since signed on.

Nobody's character changed in Texas. The contract changed. The problem was never who owns HME companies. It's what our revenue rewards.

Here's what my company is doing. Eastern MedTech is moving to what we call Earned Care. The idea fits in two sentences: We earn our revenue when our patients do better. We earn less when they don't.

We're offering payers a simple deal. Pay us less than you pay today – guaranteed savings from day one – and let us earn the rest by proving we improved care. Fewer hospital visits. Therapy that's actually used. Equipment that actually fits. Proven by devices, claims and the patients themselves – not our own paperwork. If we deliver, we come out ahead of the old model. If we don't, we lose money. From year one.

To be clear: that discount isn't us cutting our rates. It's the price of admission. It buys us the right to be paid for results instead of boxes.

Here's the good news. CMS has told us in plain English where this ship is heading: There are real consequences for failure in every new model and there is prevention in every model – waste designed out of the payment instead of chased with audits. Our industry's reflex is to row against that current – and every win buys one more audit cycle. I'd rather we take the wheel and steer with them. Small wins, earned as partners, are how we get a seat at the table when the next payment model is written. That's how everyone wins – patients, payers and us.

The hard part isn't the math. The math works. The hard part is that 50 years of fee-for-service taught everyone, including payers, to be suspicious of a provider who volunteers to be accountable. Somebody has to go first and prove that doing right by patients pays better than shipping boxes. We've decided it's us.

To my fellow operators, one last question: If your revenue depended on your patient results instead of your shipment volume, what's the first thing about your company you would change?

Whatever your answer, that's the work. The early movers will own the next decade of this industry.

Peter Falkson is CEO of Eastern MedTech, a DME provider based in Boston. He writes about Earned Care at easternmedtech.com and can be reached at peter@easternmedtech.com.