The ABCs of VBC: Understanding the Terminology of Value-Based Care 

The ABCs of VBC: Understanding the Terminology of Value-Based Care 

The healthcare industry is notorious for using abbreviations, acronyms, and technical terms that can leave patients and even professionals confused and uncertain.

While Value-Based Care (VBC) is not a new concept, it is rapidly becoming more popular as the industry continues to reshape how care is delivered, measured, and made more accessible to more people, especially in communities that have historically been underserved.

While VBC has some similarities to pay-for-performance, it strikes a more nuanced and sustainable balance between more efficient operations, cost-effectiveness, and the health and wellbeing of patients. By remaining patient-centered, focusing on early detection and prevention, and by embracing holistic care which takes into consideration mental and physical health, VBC is now proven to deliver positive outcomes for providers, payers, and patients.

Put simply, VBC is a healthcare delivery model in which providers are paid based on patient health outcomes, which uses data and analytics to simplify the measurement health outcomes against the cost of delivering those outcomes.

VBC at its best is harmonized:

  • Patients benefit with lower costs and better outcomes.
  • Providers benefit with better patient experiences and increased efficiency. 
  • Payers benefit with greater visibility that enables them to control costs and lower financial risks.
  • Hospitals and medical centers benefit with a clearer alignment of expenses and outcomes reducing their risks. 
  • Society benefits when more people are fundamentally healthier and more productive, and overall spending is sustainably reduced.

Understanding the Lingua Franca of VBC

The following is a list of terms and acronyms those seeking to understand and practice VBC may find useful, presented in two sets – General Industry, followed by Clinical Services.

General Industry  


Affordable Care Act

Comprehensive health care reform law enacted in March 2010, addressing health insurance coverage, health care costs, and preventive care.


Accountable Care Organization

Groups of doctors, hospitals, and other health care providers, who come together voluntarily to give coordinated high-quality care to their Medicare patients.


Alternative Payment Model

Payment approach that gives added incentive payments to provide high-quality and cost-efficient care.


Assignment of the results of a measure to an individual, group, or organization responsible for the decisions, costs, and outcomes.


Clinically Integrated Network

Selective partnership of physicians collaborating with hospitals to deliver evidence-based care, improve quality, efficiency, and coordination of care, and demonstrate value to the market.


Department of Health & Human Services

Department created to protect the health of Americans and provide essential human services.


Fee for Service

Payment model where services are unbundled and paid for individually.


Federally Qualified Health Center

Federally funded health centers that focus on serving underserved populations or areas.


Health Insurance Portability and Accountability Act of 1996

Federal law that ensures protection of sensitive patient health information.


Health Maintenance Organization

One of four types of Medicare Advantage plans. An HMO generally requires beneficiary to use in-network providers.


Medicare Advantage Organization

Public or private entity organized and licensed by CMS as a risk-bearing entity.


Pay for Performance

The payment model in which providers are reimbursed based upon the quality of care provided.


Per Beneficiary/Member Per Month

Unit of measurement, usually in dollars, to indicate amount per patient.


Primary Care Provider

Health care practitioner who helps a patient access a range of health care services.


Private Fee-for-Service Medicare Advantage plan offered by a private insurance company.


Physician Fee Schedule CMS rule that updates payment policies, payment rates, and other provisions for services.


Protected Health Information

Relates to the past, present, or future condition of an individual. Includes demographic data, medical histories, test results, and other information used to identify a patient.


Preferred Provider Organization

One of four types of Medicare Advantage plan. PPOs allow a person the flexibility of choosing either in- or out-of-network providers.


Shared Savings

Payment strategy that offers incentives for providers to reduce health care spending for a defined patient population by offering them a percentage of any net savings realized.


Consumer Assessment of Healthcare Providers and Systems

Survey tool used to ask patients about their health care experiences.


Clinical Quality Measure

Tools that help measure and track the quality of health care services.


Electronic Clinical Quality Measures

Uses data electronically extracted from EHRs to measure the quality of health care provided.


Healthcare Effectiveness Data and Information Set

Tool used to measure performance on important dimensions of care and service.


Merit-Based Incentive Payment System

Program that determines Medicare fee for service payment adjustments. 


National Committee for Quality Assurance

Non-profit dedicated to improving health care quality. Maintains HEDIS score and researches quality measures.


Per Member Per Month/Year

Refers to the dollar amount paid each month for everyone enrolled in a managed care plan, often referred to as capitation.


Performance Year

12-month period beginning during the agreement period, unless otherwise specified or noted in the contract.


Readmission Rate

Percentage of admitted patients who return to the hospital within 7 days of discharge.


Web Interface Quality Measure

Clinical quality measures reported by an ACO to Medicare based on the patient population.

Clinical Services


Ambulatory Surgical Center

Health care facility providing same-day surgical care.


Ambulatory Care Sensitive Conditions

Conditions for which hospital admission could be prevented by timely and effective outpatient care.


Advanced Practice Clinician

Includes advanced practice registered nurses and physician assistants.


Advanced Practice Provider

A provider who is not a physician but performs medical activities typically performed by a physician. Most commonly a nurse practitioner or physician assistant.


Annual Wellness Visit

Medicare covers the AWV, a preventive wellness visit.


Chronic Care Management

Non-face-to-face services provided to Medicare beneficiaries who have multiple (two or more) significant chronic conditions.


Drug Therapy Problems Clinical problems related to the use of medications.


Electronic Health Record

Electronic database that stores confidential patient information.


Electronic Medical Record

Digital version of a patient’s chart.


