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Blog: Is 'value-based care' more than a marketing slogan?

The U.S. healthcare system is investing a lot of time, energy and money into the concept of value-based care, and a fascinating commentary in the New England Journal of Medicine hits that idea squarely in the gut.

Two health policy professors, Jonathan Oberlander at the University of North Carolina and Miriam Laugesen at Columbia University, called Medicare's new physician payment system a “leap of faith” because it relies on a school of thought that is uncertain of working on a national scale.

Earlier this year, Congress accomplished the improbable feat of repealing Medicare's much-hated sustainable-growth rate, a complex formula created in the 1990s that attempted to control the growth rate of Medicare payments to physicians. Within that SGR repeal law is a replacement policy called the Merit-Based Incentive Payment System. (MIPS, in other words, is the new SGR.) The program also pushed heavily for physicians to get paid more if they participate in alternative payment models, such as accountable care organizations and other designs that emphasize getting paid for quality.

Hospitals, insurers, doctor groups, pharmaceutical companies and medical device companies are all buzzing about their shift toward value-based strategies, and fee-for-service medicine is now generally accepted as the root problem with the healthcare system. But Oberlander and Laugesen make the case that value-based care can't sustainably reduce spending if base prices are still astronomically high.

“Other countries that spend far less than the United States does on medical care pay physicians through fee-for-service, demonstrating that value-based purchasing is not necessary for controlling spending. Instead, international experience suggests that the key to cost control is regulating absolute prices,” they wrote.

Oberlander and Laugesen go a step further, saying most healthcare organizations are only paying lip service to the creed of value-based purchasing.

“Even for salaried physicians, bonuses are often tied to targets based on volume and service intensity. At this juncture, 'volume to value' is as much (or more) a marketing slogan as it is actual policy,” the authors wrote.

The federal government has committed to more value-based payments in Medicare over the next three years. The results of ACOs and other models that aim to control costs and improve healthcare outcomes are admittedly mixed, and some believe the methodology behind value-based purchasing is flawed. Further, many providers and insurers are still far away from any kind of true risk arrangements built on quality incentives that bury fee-for-service in the grave.

Healthcare leaders love to use the analogy of having one foot on the dock and another in the boat when talking about the transition away from fee-for-service and toward value-based care. And the NEJM piece asks an important fundamental question: Is the country even putting a foot in the right boat?


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