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Published on: Nov 06, 2021
2 minute read
By: Second Medic Expert

What Is Value-based Care?

Value-based care is a payment system that incentivizes quality and cost outcomes, rather than merely rewarding procedures or volume of care. Value-based care emphasizes patient health outcomes over speed and quantity of services, with incentives to improve both the value and the economics of healthcare delivery.

Value-Based Care (VBC) is an American healthcare payment model in which hospitals, doctors, and other providers are paid based on patient care quality metrics. Value-based care has five core components to create successful systems that serve patients better at a lower cost. First, it includes increasing accessibility of information about the costs and quality of treatment options through an easy-to-navigate "medical marketplace." Second, providers are reimbursed for wellness work critical for detecting disease earlier in its course when treatment often works best -- so long as they accept shared accountability in achieving outcomes. Value-based care shifts incentives on payment from volume to value. Value is the metric on which you are graded, not volume.

Value-based care is "an approach to health care that emphasizes measurable outcomes, coordinated care, and shared accountability." The idea is that the cost of healthcare should reflect the value it provides.

Value-based care includes incentivizing patients via alternative payment models (APMs) to influence behaviors that lead to patient outcomes. The incentives are not provided directly for the desired behavior but instead are designed to promote the best possible outcomes, which then drives financial savings for all parties involved.

Value-based care or “shared risk” arrangements between healthcare providers have been shown to be much more cost-effective than traditional fee-for-service approaches because they shift some of the financial risks onto providers and away from consumers. Many providers are now seeing value in adopting these new contracts as many stakeholders prefer its approach of shared responsibility for addressing higher costs before passing on the burden along with a downline supplier chain. Value-based care is a method that fuses health care with economics to optimize measurable clinical and economic outcomes while supporting the patient's goals.

Value-based healthcare generates increased value while decreasing costs, an updated approach using a broader set of quality and cost metrics to manage health care decisions. Physicians are compensated not just for providing or ordering a service, but rather on providing improved health outcomes.

Value-based care is the new science behind healthcare. It's about measuring outcomes, not procedures. And it's more than just following guidelines or cutting costs-it means substantially improving quality and lowering cost for about 30% of the population who are both out of control on cost, and “out of care” because they're high risk (the disabled, sick young adults). VBC requires systematic redefinition of patients' goals for care; broader use of cheaper treatments; using results to do what has never been done before--measurement; looking at four major objectives; reducing cost without reducing quality (e.g., by prevention); streamlining delivery through primary rather than specialized providers; making prevention one objective.

Value-Based Care is a strategy that incentivizes healthcare providers to provide the best care possible while reducing unnecessary and costly treatments. Under traditional fee-for-service models, providers get paid for each test they perform and every procedure they perform -- so their incentives are not focused on delivering the most appropriate treatment at the right time. Under value-based care, providers get paid if their patients' health improves - no matter whether hospitals, doctors' offices, or other settings where patients receive care.

Value-Based Care has been proven to reduce readmissions and eliminate unnecessary hospitalizations by 15%. It also reduces costs by 20?cause it's all about targeting what really matters -- service delivery with measurable outcomes for consumers of healthcare services.

Value-based care is a model of healthcare payment in which a clinician does not get paid for the number or type of procedures performed, but rather based on how well they manage a patients' disease. The goal is to incentivize excellent, high-value care by rewarding quality and eliminating insurers' financial incentives to encourage overtesting and overtreatment.

Value-based care is a new term that can be seen as a version of population health management. Value-based care aims to align the incentives of providers and payers with those who bear the most cost from healthcare, which traditionally have been patients. In other words, value-based care is designed for high-level profit by encouraging preventive practices and sharing resources with community members. The goal is to make a profit off a healthy person rather than unhealthy people seeking treatment for medical emergencies.

It's very much related to prevention and seeks not to reward investments in unnecessary treatments but instead reward solid preventative health practices like diet, exercise, etc.

Read Blog

Lower Premiums for Health Score Achievers: How Preventive Wellness Rewards Healthy Choices

Healthcare costs are rising steadily across India, driven largely by lifestyle-related diseases and late-stage diagnosis. In response, organisations and insurers are shifting focus from reactive treatment to prevention. One of the most effective approaches emerging from this shift is offering lower premiums for health score achievers.

This model aligns personal health responsibility with financial incentives, creating a win–win situation for individuals, employers and insurers.

What Is a Health Score?

A health score is a composite indicator that reflects an individual’s overall health status.

