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What is value-based care?

Also called: Value-Based Care (VBC) Transition, VBC, value-based payment

Value-based care is a payment approach that rewards healthcare providers for the quality and cost of care rather than only the number of services they deliver, as in traditional fee-for-service.

By John Britton, VP of Marketing, MedicalProspects · Updated November 4, 2026 · Healthcare Organizations

Why it matters for healthcare sales and marketing

Under value-based contracts, providers gain from keeping patients healthy and avoiding unnecessary costs. That raises demand for care coordination, analytics, remote monitoring and preventive programs, and changes how vendors should frame their value.

How it works

  • Fee-for-service: paid per service, regardless of outcome.
  • Shared savings: providers share in savings when total cost falls and quality targets are met, as in ACOs.
  • Bundled payments: one payment covers an episode of care, such as a joint replacement.
  • Capitation: a fixed amount per patient per period, with the provider taking on cost risk.

Many organizations operate under a mix of fee-for-service and value-based contracts.

Spectrum of payment models from fee-for-service to shared savings, bundled payments and capitation, with increasing provider risk.
Payment models range from fee-for-service to capitation, with providers taking on more risk along the way.

Example

Illustrative scenario. A company selling a post-discharge follow-up service focuses on health systems with bundled payment and shared savings contracts, where fewer readmissions directly improve the organization's financial results.

Common mistakes

  • Assuming everyone is fully value-based. Most organizations mix payment models.
  • Pitching volume to value-based buyers. More visits isn't a benefit under risk contracts.
  • Ignoring quality measures. Value-based payment depends on them.

Related terms

  • Accountable Care Organization (ACO)An accountable care organization (ACO) is a group of doctors, hospitals and other providers that agree to be jointly accountable for the cost and quality of care for a defined group of patients, sharing in savings when they meet quality and spending targets.
  • MIPS and MACRAMACRA is the 2015 U.S. law that created Medicare's Quality Payment Program. Its main track, the Merit-based Incentive Payment System (MIPS), adjusts Medicare Part B payments to eligible clinicians up or down based on their performance on quality, cost, improvement activities and interoperability.
  • HEDIS and CMS Star RatingsHEDIS is a widely used set of health plan performance measures maintained by the National Committee for Quality Assurance (NCQA). CMS Star Ratings score Medicare Advantage and Part D plans from one to five stars, partly using HEDIS results, and affect plans' bonus payments and enrollment.
  • Payer vs ProviderIn healthcare, payers pay for care and providers deliver it. Payers include commercial health plans, Medicare, Medicaid and self-insured employers; providers include hospitals, physician practices, clinics and other care settings.

Put it to work

Sources

  1. CMS Innovation Center, CMS

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