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The concept of value-based care and reimbursement has been around for many years. What that concept means in practice, however, has varied a great deal.
Dr. Sam Reynolds, a family medicine clinician, has been deeply involved with what value-based care means at Allegheny Health Network since joining as chief quality officer in 2015. Now serving as medical director, Risk and Value-Based Care, he also served as medical director, Quality, for AHN’s Clinically Integrated Network. His expertise in population health, often linked with value-based care, spans his entire career. Along with leaders like Jim Benedict, president, AHN, and Dr. Bruce Meyer, president, Western PA Market, Dr. Reynolds has been a front-line leader in the transition to value-based care, including a broad shared risk model AHN and Highmark Inc. launched in 2024.
In our interview, Dr. Reynolds discusses the importance of close payer-provider collaboration, moving beyond payment structure to achieve a fundamental shift in health care delivery, impacts and benefits for clinicians and patients, and more.
Caitlan Rossi: Why is value-based care important, and how are we uniquely positioned to succeed in advancing value-based care?
Dr. Sam Reynolds: Health care as we know it is on an unsustainable path with its rising costs. Policymakers around the country have looked at how we can change the course of health care in the U.S. and concluded that continuing on a fee-for-service chassis is not the answer. The only way to right the ship is by shifting focus to population health and value-based reimbursement.
However, few health systems are positioned to accelerate on the path to a different payment model. AHN and Highmark Inc. in western Pennsylvania are better positioned than most for several reasons. First, having a large market share has allowed AHN to work under a different financial arrangement with Highmark, moving away from just managing sick patients and toward population health. The new shared risk payment model provides strong incentive to focus on prevention and what we often refer to as delivering care upstream — that is, upstream from hospital or emergency room visits, so we can affect change by coordinating care and delivering a better outcome sooner and in a lower cost setting.
As part of a blended payer-provider organization, we combine the best of both worlds to create a remarkable experience for the people we serve, and especially what we call our shared patients — people with Highmark Inc. health coverage who choose AHN for their care. This blended approach creates the opportunity to streamline certain administrative processes, such as prior authorizations and scheduling appointments, which can be done more efficiently when we work closely with the payer.
In our case, payer and provider truly have the same goals, which we describe through the quintuple aim: joy in practice, better health outcomes, health equity, lower costs, and improved population health. We have an agreement in which both payer and provider share the responsibility to deliver a remarkable and valuable experience to each patient, and we’re all working collaboratively to keep the patient healthy and help them accomplish their personal health goals.
Caitlan Rossi: Why is there a stronger push to transition to value-based care now, and why did AHN and Highmark Inc. take the additional step to broad shared risk in 2024?
Dr. Sam Reynolds: Health systems have been built on a fee-for-service chassis basically since the early 1900s. Hospitals, health systems, and provider groups have functioned under a volume model: the goal is to achieve a certain volume to maintain infrastructure. Paying your bills, keeping the lights on, keeping people employed — all of that has been dependent on the health system delivering and billing for a certain volume of care. So you can see why there has not been a strong push to reduce the volume of care. There were certainly pockets of clinicians within larger health systems that focused on wellness and prevention, but you didn’t typically see a system-wide function or investment in that area because it wasn’t reimbursed in the past.
On the other hand, in servicing a population, a health plan has a strong interest in keeping people healthy and supporting them on their health care journeys. So again, we come back to the advantages of our blended organization. We looked at this together, we made decisions together, and we think the time is now right for a health system such as AHN to be bold and innovative and think beyond the historical way health systems have done things. What we’re doing aligns with payment reform and health care innovation in other areas of the country, and we believe we have an opportunity to leapfrog, take learnings from others, and really accelerate our rate of change.
While we have years of experience at AHN working in value-based reimbursement, going into a global budget type model is a big step for us. We believe that our experience over the past seven years has put us in a position to be successful: We have the right leadership, we have physician engagement, we have a governance model to make sure activities are clinician-led and right for patients. We are always cognizant that we are not rationing care. We are really excited about where we are headed. We have a track record of showing we are a lower-cost provider of health care in western PA, and we couple that with delivering a remarkable patient experience, so our history sets us up to be successful as we take the next step.
Caitlan Rossi: How is value-based care different from a more traditional model of health care?
