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Value-Based Care vs. Fee-for-Service

In this article, we will explore behavioral healthcare definitions and compare and contrast value-based care (VBC) vs. fee-for-service models. While the fee-for-service model is more traditional, the newer value-based care model has been gaining popularity in recent years. Let’s discuss the advantages and disadvantages of each.


Value-based care and fee-for-service are two kinds of healthcare reimbursement models for the pricing of healthcare services. Historically, value-based care has been harder to implement in behavioral healthcare due to difficulty with measuring outcomes—it isn’t as simple as physical health. But, lately, with the help of technology, this has been changing. This has had an impact on the behavioral health industry, as value-based care affords opportunities to providers to streamline their practices and to be rewarded for improving their quality of care, but also requires diligence and good recordkeeping.

Value-Based Care vs. Fee-for-Service: Understanding the Key Differences

Fee-for-service is based on services rendered, such as therapy sessions. In a fee-for-service model, each therapy session might be billed to the payor at a fixed rate. In contrast, value-based care models integrate outcome measurement directly into the contract between the provider and payor, with the provider being paid more money based on the effectiveness of treatment. This has been becoming a more popular mode of healthcare delivery, as it can reduce costs for insurance companies and other payors while rewarding excellent quality of care.

Some common outcome measurements in value-based care payment structures for behavioral health services include improvements in symptoms, quicker treatment success in fewer sessions, and fewer behavioral health hospitalizations. This has the advantage of aligning incentives for the provider with positive outcomes for the patient. But, a disadvantage is that it requires more data collection and ongoing reporting to the payor, whereas fee-for-service is simpler. Neither model is perfect, but the value-based care model presents interesting opportunities for providers and payors when coupled with electronic health record (EHR) software that streamlines workflows for VBC, such as Valant’s software.

An important note: In this context, “fee-for-service” should not be confused with how behavioral health practitioners are paid. Some businesses choose to pay practitioners a salary (often, with a minimum billable hours or similar requirement), while others choose to pay them based on services rendered, sometimes as independent contractors rather than employees (if legally appropriate). But in this article, we are talking about the differences at the broader level of a behavioral health practice as a whole.

Quality of Care: How Value-Based Care and Fee-for-Service Models Compare

Providers are ideally incentivized to provide better quality of care in value-based care models, because it is tied to their pay. Some have described value-based care as “the future” of behavioral health. For instance, if a patient’s symptoms are equivalently improved in 10 therapy sessions instead of the “normal” 20 sessions, under a value-based care model the provider might be paid based on that outcome (effectively, doubling their hourly rate).

Fee-for-service models basically assume that quantity is quality, so if more medical treatments are performed, the provider is paid more. This can be a conflict of interest that leads to treatment without improving quality of care. At the same time, value-based care can provide incentives to rush treatment, although this is remedied with measurement-based care, depending on the objectivity of the measurements. For example, patient symptoms are often measured by patient self-report, which ideally is objective, but could be influenced if the patient misreports improvement (or, lack of improvement).

Out-of-Pocket Costs: How Value-Based Care and Fee-for-Service Models Affect Patients

Some providers find that they are underpaid in an insurance-based practice, as insurance reimbursement rates are often relatively low in the typical fee-for-service model. With support from an EHR that streamlines collecting and reporting on outcomes data, value-based care contracts are a great option to increase revenues while continuing to accept insurance. This also reduces patients’ out-of-pocket costs. Quality of care is measured with more sophistication when you transition to a value-based care model. This results in financial rewards for excelling as a provider, helps patients succeed, and reduces attrition from lengthy treatment plans patients are less likely to complete.

On the other hand, some providers require patients self-pay in lieu of billing insurance. A fee-for-service model is common here and providers strive to convey that their behavioral health services are worth the out-of-pocket cost. Still others, use a blended model including a mix of self-pay and insurance-paid clients. In either case, it is possible and sometimes easier for these providers to transition to a value-based care model, as self-pay clients are interested in paying more for superior quality of care, too. Of course, one must be wary of relying on self-report measures for treatment effectiveness in such cases.

Behavioral Health Services: Which Model is the Best Fit?

Although both models have their strengths and weaknesses, providers and payors are increasingly seeking the value-based care model as a better fit in many instances. This follows trends in physical health practices where outcomes were historically easier to measure. With the help of technology, as well as research-supported measurement tools, it is now easier than ever to implement a value-based care model in behavioral health. Software like Valant can facilitate value-based care for providers, patients, and payors. This opens new opportunities for all parties involved.

One thing to keep in mind is that you do not have to transition to a value-based care practice all at once. It can be done gradually, one payor at a time, as you convince payors of the reasons for the change and learn from the process of implementing it. To learn more about transitioning to VBC, check out this whitepaper. You can also listen to experts discuss negotiating for better reimbursement in this webinar.


The value-based care model contrasts with the fee-for-service model by financially rewarding providers for positive patient quality-of-care outcomes, whereas fee-for-service typically is paid simply on the quantity of care delivered. In behavioral health, value-based care has historically presented problems pertaining to the ease and subjectivity of measurement; however, in recent years these problems have been alleviated through technological innovation and advancements in therapeutic and methodological research. This presents a golden opportunity for payors and providers to change their healthcare reimbursement models toward value-based care.

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