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Review: Impact of Medicare's Alternative Payment Models on the Value of Care

Along with colleagues from the University of Pennsylvania, Joshua Liao -- VSSL Director and Senior Fellow at the Leonard Davis Institute of Health Economics at Penn -- authored a review recently published through the Annual Review of Public Health about the impact of Medicare's large value-based alternative payment models on clinical, quality, and spending outcomes.

As Dr. Liao and colleagues note in their abstract:


"Over the past decade, the Centers for Medicare and Medicaid Services (CMS) have led the nationwide shift toward value-based payment. A major strategy for achieving this goal has been to implement alternative payment models (APMs) that encourage high-value care by holding providers financially accountable for both the quality and the costs of care. In particular, the CMS has implemented and scaled up two types of APMs: population-based models that emphasize accountability for overall quality and costs for defined patient populations, and episode-based payment models that emphasize accountability for quality and costs for discrete care. Both APM types have been associated with modest reductions in Medicare spending without apparent compromises in quality. However, concerns about the unintended consequences of these APMs remain, and more work is needed in several important areas. Nonetheless, both APM types represent steps to build on along the path toward a higher-value national health care system."


Key conclusions from Dr. Liao and colleagues:


  • Over the past decade, traditional volume-based reimbursement in the US health care system has been increasingly replaced by payment reforms designed to promote quality and contain costs in order to prioritize the value of care.

  • While the ability for payment reforms to achieve this goal remains far from certain, available evidence suggests that existing APMs have begun to move the nation in that direction.

  • In particular, the implementation and expansion of two major types of APMs—population-based models (such as ACOs) and episode-based models (such as bundled payments)—have been associated with modest reductions in Medicare spending without apparent compromises in the quality of care.

  • A number of concerns about the unintended consequences of these APMs remain (e.g., including their effects on disparities and volume of care), and more work is needed in several important areas.

  • Nonetheless, while we remain on a long path toward building a lower-spending, higher-value national health care system, current APMs represent a step to build on in that direction.

View and download the review here.

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