It typically considers:

preventive health checkup results
lifestyle habits such as physical activity and sleep
key biomarkers like blood sugar, cholesterol and blood pressure
body composition indicators

The focus is on risk reduction, not perfection.

Why Health Score–Based Premiums Are Gaining Importance

According to NITI Aayog and EY-FICCI reports, preventive healthcare can reduce long-term medical costs by up to 30–40 percent.

Health score–linked premiums:

reward proactive behaviour
reduce claim frequency
encourage early detection

This shifts healthcare from illness management to health preservation.

The Preventive Healthcare Gap in India

NFHS-5 and ICMR data show:

many chronic diseases remain undiagnosed until advanced stages
preventive screenings are underutilised
lifestyle risks are increasing among working adults

Health score incentives help close this gap.

How Lower Premiums Motivate Behaviour Change

Financial Incentives Drive Consistency

When healthy habits are rewarded financially, individuals are more likely to:

attend regular screenings
improve diet and activity
monitor health metrics

Behaviour change becomes sustainable.

Focus on Improvement, Not Punishment

Modern health score models emphasise:

gradual improvement
personalised targets
achievable milestones

This avoids discouragement and promotes inclusion.

Benefits for Individuals

Reduced Insurance Costs

Lower premiums directly reduce out-of-pocket insurance expenses.

Better Health Awareness

Tracking health scores increases understanding of:

personal risk factors
lifestyle impact
preventive actions

Knowledge leads to better choices.

Early Disease Detection

Regular monitoring identifies:

prediabetes
early hypertension
lipid abnormalities

Early intervention prevents complications.

Benefits for Employers

Lower Healthcare Claims

Preventive health programs reduce:

hospitalisations
long-term treatment costs

This improves corporate insurance sustainability.

Improved Productivity

Healthier employees experience:

fewer sick days
better energy levels
improved focus

Wellbeing translates to performance.

Stronger Wellness Culture

Reward-based programs signal genuine employer commitment to health.

Benefits for Insurers

Health score–based premiums help insurers:

manage risk more accurately
reduce high-cost claims
promote preventive engagement

This supports long-term viability of insurance models.

Role of Preventive Health Checkups

Preventive screenings form the backbone of health scoring.

They help track:

metabolic health
cardiovascular risk
nutritional deficiencies

NITI Aayog identifies screening as the most cost-effective health intervention.

Addressing Privacy and Fairness Concerns

Responsible programs ensure:

data confidentiality
voluntary participation
non-discriminatory design

Transparency builds trust and engagement.

Making Health Scores Inclusive

Inclusive programs:

adjust for age and baseline health
reward progress
offer support for high-risk individuals

Equity is essential for success.

Integration with Digital Health Platforms

Digital tools enable:

real-time health tracking
personalised insights
long-term trend monitoring

This improves engagement and accuracy.

Long-Term Impact on Public Health

Widespread adoption of health score incentives can:

reduce lifestyle disease burden
shift focus to prevention
improve population health outcomes

WHO supports incentive-based preventive health strategies globally.

Challenges and How to Overcome Them

Common challenges include:

low initial engagement
lack of awareness
resistance to change

Solutions involve education, simplicity and continuous support.

Why Lower Premiums Are More Effective Than Penalties

Positive reinforcement:

motivates sustained behaviour change
reduces anxiety
builds trust

Punitive models often discourage participation.

Future of Health Score–Linked Premiums in India

As digital health infrastructure expands, health score–based models are expected to:

become more personalised
integrate AI-driven insights
support nationwide preventive strategies

This marks a shift toward value-based healthcare.

Conclusion

Lower premiums for health score achievers represent a powerful shift toward preventive, value-driven healthcare. By rewarding healthy behaviours, early screening and consistent wellness practices, these programs benefit individuals, employers and insurers alike. Financial incentives aligned with health outcomes encourage long-term behaviour change, reduce disease burden and create a sustainable healthcare ecosystem. In a country facing rising lifestyle diseases, health score–linked premiums are not just an incentive—they are a strategic investment in healthier futures.

References

World Health Organization (WHO) – Preventive Healthcare and Incentive Models
Indian Council of Medical Research (ICMR) – Lifestyle Disease and Prevention
National Family Health Survey (NFHS-5) – Adult Health Indicators
NITI Aayog – Preventive Healthcare and Insurance Reform Reports
EY-FICCI – Corporate Wellness and Healthcare Cost Studies

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