Think about every health care reform effort we’ve been working on for the last decade or two, including accountable care organizations (ACOs) and the value-based purchasing models from CMS. The vast majority of them use one or both of the following strategies in an attempt to financially reward providers for delivering higher value (it’s like they’ve realized that financial incentives need to be fixed!):
- Quality bonuses: For providers who deliver higher quality, give them a bonus.
- Shared savings: For providers who decrease the total cost of care (while maintaining quality), give them a bonus.
You can take a look at the list of CMS’ value-based programs here, and you will see that all of them use one or both of the two strategies listed above.
These are good—they achieve their purpose of giving providers a financial incentive to improve their quality of care or decrease the costs of care. I’m sure almost everyone reads about those projects and applauds them because they make sense.
But if you have a broader perspective, they don’t make any sense!
The broader perspective is this: Our goal is to increase the value our health care system delivers to us. Value = quality / price. We want both quality improvements and price reductions. And we want that value to go up and up over time. Do those programs offer a pathway to that?
No.
As soon as a provider improves quality, we give them a bonus. That means their value first went up, and then it went back down (because their price went up after accounting for the bonus).
And as soon as a provider lowers the cost of care, we give them a bonus. That means their value first went up, and then it went back down (because their price went up after accounting for the bonus).
Sure, there will be some token improvements in value over time, but it’s so limited. I just did an updated search for articles evaluating these programs (see here, here, here, here, here, here, and here), and you will see that they’re all pretty depressing. Most don’t show any value improvements or cost reductions. And all of them are costing CMS a lot of money.
It leads me to wonder, why in the world are we still spending money on all of these models? My guess is that we don’t have any new ideas about what to do, so CMS just keeps dumping money into these nearly useless programs.
Another interesting anecdote about all this: As I was searching for those updated articles about the results of all of these programs, I found that over the last few years the focus has shifted from evaluating their impact on cost and quality to instead evaluating their impact on health care disparities.
And, if all of that weren’t enough, consider all of the providers in our country who aren’t bothering to join those programs because they don’t think they will earn more money in bonuses than the costs they incur being involved in the program. They don’t participate, so they largely stay as they are.
In summary, no matter how you look at it, these programs have barely put a dent in our low quality and high costs (and may worsen inequities).
There’s a better way.
I know there is a lot of nuance to the idea I’m about to propose, which I’ve addressed in my Building a Health Care System from Scratch series, but I’ll just stick to the basics here:
If you can reward higher-value providers with more market share, their profits will increase without having to lower their value. And when that happens, where is the additional profit coming from? Their competitors. Which forces those competitors to change to improve their value as well or go out of business. In this way, one provider innovating to improve their value will trigger an entire evolution of value-improving innovation, and over time you get higher and higher value from the health care system.
That is way better than these CMS programs that are only achieving modest and spotty gains. And it’s obvious once you see the bigger picture.
But can we steer more patients to higher-value providers? Yes. It requires patients to have apples-to-apples quality data that are actually relevant to their decisions, and it requires patients to know beforehand the total price they will pay at each provider, and it requires their insurance plan to be designed in a way that they will bear some of the cost increase if they choose a higher-priced provider.
So that’s why, if I were in charge of CMS, I would immediately scrap every one of CMS’ value-based programs (except for bundled billing, which helps patients know the total cost of a care episode beforehand) and shift all of CMS’ efforts over to helping patients identify and then choose higher-value providers.
All of this is totally achievable. We can find out what quality metrics patients care about and start reporting those instead. We can find ways to get patients’ price info upfront. We can work with insurers (most easily Medicare and Medicaid since CMS is already directly or indirectly in control of them!) to adjust their insurance plan designs to get patients to bear some of the cost differential between providers (even very nominal amounts for Medicaid patients would be enough).
And now I will predict the future: If we make these changes that I’m suggesting, we will see greater value improvements in the health care system than we’ve ever seen within even just a few years of implementing them.
We just need the people in charge to understand this and be brave enough to scrap their current failing efforts and try something new.
Taylor J. Christensen is an internal medicine physician and health policy researcher.