Dr. Sam Reynolds: If we think about dollars spent on health care, each year there is a projection on what the rate of spend will be. Increased health care spending is in part related to the cost of goods and services going up — just like in any other sector of the economy. But another part of increased spending is related to inefficiency. A patient may receive a test that wasn’t indicated for their condition, or a test they’ve already had, but the clinician wasn’t aware it was a duplicate. There are patients who unfortunately don’t know where to go or who to call when they are experiencing an urgent need, and instead of being able to help that patient in their home setting, they may end up in the ER. This inefficient care delivery model often leads to downstream costs.
Value-based care is the idea of working back upstream. It takes us back in time to say, where did things go wrong? We may discover that the patient didn’t have the right support between doctor visits. Maybe the patient couldn’t afford their medication, or they didn’t have transportation to their appointment and therefore their needs could not be addressed. Value-based care is about identifying where we can intervene earlier so we can prevent the crisis from beginning in the first place.
Caitlan Rossi: How does AHN’s value-based model of care work?
Dr. Sam Reynolds: It’s what we call a virtual budget. We continue to bill fee for service as we normally would, but there is a budgeted amount that has been determined based on projections around cost (with some slight adjustments for expected improvement in our care for patients). Our virtual bank account has all the anticipated dollars that would be spent in 2024 for the care of that population. Throughout the year, fee for service billing draws upon that virtual bank account. If there are dollars that remain at the end of the year, these are in essence the “savings” generated based on the better care that was provided to patients. A portion of those savings are distributed back to the provider, a portion gets distributed back to the health plan, and for employers that are self-funded, a portion goes back to the employer group.
Volume remains important, at least in a historical fee-for-service model. But if we think about our “shared patient” population, care is no longer about volume — it’s about wellness and prevention, condition management and coordination of care, and a continuous healing relationship with our patients rather than episodic and fragmented care. In creating that value experience for patients in the Highmark-specific population, there’s no real additional revenue generated by increased volume. Instead, the virtual budget allows the health system to begin to develop a different care model that is more population focused.
Patients are still going to have crises, and we will continue to do our best to care for people in a crisis. But when those events occur, the goal is to also create a meaningful patient experience that is highly coordinated, and to transition back to their home environment with the type of support they need to better manage their condition.
Caitlan Rossi: Can you talk a bit more about how this model benefits AHN?
Dr. Sam Reynolds: Value-based care allows us to become more innovative in how we care for patients. In the past, systems and programs were funded based on their ability to be supported by direct revenue. Take, for example, a cardiac program. You might have outside funding from research or donations, but generally, only programs that generate revenue continue to receive funding. That means programs that don’t generate direct revenue may not see the funding they need to support patients.
That tension can come into focus when we think about wellness and prevention. While many people have a wellness and prevention plan as part of their health insurance, and it may cover screenings and annual wellness visits, it doesn’t necessarily encourage the health system to be coordinated in its care or put emphasis on providing services known to extend a person’s quality of life, such as staying up to date on vaccinations. The type of contract we have with Highmark Inc. begins to incentivize a focus on services that in the past may not have been funded directly.
The way we succeed in the future is by creating a more continuous connection with patients, offering them the ability to communicate with their provider asynchronously, meaning we don’t have to be online at the same time to communicate. There are now virtual ways we can connect. There are resources we can draw upon to support patients as part of a care team — a care manager, a social worker, a pharmacist, a behavioral health specialist — across their health journey. Instead of depending on direct revenue, we can fund all of that with the dollars, or the savings, generated through our value-based arrangement.
Caitlan Rossi: How does this value-based arrangement change the way we work?
Dr. Sam Reynolds: For many clinicians, it really doesn’t change what we do, because I honestly believe most clinicians try to do the right thing for patients. But often there have been barriers to care being delivered, or roadblocks between clinician encounters that get in the way of patients experiencing their best health. We want to surround that doctor-patient relationship with the tools and team support to help carry the patient along their health journey, and to follow the plan that the clinician and patient develop together.
