Value-Based Payment Success Hinges on a Holistic Strategy for Changes


Piecemeal solutions to implement value-based payment arrangements will not be able to effectively enact change. Authors in The New England Journal of Medicine argue that a range of complementary solutions need to be pursued simultaneously based on previously successful tactics on a smaller scale.

The healthcare system can only find success with value-based payment models if there is a holistic approach, rather than “uneven adoption” of guidelines and experimenting with moving individual levers, according to a Perspective piece in The New England Journal of Medicine.

In the piece, Hoangmai Pham, MD, MPH, an editorial board member of The American Journal of Managed Care®, and Paul B. Ginsburg, PhD, highlighted tactics that have been shown to work for private payers that can be adopted for Medicare and Medicaid.

They identified tiered or narrow networks as one successful mechanism that can be used to funnel patients toward high-value providers, who can then be rewarded with value-based arrangements.

“Smartly allocating resources and attention to high-performing providers, combined with exerting consistent pressure on fee-for-service prices and regulations, could induce greater competition and motivate lower-performing providers to focus and improve,” Pham and Ginsburg noted.

They acknowledged that better incentives would be needed to encourage patients to use high-value providers, such as services that make care more convenient. In addition, high-value providers need more motivation to perform well beyond the current system of gains and losses based on their ability to improve. The challenge with high-performing providers is that eventually they’ll be pushed into an “unwinnable situation.” The authors suggested that performance targets should be based on regional or market trends in order to avoid punishing providers who are already performing well.

Pham and Ginsburg added that a shortcoming of many value-based payment arrangements that needs to be addressed through reform is the heavy burden placed largely on primary care providers (PCPs).

“Though promoting and supporting primary care are critical policy goals, it’s not realistic to expect PCPs, given their limited financial and political leverage, to optimally drive efficient care on their own,” they wrote.

The limited influence of PCPs over the use of specialty services may be why initiatives such as patient-centered medical homes and accountable care organizations have not had a clear impact, the authors suggested. Payers need to be more assertive with engaging specialists and provide them with incentives to collaborate with PCPs.

“Continuing with piecemeal solutions to these design issues is inadvisable: they are intimately interrelated, and it’s hard to solve one without considering the implications for the others,” Pham and Ginsburg concluded. “If payers align with one another and pursue a range of complementary solutions simultaneously, they may be able to avoid many more years of ambiguous results…”


Pham H, Ginsburg PB. Payment and delivery-system reform—the next phase [published online September 19, 2018]. N Engl J Med. doi: 10.1056/NEJMp1805593.

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