What will it take to truly align payment with value in health care? It’s time to move beyond tepid pilot programs

February 10th, 2021 / By L. Gordon Moore, MD

State budgets have been pushed to extremes driven in part by ballooning Medicaid costs and ballooning Medicaid rolls. According to the Kaiser Family Foundation

“Early estimates indicate that states are facing large shortfalls, with some estimates showing state budget shortfalls of up to $110 billion for FY 2020 and up to $290 billion for FY 2021.”[1]

We might reduce costs by pushing more of the burden on consumers (higher deductibles, reduced benefits) or by throwing more people off of the health insurance boat to let them swim on their own, but these options are repugnant because they cause people to avoid needed care, resulting in worse outcomes and human suffering.

With its “do more and earn more” incentives, fee-for-service payment is still the norm.[2] This is in spite of good evidence that more is not always in the best interest of the patient.[3] Good people operating in this flawed model are at times forced to decide between financial rewards and doing the right thing for patients. Physicians compensated based on a percent of revenue generated are financially punished if they do not perform a procedure. Hospital financial directors put their institutions at risk if they invest in programs that reduce hospitalizations or emergency room visits. 

Too many health care professionals nod and say “Yes, the system is messed up, but that’s what we have to deal with.” I find it problematic that this dilemma is the normal, daily experience of health care delivery in the U.S.

Payment predicts behavior. Follow the money. It is time to move beyond fee-for-service to models that pay for value, pay for outcomes and mitigate these perverse incentives. Consider models that line up better with the behaviors of high-value health care, care that makes clinicians and others working in health care proud of their work. There are numerous examples of high-value health care delivery that improves outcomes and reduces unnecessary costs.[4],[5] To these we could add Patient Reported Outcomes and other measures that matter.[6] We don’t have to work like this, we can do better.

L. Gordon Moore, MD, is senior medical director, Clinical Strategy and Value-based Care for 3M Health Information Systems.

[1] Hinton, Elizabeth, Lina Stolyar Published: Oct 14, and 2020. “Medicaid Enrollment & Spending Growth: FY 2020 & 2021.” KFF (blog), October 14, 2020. https://www.kff.org/medicaid/issue-brief/medicaid-enrollment-spending-growth-fy-2020-2021/.

[2] RevCycleIntelligence. “Healthcare Reimbursement Still Largely Fee-for-Service Driven.” RevCycleIntelligence, March 26, 2020. https://revcycleintelligence.com/news/healthcare-reimbursement-still-largely-fee-for-service-driven.

[3] Christine K. Cassel, and James A. Guest. “Choosing Wisely – — JAMA.” Accessed April 5, 2012. http://jama.ama-assn.org/content/early/2012/03/30/jama.2012.476.full.

[4] “RARE Campaign Prevents 4,570 Avoidable Hospital Readmissions > MHA.” Accessed February 7, 2021. https://www.mnhospitals.org/newsroom/news/id/183/categoryid/1/rare-campaign-prevents-4570-avoidable-hospital-readmissions.

[5] Millwee, Billy, Norbert Goldfield, and Jeff Turnipseed. “Achieving Improved Outcomes Through Value-Based Purchasing in One State.” American Journal of Medical Quality: The Official Journal of the American College of Medical Quality 33, no. 2 (April 2018): 162–71. https://doi.org/10.1177/1062860617714322.

[6] Etz, Rebecca S., Stephen J. Zyzanski, Martha M. Gonzalez, Sarah R. Reves, Jonathan P. O’Neal, and Kurt C. Stange. “A New Comprehensive Measure of High-Value Aspects of Primary Care.” Annals of Family Medicine 17, no. 3 (May 2019): 221–30. https://doi.org/10.1370/afm.2393.