Value-based care models have helped reduce healthcare costs and improve care quality but must also incorporate health equity and clinical outcomes to achieve true value for all patients, according to the Association of American Medical Colleges (AAMC). The AAMC issue brief explores the different types of value-based care models and whether they have achieved savings. Population-based payment models, including accountable care organizations (ACOs), have been widely successful in the healthcare space, while episodic payment models focus on specific conditions or procedures. However, AAMC highlights the need to address health equity challenges and measure clinical outcomes.
Value-Based Care Models: Achievements and Challenges to Achieving True Value for All
Value-based care models are a new paradigm in healthcare delivery that aims to shift the focus from quantity of care to quality of care. These models have been successful in reducing costs, improving care quality, and generating savings. However, there is still room for improvement as models must incorporate health equity and clinical outcomes to achieve true value for all patients. In this issue brief, the Association of American Medical Colleges (AAMC) explores the different types of value-based care models, whether they have achieved savings, and what is missing from value-based care.
Population-Based Payment Models
Population-based payment models, including accountable care organizations (ACOs), have been widely successful in the healthcare space. ACOs are groups of healthcare providers who coordinate care for a specific patient population. The aim of ACOs is to reduce healthcare costs and improve care quality by incentivizing providers to work together to achieve these goals.
Several Medicare ACO models, which are all voluntary for hospitals and physicians, have achieved cost savings by reducing avoidable inpatient admissions and emergency department (ED) visits. The Medicare Shared Savings Program (MSSP), the largest ACO model in the country, achieved $1.66 billion in savings in 2021, marking the fifth consecutive year the program has generated savings for Medicare.
The Pioneer ACO Model, whose elements were eventually incorporated into MSSP, achieved $254 million in net savings from 2012 to 2013 relative to MSSP. These ACOs reduced inpatient admissions, ED visits, and post-acute care utilization.
Other ACO models have not generated net savings for Medicare, including the Next Generation ACO Model, which achieved gross but not net savings for CMS from 2016 to 2021 after accounting for shared savings. However, the model still reduced spending and utilization measures for acute care, professional services, and post-acute care.
Population-based models that include capitation have had differing impacts on costs and quality. The Primary Care First (PCF) Model includes monthly capitated payments for patients assigned to a provider and additional revenue for primary care visits delivered to patients. The model builds on two earlier primary care models, Comprehensive Primary Care (CPC) and CPC Plus, which reduced inpatient and ED utilization but did not decrease costs.
Meanwhile, the Maryland All-Payer Model achieved the largest savings to date of any CMMI model, generating $975 million in net Medicare savings from 2014 to 2018.
“Capitation is intriguing for both public and private payers because it allows the insurers to offload most or all the financial risk to providers, while the payers keep a slice of the total cost of care to cover administrative services,” AAMC wrote.
“To be willing to take on this degree of financial risk, providers must believe the capitated payments and the associated quality measures are directly related to clinical decisions in their control.”
Episodic Payments
Value-based care models incorporating episodic payments focus on specific conditions or procedures. Most episodic payment models are voluntary, but the Center for Medicare and Medicaid Innovation (CMMI) has indicated that future models will likely be mandatory.
The Comprehensive Care for Joint Replacement (CJR) Model, currently the only mandatory bundled payment program, achieved $21.5 million in net savings from 2016 to 2019. The Bundled Payments for Care Improvement (BPCI) Model and the BPCI Advanced Model have both achieved gross savings.
Health Equity
While value-based models have produced savings and improved health outcomes, existing models are lacking health equity, according to AAMC. CMMI has committed to incorporating health equity into future models, but several challenges remain.
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