Issue Briefs

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A decade after the passage of the Affordable Care Act, the vision of moving the U.S. health care system “from volume to value” has been partially realized, with few value-based payment initiatives systematically reducing spending or improving quality. While participation in value-based payments continues to grow, the adoption of advanced forms of value-based payment through alternative payment models lags behind both the goals set by the Secretary of Health and Human Services in 2015 and the threshold required for widespread practice transformation. Furthermore, the complexity of the current suite of alternative payment models and allure of traditional fee-for-service prevent the widespread adoption of full risk-bearing contracts. The high costs of care with the impending insolvency of the Medicare trust fund, persistence of poor quality of care and health disparities along racial and socioeconomic lines, and mixed success of alternative payment models indicate the need for a revamped vision for the 2020s.

The 2020s require a new strategy that moves from a short-term focus on testing new payment models to a long-term focus on expanding models that are most likely to generate substantial savings and improve quality. This white paper outlines a new direction for the federal government—primarily through the Centers for Medicare and Medicaid Services (CMS)—to chart over the next decade aimed at completing the transition to a health care system that pays for value and reduced health disparities, rather than high volumes of services.

First, CMS must articulate a clear vision for the future of value-based payment. In particular, the vision must align across all publicly financed health care, driving change beyond Medicare and Medicaid. Second, CMS must dramatically simplify the current value-based payment landscape and engage late-adopting providers. Third, for health systems already participating in value-based payment, CMS must accelerate the movement from upside-only shared savings to risk-bearing, population-based alternative payment models while curtailing the ability of providers to opt out of value-based payment altogether. Fourth, CMS must not only pull providers toward advanced alternative payment models, but also structure incentives to push providers away from fee-for-service payment. Finally, achieving health equity must be a central feature and goal of value-based payment. Taken together, these five recommendations provide a path toward widespread adoption and success of alternative payment models, producing better health outcomes for all Americans, reducing wasteful inefficiencies and health disparities, and more effectively stewarding taxpayer funds to support other national priorities

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value-based payment, health reform, health care reform, health insurance, payment models, health equity

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Date Posted: 19 February 2021