Value Based Contracting is a form of insurance contracting that links compensation to the health outcome of patients, rather than just the quantity or number of services provided. It’s an approach to provider contracting intended to improve the quality and affordability of care for individuals receiving such services. The goal is to incentivize providers to maximize value—outcomes achieved per dollar spent—rather than simply increase volumes or revenues. In other words, this type of contracting rewards those who are able to deliver better outcomes in fewer resources, instead of paying more for higher costs and/or increased utilization. Depending on the specifics of each agreement, providers can be rewarded with bonuses if they meet certain performance targets related to cost efficiency, patient satisfaction, and other measures. By shifting away from a traditional fee-for-service payment system, Value Based Contracting encourages providers to embrace new models of care that focus on better patient outcomes in more cost-effective ways. It also gives insurers and other contract holders more visibility into how their money is being spent, allowing them to make sure that value is being maximized over the life of the contract. This type of contracting also offers an opportunity for collaboration between payers and providers as both parties share in the risk associated with providing care. With this arrangement, everyone involved has a vested interest in achieving successful outcomes for patients.