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Report Outlines Roadmap for Continued Support of Value-Based Payment Models


A new report suggests ways policy makers can support and advance value-based payment models so payment innovations can catch up to healthcare delivery innovations.

As the United States innovates its healthcare delivery system with features like case management and telehealth, it runs into the challenge of payment innovations that have not kept pace. A new primer from the Council of Accountable Physician Practice (CAPP) outlines a roadmap to transition from a fee-for-service system to one that pays for value. The primer is the third in the Implementing Health System Improvement series.

The report suggests ways policy makers can advance value-based payments even as most attention is focused on changes to insurance coverage.

“Value-based payment systems hold providers accountable for improving people’s health, not simply doing more procedures,” CAPP Chairman Stephen Parodi, MD, associate executive director, The Permanente Medical Group, said in a statement. “Value-based payment lets us step back and look at patterns of care over time, so that we can change our processes to improve quality and efficiency. It allows us to achieve true innovative solutions for delivering care that is coordinated, cutting edge, convenient, and most importantly, producing ever better health outcomes.”

In presenting lessons learned from value-based payments, the primer identifies the challenges associated bundled payments and accountable care organizations (ACOs).

For example, while bundled payments encourage providers to manage episodes in the most efficient way, they should only be used for patients requiring well-defined, time-limited episodes of care or procedures. In contrast, bundled payments “are not an ideal payment mechanism for care that is both complex and ongoing,” the report noted.

In comparison to bundled payments, ACOs incentivize providers to meet budget and quality targets for whole populations, which makes them more appropriate for caring for patients with chronic disease. ACOs have their own issues.

“While we see great potential in these models, we have been challenged by several issues, including patient attribution methods, data lags, and, in some cases, unrealistic financial models using historic cost trends that ultimately penalize us for previous inefficiencies,” according to the report.

With the acknowledgement of the opportunities and challenges in value-based payment models, the primer offers several recommendations for policy makers to continue supporting value-based payment programs:

  • Keep moving forward. Private payers will continue to push for value-based payment models, but CMS’ commitment is critical.
  • Address challenges in the ACO programs. While data turnaround time and attribution accuracy have improved, CMS still needs to address providers’ concerns about 2-sided risk models.
  • Help coordinate bundled payment programs. One current challenge is the lack of coordination, which leads to administrative complexity for providers. With a federal agency acting as a facilitator, stakeholders should come together to streamline and simplify programs by agreeing on a limited set of high-priority bundles.
  • Continue to support and grow Medicare Advantage. One-third of Medicare beneficiaries are in a Medicare Advantage plan, and the CAPP report urges policy makers to continue supporting these plans. If Medicare expands, such as through a “Medicare for All” plan, Medicare Advantage needs to expand with it.
  • Help make it easier for patients to choose high-value providers. Success of value-based programs requires both providers and patients to acknowledge their commitment to one another. Policy makers can help patients make informed choices by letting Medicare give beneficiaries a financial incentive to obtain care from high-performing groups or systems.
  • Allow and encourage payment experimentation. CMS and Congress should remain open to partnering with providers, private payers, states, and patients, and provide opportunities to test innovative payment programs. Some ideas worth exploring include expanding payment for telehealth and in-home care, implementing value-based insurance design, and supporting dedicated care management for high utilizers.
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