Why Medicare’s Value-Based Payment Models aren’t working


CMS' Value-Based Programs | CMS

 A commentary piece in Health Affairs argues that CMS’s value-based payment (VBP) initiatives have not reached their full potential because they fail to take into account conflicting market dynamics.

The authors argue that VBP models won’t take hold unless CMS both increases the “carrots”, or positive incentives, that market dominant providers receive to support true care transformation, and sharpens the “sticks” by requiring participation in accountable care organization (ACO) models, decreasing the attractiveness of fee-for-service (FFS) payments, and banning anti-competitive commercial deals that discourage steering referrals toward lower-cost providers. 

The Gist: To date, CMS’s VBP efforts have largely fallen short of their two primary objectives: transforming care at scale across the country, and generating meaningful savings for the federal government.

With more and more seniors choosing Medicare Advantage (MA) each year, the federal government clearly views MA as the primary vehicle to control Medicare cost growth in the future—although savings will ultimately hinge on CMS cutting payments to insurers in the future. 

Over time, continuing to foster the growth of MA may prove more successful than overcoming the myriad complications of FFS-based VBP programs.

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