Shifting from volume to value drives better outcomes, strengthens Medicare

Since Medicare’s inception nearly six decades ago, it has overwhelmingly been structured around a simple principle: providers offer a service for which they are later reimbursed for by the federal government. It’s the traditional fee-for-service approach to care.

It is easy to infer from this model for health spending that the more care provided, the better the outcomes. However, this is far from the truth. The U.S. spends twice as much on healthcare as other developed countries and we still have one of the lowest life expectancies in the industrialized world. If we’re looking for what’s ailing our current healthcare system, it’s that we’re still stuck in the antiquated ways of paying for our care.

Over the last decade, a new approach to providing care has developed with the potential to revolutionize our payment models: rewarding value instead of volume. This approach incentivizes better collaboration between providers and payers and is centered around the needs of patients to improve quality and lower costs.

We already have a value-based approach that is driving change and delivering for our seniors, the healthcare system and taxpayers, but we need to double down to encourage greater participation and ensure we don’t go backward. The most important issue at play here is delivering better care for seniors.

A 2017 report from the Department of Health and Human Services showed that 98% of accountable care organizations, Medicare’s predominant value-based care model, met or exceeded quality measures and outperformed fee-for-service providers on 81% of quality measures after participating in the program for three years.

Beyond their quality outcomes, these programs have already begun to deliver savings. Between 2012 and 2020, ACOs collectively lowered spending by $13.3 billion and garnered $4.7 billion in net savings for Medicare. Already, estimates show that 40% of healthcare dollars are tied to programs focused on value with the goal to increase that share going forward. These are astounding figures that, if scaled, could help ensure Medicare’s solvency for decades to come.

For all their potential, value-based care programs are at risk of losing ground because of changes in federal policy. In 2019, the Centers for Medicare and Medicaid Services made changes to the ACOs’ structure. While this redesign was ostensibly meant to put more skin in the game from healthcare providers, it failed to take into account the significant investments health systems must make to participate in these programs, which are still mostly voluntary. On average, ACOs invest between $1 million to $2 million per year on delivery system reforms that improve patient outcomes.

Larger systems have the resources to implement value-based programs, but if we are going to make this type of care available to more Medicare beneficiaries, we need to make sure there are incentives and protections that encourage participation. After the 2019 changes went into effect, fewer providers participated for the first time since the ACO program’s inception in 2012.

There are common-sense changes the federal government can take to renew its commitment to rewarding value over volume while also ensuring Medicare dollars are being used most efficiently. This includes encouraging greater participation in ACOs and other advanced alternative payment models.

We cannot turn our back on value-based care now. That’s why I introduced the Value in Health Care Act along with Reps. Peter Welch (D-Vermont), Darin LaHood (R-Illinois) and Dr. Brad Wenstrup (R-Ohio) to help more providers join value-based programs. While the Biden administration recently proposed changes that align with my bill, more needs to be done. This includes Congress extending incentive payments to participate in ACOs, which expire at the end of this year.

These programs have clearly shown that, if crafted correctly, they can improve the health of our seniors while saving Medicare much-needed resources.

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