Value-Based Care Success in 2025: Insights from the Field

As healthcare organizations chart their course for value-based care success, many are discovering that while the fundamental principles remain unchanged, the execution is becoming increasingly nuanced. To gain practical insights into effective strategies for 2025, we spoke with Jon Fowler, Executive Director of Key Physicians, an Independent Physician Association serving North Carolina’s Triangle region. Based on his extensive experience in value-based care implementation, here are Jon’s recommended priorities for success in 2025.

I think the fundamentals for achieving value-based care success haven’t changed. So when we talk about value based care, you really have to go and read the information that’s on cms.gov, it’s a great website. It has all kinds of valuable information, lessons learned, things that are going on through the Center for Medicare and Medicaid Innovation, the CMMI, which has a lot of great, valuable lessons.

If you boil it down, what it says is that you only really have to do three things to succeed in value based care. You have to do risk adjustment coding, you have to get 80 to 90% of your eligible Medicare patients in for their Annual Wellness Visits (AWVs), and you have to really focus on transitional care. With the diminished value of HCC codes in V28, which is what determines our Risk Adjust Factor (RAF) scores, I’m looking at two additional pieces, and those are site of service and care management.

To date, excelling in risk adjustment coding has been a huge part of value-based care success. The process is getting trickier, though, since the HCC codes are transitioning from v24 to v28. Historically, we’ve had to focus on things like diabetes, obesity, and hypertension with comorbidities like kidney disease or heart failure. It’s moving away from disease processes with comorbidities that we know are very expensive to very specific diagnosis of those comorbidities. There will be a greater emphasis on how diseases interact. For example, we used to get a risk adjustment for flagging someone as morbidly obese, and I think we’re going to continue getting that one. But there are new clinical questions we like, “Why are they morbidly obese? Why does morbid obesity potentially create complications or other disease processes in a patient?”

Also, CMS is removing some risk adjustment weight from the diagnoses we’ve focused on in the past. And so there’s going to be less overall risk adjustment available, associated with fewer risk adjusting codes, and it’s going to be more nuanced and different than the work that we’ve done up to this point. With these HCC changes, payers and aggregators in general see a negative impact on value based care programs and/or full risk arrangements like Medicare Advantage, but crafty payers and crafty single tax ID roll ups, so called aggregators, realize that risk adjustment  is still important. More and more, we’re looking at mental health and depression. We’re questioning whether someone’s depression is in a remissive status or in an active status, whether it’s a chronic depression or the first incidence of major depressive disorder. The specificity in all diagnoses are going to be even more important in V28.

AWVs are good because it’s like a care management encounter, but on steroids, with a physician instead of a care manager. An AWV is designed to highlight the concerns that people have and the things that keep them from engaging in the activities that improve their health outcome. So individual attention from a physician, nurse practitioner, physician assistant, or even and RN or LCSW, when you’re feeling well is a good thing. Meeting people where they are in their health journey produces better outcomes. I don’t know that correlation and causation are the same thing, but, from my experience and research, there’s definitely a strong correlation between AWVs and savings. If you can get into that 80 to 90 plus percentage of your Medicare patients having their AWV, you save money by default in your Advanced Payment Model.

Knowing where your patients are at any given time is crucial. When a patient is admitted to the hospital, you have to make sure that the hospital team has access to information about the patient. When the patient is discharged from the hospital, you’ve got to get them back into primary care with the discharge documentation, and you have to do it fast.

You also have to look at transitions of care more broadly, specifically when it comes to specialists. For example, a primary care physician may need a cardiologist to assess a patient and answer a few questions. As soon as that consultation is complete, the primary care team needs to engage the specialist to obtain the information and continue to follow the patient for ongoing management. Unless there’s a specific need for a specialist to follow a patient, the patient should be seen by their primary care physician. Having the primary care physician as the quarterback in a patient’s care is, by far, the most cost effective for the system as a whole and the patient.

Site of service has always been a strong play, but it’s not been deployed and executed well enough and broadly enough. And there’s a reason. It’s because the hospitals want to render as much service as possible in the hospital. . The hospitals are vastly overutilized, and we can do so much more on an outpatient basis or community level at a significantly lower cost.

For example, there was a story in the local news a few years ago about a person who was a former smoker and decided to take advantage of the free CT scan he was eligible for with his insurance. This person went to the hospital for his lung screening and it cost around $3,000 on his explanation of benefits. His wife went to an outpatient radiology center and got the same lung CT scan and it was $500. So site of service is a big place where I think we need to do more work there to make value continue to work.

