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A little more than 10 years ago, the passage of the Affordable Care Act (ACA) set the nation's badly broken healthcare system on a new path. In its bold shift away from the traditional fee-for-service (high volume-focused) payment model, the ACA set the stage for new value-based payment (VBP) models designed to reduce the rate of inappropriate services and sub-optimal care while improving population health outcomes.

Despite delays and setbacks (e.g., congressional efforts to weaken or dismantle the ACA), several VBP initiatives have shown some promise in terms of reduced spending and quality improvement, and participation in VBP short-term models has increased. Nevertheless, the twin issues of cost escalation and suboptimal quality of care persist. And, as the Medicare trust fund plummets, racial and socioeconomic health disparities are amplified.

So, the short answer to the question, "Are we there yet?" is "No -- but there is a strong case to be made for optimism." That case is made -- and very effectively so - in a from the Leonard Davis Institute of Health Economics and the Healthcare Transformation Institute at the University of Pennsylvania. Rachel Werner, MD, PhD, and colleagues argue that, at this point in the trajectory, a long-term strategy is needed with a focus on expanding the payment models most likely to generate substantial savings and improve quality (and equality).

Experimentation during the past decade has provided the necessary level of understanding for designing and implementing VBP methods; in effect, pursuing the most promising models and phasing out those that have underperformed. For example, bundled payments have shown modest per-episode savings for surgical procedures such as joint replacement, but not for medical conditions. Population-based Accountable Care Organizations (ACOs) have shown modest per-beneficiary savings and quality improvement, particularly physician-led ACOs that generate better outcomes by reducing hospitalizations. Programs using two-sided risk (shared savings and losses) have the greatest impact, but providers have been reluctant to take these on.

With input from a national panel of thought leaders, experts from the University of Pennsylvania reviewed the effectiveness of payment reforms previously implemented by the Centers for Medicare & Medicaid Services (CMS) and made recommendations on how to accelerate and complete the national transition to VBP. They wisely concluded that the path forward should promote and facilitate the widespread adoption -- and success -- of alternative payment models that produce better health outcomes for all Americans, reduce wasteful spending, improve health equity, and more effectively steer taxpayer funds to support other national priorities.

The "road map to 2030" proposed in the white paper includes several recommendations for the federal government and CMS to consider as they seek to complete the transition to a healthcare system that pays for what we now understand as "value," as well as a reduction in disparities. Briefly, the recommendations include:

• CMS's vision and strategy for the evolution of VBP should be implemented through a "carefully managed portfolio of initiatives and aligned across payers, service lines and health plans." In this way, investments can be balanced across a range of payment models based on achievement of goals. The new payment models should be expanded and fully implemented across all publicly funded markets -- from Medicare, Medicaid, the Veterans Health Administration, and the Federal Employee Health Benefits Program to a full range of managed care plans (e.g., commercial plans included in ACA exchanges, and managed care in both Medicare and Medicaid.)
• Whenever feasible, CMS should move toward mandatory participation in VBP. In addition to simplifying and accelerating the adoption of new payment models, mandatory participation produces fair competition when benchmarks are set regionally. It also permits more rigorous evaluation with robust results that can be incorporated into models and diffused more rapidly.
• When requiring participation in VBP models is not feasible, CMS should encourage providers to participate in some way (e.g., reducing administrative burdens, committing to long-term contracts, reducing the attractiveness of fee-for-service arrangements). CMS should also re-evaluate the current physician fee schedule, which is "biased toward procedures, overvalues several specialty procedure codes and undervalues primary care." The goal should be to reprice the most used billing codes based on value, and to lessen the comparative advantage of remaining fee-for-service arrangements.
• For health systems that already participate in VBP, CMS should accelerate the movement from upside-only shared savings to risk-bearing, population-based VBP models. To encourage systems to take on significant risk and responsibility for defined populations, CMS should slow the introduction of new models, reduce the overlap between models, and align the financial design of models.
• CMS should proactively promote equity with advance payment models that prioritize reducing disparities and tie health equity outcomes to financial outcomes. In most cases, VBP models should include explicit, direct funding that targets the care of populations with social risk factors. CMS may require intra-agency coordination to develop new standards for data collection and valid measures of social risk and health equity.

A key roadblock here is the timing. Conceptually, everyone is getting on board with VBP, but most are consumed with extinguishing and recovering from the pandemic. Coping with financial shortfalls from COVID-19 has become a top priority for most providers.

As I see it, the pandemic has given us an opportunity to mandate VBP as one step toward creating a better system for the future. We owe it to the more than half a million victims, so that their deaths will not have been in vain.

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