Pharmacy News

By Rachel Kollmeyer, Pharm.D., clinical care coordinator, SpartanNash/Medical Advantage Group, Flint

As the United States healthcare system evolves to value-based reimbursement, pharmacists will be utilized in new and different ways to help improve patient outcomes. With new payment models comes a lot of new terminology and acronyms. For pharmacists unfamiliar with outpatient practice, it may seem like ambulatory care pharmacists speak a different language. Let’s try to break down some of the more common terms as they relate to outpatient, value-based reimbursement.

Fee-for-Services (FFS) refers to the method of healthcare billing where a provider is reimbursed for each service performed.1 This is seen as the traditional method for reimbursement and payment is not tied to any quality or outcome measures. Current healthcare trends are moving away from FFS to value-based reimbursement.

Value-based reimbursement (VBR) refers to payment models that reward providers for providing high-quality care with improved patient outcomes and decreased healthcare costs.2 This can also be referred to as pay-for-performance, provider incentive programs or alternative payment models. Currently value-based reimbursement is typically additional revenue for healthcare providers above their FFS billing.

When it comes to value-based reimbursement programs, there are many variations based on different payers and contracts. Some of the more common programs are accountable care organizations (ACOs) and patient-centered medical homes (PCMH).

Accountable care organizations were developed by the Centers for Medicare and Medicaid Services (CMS) to encourage coordinated, high-quality care for Medicare patients.3 ACOs may be comprised of physicians, hospitals and other healthcare providers.3 If an ACO is able to deliver high-quality care and decrease healthcare costs for its patients, providers will receive part of that savings from Medicare. This is called shared savings.

A patient-centered medical home is not a physical location, but a delivery model that focuses on coordinated patient care.2 Care is typically coordinated through a primary care physician and is intended to decrease healthcare cost by preventing redundant services across multiple providers.

Value-based contracts have different methods to deliver payments to providers. As mentioned previously, ACOs function as a shared savings program that provides payment to providers if cost savings is achieved. These contracts may have one-or two-sided risk. One-sided risk means a contract only has upside or downside risk. Two-sided risk contracts contain both upside and downside risk for the provider. In upside risk contracts, providers receive payments when metrics are met, but are not penalized for not meeting metrics. Conversely, downside risk refers to contracts that require participants to pay if metrics are not met. Taking on additional risk typically means bigger rewards if shared savings is achieved.

Other value-based reimbursement may come as lump sum incentive payments or as uplift payments. Uplift refers to an increase in the amount of payment beyond what would have normally been paid and is typically a percentage.4

Even though some of the terminology may be different in ambulatory care, pharmacists across all areas of practice are actively working to improve quality of care and patient outcomes. By understanding value-based reimbursement, ambulatory care pharmacists can find ways to be indirectly reimbursed for the services they provide.

1. Glossary [Internet]. Baltimore (MD): U.S Centers for Medicare and Medicaid Services; [cited 2019 Oct. 3]. Available from:
2. What is value-based healthcare? [Internet]. NEJM Catalyst. 2017 Jan. 1 [cited 2019 Oct. 3]. Available from:
3. Accountable care organizations (ACOs) [Internet]. Baltimore (MD): Centers for Medicare and Medicaid Services; 2019 Oct. 2 [cited 2019 Oct. 3]. Available from:
4. The payment reform glossary [Internet]. Pittsburgh (PA): Center for Healthcare Quality & Payment Reform; [cited 2019 Oct. 3]. Available from:


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