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Health insurers and hospitals have talked a lot about their successful forays into value-based care. But the broader shift from volume to value needs to accelerate if we are to finally tame the increases in health care costs that threaten long-term economic growth in the United States.

Fee for service, the dominant payment model in health care today, relies on an elaborate fee schedule for every identifiable procedure. Unfortunately, it has created incentives for doing more tests and surgeries than may be necessary.


The concept of population health stands in contrast to the fee-for-service model. It focuses on managing the health of a population by providing the right interventions for patients at the least costly point in the care continuum — from preventive care programs to post-acute services. Population health management means paying providers or health systems on a per-patient, per-month basis rather than sticking with the fee-for-service system of paying for each service rendered. With quality reporting and guarantees built in, this change provides incentives to keep people healthy — not just treat them when they are injured or sick.

Many of today’s value-based care efforts aren’t transforming the way health care is paid for and delivered. They tend to make only minor modifications to the fee-for-service model, starting with existing fee schedules and adding incentive payments for reporting certain data, meeting cost benchmarks, and the like. But these efforts largely don’t make providers responsible for the total cost of caring for their patients or for the health outcomes achieved.

Broad implementation of population health would challenge providers to assume greater financial risk for their patients’ outcomes and so take a different approach to delivering and coordinating care. Since most organizations are entrenched in today’s fee-for-service model, it’s no surprise to find resistance to this shift.


That’s exactly what we saw in the second annual State of Population Health Survey, published by Numerof & Associates. It showed that fewer than 1 in 5 health care executives are confident that their institutions are ready to assume financial risk for cost and quality. The majority of providers surveyed said that under 10 percent of their revenue comes from risk-based reimbursements, which is virtually unchanged from the prior year.

Executives are also dialing back their expectations for how fast this percentage will grow. In this year’s survey, respondents projected that just 20 to 40 percent of their revenue will flow through alternative models within two years, down from 40 to 60 percent the year before. That’s worrisome, as changes in payment models are essential to achieving better health outcomes at a sustainable cost.

If left to choose between the new path of assuming accountability for the total cost of care and outcomes or the current one of being paid for every service performed, most providers will choose the status quo. Recent government pilots demonstrated that phenomenon. In the Medicare Shared Savings Program, for example, only 1 percent of participants chose the track that exposed them to shared losses, while 99 percent chose shared savings only, steering clear of downside financial risk.

But incentives can change behavior. As the largest purchaser of health care in the United States, the Centers for Medicare and Medicaid Services is in a unique position to influence delivery organizations. One provision in the embattled Affordable Care Act sought to promote progress toward changing how we pay for health care by directing CMS to test new payment mechanisms that hold providers accountable for costs and outcomes. Some of these mechanisms, like bundled payments, use financial risk to focus providers on the value of their care and lay the groundwork for population health.

While some of these pilots have shown promise in moderating the spiraling cost of care, they’re not moving the industry fast enough toward new models of care delivery and payment. And the progress they’ve made has been accompanied by reams of regulations for providers to navigate, encouraging consolidation to deal with burdensome administrative requirements and taking the focus off providing the best possible care.

President Trump and the Republican Party have been clear about their intention to replace the ACA with a more market-driven system. Less certain is the administration’s commitment to the idea of value-based care and the pace at which it will push for changes; the AHCA has little to say on the issue. It will be important to differentiate between the baby (payment reform and greater emphasis on prevention) and the bathwater (onerous regulations and reporting requirements) if we’re ever going to get to true value in health care.

If the transition from fee-for-service to value-based accountable care is allowed to happen at a pace that makes health care delivery organizations comfortable, it will be decades before we see meaningful change. By that time, the confluence of the boomer age wave and inflation that is almost certainly in the near future promises to swamp the federal budget in a torrent of health care costs.

To have any chance of success, real health care reform needs to dramatically change how we pay for what we get. Payers (public and private) need to rapidly increase provider participation in payment models with meaningful risk, while at the same time moving faster to put the old model and its perverse incentives to rest. We also need industry and policymakers to establish the transparency in cost and outcomes essential for enabling patient choice and keeping providers accountable for value.

Until we reward population health, we won’t get it.

Rita E. Numerof, PhD, is president of Numerof & Associates. David B. Nash, MD, is dean of the Jefferson College of Population Health.

  • Most of the really valuable care physicians provide can’t be check-listed. That means the real value of physician care isn’t in outcomes which can be generalized and paid for.

    It’s time to pay physicians fairly for the care they provide. Time to let them provide care to patients without having to look at a computer screen. If insurances or CMS want to collect data, have the insurance companies and CMS provide the computers and scribes to input the data.

    Fee-for-service works fine when the fee is reasonable. Insurance and CMS reimbursement is not in any way reasonable, and it becomes more difficult to get paid as one value-based scheme after another fails, but is just repurposed into an even more onerous programs such as MACRA.

    Value-based care without the intrusion of insurances and CMS is called Direct Primary Care.

    Let doctors be doctors.

  • The rub in value-based reimbursement from a surgeon’s perspective is that we will ABSOLUTELY select out the patients most likely to do the best for our procedures–leaving the most desperate and sickest without care. If, however, valid scoring instruments can be developed that properly predict likely outcomes of intervention based on pre-operative patient variables, then rigorous patient selection (and de-selection) might be avoided.

  • We cannot afford the health care that we have – especially the last two trillion dollars added for little or no improvement in outcomes. This is of course the opposite of value based care. The sad state of health care is indicated by those who promote value based while being part of those contributing to the opposite result.

    Pay for performance is not evidence based for significant health outcome improvements in dozens of studies and major reviews involving large populations over longer periods of time. Many physicians should “resist this shift” and other interventions that are not evidence based.

    Small hospitals, rural hospitals, family physicians, small practices, underserved practices, and others most closely associated with the care of complex patients, patients in places with low resource levels, and patients more likely to have one or more chronic diseases should resist pay for performance because they are already paid too little and will be penalized more. This is actually discrimination by design, or rather the sixth way that such providers are discriminated against.

    People need services. Clinical interventions have minimal if any impact upon outcomes – especially for populations. True improvements in outcomes require 1 or 2 trillion converted from health spending to invest in better populations in areas other than in health care – housing, nutrition, and team members across child development, senior resources, education, public service. Entirely different training is required because changing outcomes requires awareness of the populations (common origins) and demonstration of ability as a change agent. Entirely different preparation, selection, and training is needed for entirely different focus upon outcomes.

    Two trillion more dollars added to health care spending for little or no gain in outcomes is the opposite of value based.

    Two trillion more dollars added has resulted in cuts in the domestic discretionary spending that does have adverse impact on health, education, and other outcomes.

    Over $30,000 per person tracked to 79 top physician concentration counties (3 times average) shapes disparities in 2621 lowest physician concentration counties receiving only $3500 per person in spending (3 times less). Designs that pay so little for the generalist and general specialty services that are 90% of lowest concentration services and pay so much in top concentrations along with multiple more lines of revenue (research, corporations, training)

    Paying for outcomes, if understood, would result in payment that avoids sending dollars to clinical services while shifting dollars toward populations with disparities in outcomes – the opposite of the current designs shaped by decades of health policists and decades of austerity focus.

    Reversing austerity and cost cutting and maldistributions of dollars and diversions of dollars away from populations – this is the solution for improvements of health, education, economic, and other outcomes.

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