Care management is somewhat controversial because there are care management programs throughout the country that aren’t effective in improving outcomes and reducing the total cost of care. And so what is it that makes effective care management? And what are the targets for care management? There’s a lot of different philosophies around that, but in general, I think you want to use technology or AI or humans, to look at patients and try to predict if they’re going to have a cost incident in the next six to 18 months. Those patients, and patients with a lot of transitions of care are your care management targets. Having patients enrolled in Medicare’s chronic care management program is good, but not necessarily cost effective for all patients. There are some patients, for example, a patient with diabetes and end stage kidney disease who has an unhealthy lifestyle. This patient certainly meets the criteria to be in CCM, but there’s not a lot we can do to change this particular patient’s outcome or spend until they are ready to make significant changes. We’re already getting the biggest bang out of care management by working aggressively on transitions of care like we talked about earlier. Remember, that’s one of the three core things we’re working on – RAF scores, AWVs, and transitional care. And we can be more cost effective with transitional care by not employing higher cost care managers. It doesn’t have to be an RN or a medical assistant (MA). Transitions of care are about touch points and coordination, which can be done by front office staff.

So, the bottom line from my perspective is we need to be smart about care management and how and with whom we deploy it. The focus really needs to be on mitigating rising risk. For example, a geriatric patient who has had a fall. Before they fall again, get them into care management. Send a care manager to their home to complete a comprehensive fall risk assessment. Or for CHF patients, consider using remote patient monitoring to alert you if a weight gain threshold is crossed. These are affectable healthcare costs. If care management has the right goals and is properly aligned, it can have a huge impact. It’s not just about spending 20 minutes with each patient every month or an hour or an hour and a half, or whatever it is, in the traditional sense of care management and fee for service. It’s about finding those people who you can affect and working closely with them with a high number of touch points and coordination.

I’d say improperly aligned incentives. Think about it. Since hospital-employed physicians are paid for RVUs and productivity, there’s an incentive for them to see 8-10 patients an hour and refer every one of them to hospital-owned specialists and hospital-owned labs and diagnostics. There’s an incentive for providers participating in shared savings contracts to upcode RAF scores to receive more cash for their reserve. And there’s incentives for patients. For example, some patients may have a flat-fee co-pay of $150 – $300 for an ER visit. Instead of going for a diagnostic test at an outpatient lab or radiology center and paying a 20% co-pay, it’s less expensive for them to go to the ER and pay a co-pay for all their tests and consultation. It’s a real conundrum that the industry is facing right now. Pharmaceutical companies, PBMs, payers, hospitals, and private equity are pricing and spending the healthcare systems to death. A family premium is $25k per year now! It would take a long time for a family to use $25k worth of primary care services in most cases.

As healthcare organizations prepare for 2025, success in value-based care will require mastery of core fundamentals while adapting to new challenges. Whether it’s navigating the transition to HCC v28, optimizing site of service decisions, or implementing targeted care management programs, organizations must remain agile. However, the greatest challenge lies not in the strategies themselves but in overcoming systemic misaligned incentives across the healthcare ecosystem. Those who can effectively balance these competing demands while maintaining focus on high-quality, cost-effective care delivery will be best positioned for success in the value-based care landscape of 2025 and beyond.

Jonathan Fowler has 19 years’ experience serving independent, value-focused primary care practices. He has delivered millions in shared savings and incentive payments on top of consistent year-over-year revenue growth of 40-50% per year. For the last 2 years, Jon has been executing the Key Physicians strategy to protect and empower independent primary care through service to 370 clinician members at 70 service locations. In his first year alone, Jon reduced association member expenses by more than $1M, while increasing revenue through managed care contracting with multiple payers. Before that, while changing hats between operations, IT, contracting, recruiting, facilities and revenue cycle management, Jon executed an independent primary care growth story that saw a 20 fold increase in providers, revenue, and footprint, while maintaining positive cash flow throughout. He also generated more than 4x revenue growth through a single TIN aggregation project in a single year. Jon was a pioneer in Patient Centered Medical Home (PCMH) recognition, value-based contracting, and cloud based EHR. He has also developed growth in surgical suite productivity, efficiency, and provider satisfaction, in the specialty hospital setting at the University of North Carolina (UNC) Children’s Hospital. Currently, he’s working on primary care centric employer health plan design and implementation.

Jonathan has a BA in Peace, War, and Defense from the UNC-Chapel Hill, and graduated from the North Carolina School of Science and Mathematics.