But there are areas where we encourage our clinicians to begin to think more innovatively. For example, what resources can be brought to bear to support a patient? That may not have been top of mind for physicians in the past. The clinician is in the best position to understand what the patient needs and to connect the patient with resources, such as recognizing that the patient has access to a care manager, or that we can place a referral for behavioral health or social work support. So that is one of our asks: for clinicians to think more about what tools and support we can provide to assist patients.
We are also asking clinicians to be rigorously evidence-based in their approach. Sometimes there is a prevailing approach to a specific condition that people think is “standard of care” but it may not necessarily be based on a body of evidence. When we know in certain circumstances that there is a clear pathway that should be followed to treat a condition, we encourage our clinicians to follow those evidence-based clinical pathways to reduce the variation in care. Oftentimes when we don’t follow the evidence, unnecessary care can happen, which leads to an increase in the total cost of care. If we do what’s in the guidelines, the patient is more likely to experience a better outcome.
Caitlan Rossi: Let’s talk about the measurements in a value-based arrangement. What are some of the metrics for AHN?
Dr. Sam Reynolds: ED utilization, especially preventable ED utilization, is one area we focus on. For most patients, going to the emergency room is a decision of necessity. They go to the ER because they don’t have an answer to symptoms they’re experiencing, and based on the time of day or location, that may be the only option they see. Once they’ve been evaluated in the ER, in retrospect, we often see that their condition could have been dealt with in another location closer to their home, or even virtually, if we had just been able to create the appropriate connection with the provider. Our goal is to start working upstream around conditions that often end up in the ER, and ask what we can do to prevent those. ED utilization is one metric that helps us measure how we are doing with preventing or treating conditions before a crisis occurs.
Another important metric is readmissions. We’re looking at patients who have been in the hospital, are discharged, and find themselves back in the hospital within 30 days of discharge. We look at that as a treatment failure — something in that patient’s care did not go according to plan. We would never send a patient home just to come back in 30 days. Our goal is to work in that transition period to support patients with the right tools and care they need to reacclimate to their new normal, self-manage, and get support when they need it.
There are also a host of quality measures. They include cancer prevention — breast, colon and cervical — which requires screening to detect those conditions before they spread. We do that through universal screening of patients in the appropriate age groups. We are highly focused on that. There are also pediatric measures in the program, including well visits, immunizations, and developmental screening. All of these are for the purpose of doing our best to foster a future generation that has a healthier outcome than the current one. That’s built into the program: to encourage us to think about the next generation and do what we can to put them in a good position to have a remarkable future.
Caitlan Rossi: Thank you for sharing your insights. Do you have any final thoughts you want to share?
Dr. Sam Reynolds: Highmark Inc. and AHN are uniquely positioned to lead the way in value-based care, leveraging our shared patient population and commitment to population health. By focusing on prevention, coordination, and a continuous healing relationship, we can improve patient outcomes, reduce costs, and create a more sustainable health care system. I invite everyone across our blended organization to join us on this mission. Let's work together to build a healthier future for western Pennsylvania.
Dr. Sam Reynolds has been medical director, Risk and Value-Based Care, at Allegheny Health Network since 2024. Previously, he was medical director, Quality, for AHN’s Clinically Integrated Network. He also continues to practice family medicine, including caring for individuals of all ages who have chronic conditions or are suffering acute illnesses or injuries.
Dr. Reynolds joined AHN in 2015 as chief quality officer and led development of coordinated quality management and measurement systems, including continuous improvement initiatives. In each of his roles, Dr. Reynolds has worked with senior leadership, department chairs, medical staff, nursing and risk management to create a culture of shared best practices across AHN, and to enhance public awareness of AHN’s reputation for excellence and commitment to quality and patient-focused care.
Prior to joining AHN, Dr. Reynolds served as a family physician at Edinboro Medical Center, providing full scope family medicine services including obstetrical care. He also served as medical director of Population Health for Saint Vincent Healthcare Partners (SVHP) in Erie, PA, overseeing all population health management activities for the SVHP Accountable Care Organization, facilitating achievement of NCQA Patient-Centered Medical Home (PCMH) Recognition in the Saint Vincent Medical Group (SVMG) Network.
A native of Beaver County, and a graduate of Geneva College, Dr. Reynolds completed medical school at Penn State College of Medicine in Hershey, PA, and his family practice residency at Lancaster General Family Medicine in Lancaster, PA.
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