One thing we do know – Value-based payment in health care is here to stay

March 1st, 2017 / By Gretchen Mills

Political agreement across the aisle!  “What’s that?” you ask. Yes it is true that there is general agreement that healthcare payment in the U.S. has to transition from paying for each service provided, regardless of its efficacy, to paying for efficient and effective services. And that much of the waste that currently exists in health care can be eliminated by paying for “value.” 

New Federal Medicare initiatives in value-based payment may feel like they have slowed down while the new administration assesses the current situation, including the numerous programs initiated under the Obama Administration. However, we know that CMS is continuing to move forward with programs such as the Physician Merit-based Incentive Payment System (MIPS). The Senate also has confirmed Tom Price as Secretary of Health and Human Services (HHS), the agency responsible for Medicare, Medicaid and CHIP as well as the individual health exchanges, and Seema Verma has been nominated as CMS Administrator. So we may be at a point where HHS will indicate its plans for value-based payment initiatives. There are sweeping societal forces that are driving consensus on the transition to value-based payment. These include: 

  • The demographics of our aging population, in which about 10,000 persons a day turn 65 years of age, placing enormous pressure on the federal budget due to increases in Social Security and Medicare.
  • National health spending growth is projected to outpace projected growth in Gross Domestic Product (GDP), according to a new CMS study released this week. The health share of GDP is expected to rise from 17.8 percent in 2015 to 19.9 percent by 2025, which is perceived to be “unsustainable,” and requiring interventions in payment policy in both the public and private sectors.
  • The healthcare industry and, yes, the general public are becoming more comfortable with the concept of the “Triple Aim,” which is designed to improve U.S. health care with programs that not only drive better quality, but also lower cost and improved access. Triple Aim goals and programs have earned broad acceptance and are encouraging the shift to value-based payment.

Thus, while we may not know exactly which programs the new administration and Congress will embrace, we can be sure that the transition to value-based payment in health care will inexorably march on.

Gretchen Mills is manager of market strategy for populations and payment solutions at 3M Health Information Systems.