Skilled Nursing Facility

In-patient rehabilitation and medical treatment center staffed with trained medical professions.


Transitional Care Management

Services that address the hand-off period between inpatient and community settings.


Transitions of Care

Process of transferring a patient’s care from one setting or level of care to another.


Social Determinants of Health

Conditions in the places where people are born, live, learn, and work that affect a wide range of health, functioning, and quality-of-life outcomes and risks.


History of Present Illness

Description of development of patient’s present illness.


Long Term Care Services to meet the needs of people with chronic illness or disability who cannot care for themselves for long periods.


Clinical Documentation Improvement

Process of improving health care records to ensure improved patient outcomes, data quality, and accurate reimbursement.


Hierarchical Condition Category

Medical codes linked to specific clinical diagnoses.


International Classification of Diseases

Medical classification list by the World Health Organization.

RADV Audits

Risk Adjustment Data Validation Audits

Process of verifying diagnosis codes submitted for payment with the support of medical record documentation.


Risk Adjustment Factor

Medical risk adjustment model used by CMS to represent a patient’s health status.


Centers for Medicare and Medicaid Services

Federal agency responsible for administering Medicare and overseeing state administration of Medicaid.


Center for Medicare & Medicaid Innovation

The innovation center was created for the purpose of testing “innovative payment and service delivery models to reduce program expenditures…while preserving or enhancing the quality of care.”


Global and Professional Direct Contracting Model

Set of two voluntary risk-sharing options aimed at reducing expenditures and preserving quality of care for beneficiaries in Medicare FFS.


Medicare Advantage

Type of Medicare health plan offered by a private company that contracts with Medicare to provide Part A and B benefits.

MACRA Medicare Access and CHIP Reauthorization Act of 2015

Changed how Medicare pays physicians who provide care to Medicare beneficiaries.


Medicare Beneficiary Identifier

Every person with traditional Medicare is assigned an MBI.


Medical Benefit Ratio Medical Loss Ratio Medical Expense Ratio

Amount of premium revenue spent on medical care and services.


Medicare Improvements for Patients and Providers Act of 2008

Supports states through grants to provide outreach and assistance to eligible Medicare beneficiaries to apply for benefits programs that help lower cost of their premiums and deductibles.


Merit-Based Incentive Payment System

One option of the MACRA Quality Payment Program. Comprised of quality, cost, improvement activities, and advanced care information.


Medicare Spending per Beneficiary

Assesses Medicare Part A and Part B payments for services provided to a Medicare beneficiary during a spending-per-beneficiary episode. Evaluates hospitals’ efficiency relative to the efficiency of the median hospital.


Medicare Shared Savings Program

Voluntary program that encourages doctors, hospitals, and other health care providers to come together as an ACO to give coordinated, high-quality care to their Medicare beneficiaries.


NextGen or Next Generation

Initiative for ACOs that were experienced in coordinating care for Medicare populations. It allowed these provider groups to assume higher levels of financial risk and reward.


Clinical Decision Support

A health IT system that is designed to provide physicians with clinical decision-making tasks.


Certified Electronic Health Record Technology

EHR that’s demonstrated the tech capability, functionality, and security requirements required by DHHS.


Health Information Exchange

Use of technology to manage current and historical information related to a person’s care.


Health Information Technology

The exchange of health information electronically, with the goal of improving quality of care by reducing costs, errors, and inefficiency.

Healthcare is becoming increasingly sophisticated and complex, and the economics of providing healthcare is continuing to evolve in very positive ways. 

At Arkos Health, we are all about finding intelligent ways to simplify the experience of all three participating groups: patients, providers, and payers. 

We deliver patient-centered services and personalized programs through proprietary technology combined with clinical programs and social services for a seamless transition to value-based care.

We develop value-based strategies and transform clinical, financial, and operational models through digital innovation combined with a human touch.

Our partnership approach, enabled by end-to-end clinical and administrative programs, fuels the success of payer, provider, and patient partners.

In the ever-changing healthcare industry, the road to value-based care is increasingly necessary yet complex. Every step requires close coordination, and many payers and providers lack the resources, appetite, and time to shift away from the status quo.

Arkos Health is a strategic partner empowering payers to transform their provider networks, bringing value-based care to their members, and making the transition to value-based care easy for providers.


BY Arkos Insights
Published July 14, 2023 2:15PM

About the author

Arkos Insights

Introducing Arkos Insights: Your go-to resource for value-based care news and views. Explore our curated content to empower your decision-making and drive positive healthcare delivery changes. Stay informed with up-to-date news, insightful articles, and expert perspectives on the evolving value-based care industry. Join us on the journey to a patient-centric, quality-driven future.

You might also want to read

Nurturing Community Health at Arkos Health’s Sunset Supper Event

Nurturing Community Health at Arkos Health’s Sunset Supper Event

News May 31, 2024

At Arkos Health, we believe in the power of community and the importance of providing health care...

Read Now
We are Honored to Support the American Heart Associations Mission to Reach Hispanic Communities with Education on Preventing Strokes

We are Honored to Support the American Heart Associations Mission to Reach Hispanic Communities with Education on Preventing Strokes

News May 17, 2024

This year, the team at Arkos is working in collaboration with The American Heart Association toad...

Read Now
The Difference Nurses Make: Celebrating Healthcare Heroes This May

The Difference Nurses Make: Celebrating Healthcare Heroes This May

News May 10, 2024

National Nurses Week takes place this year from May 6–12. The week is uniquely bookended with May...

Read Now