Value-based payment reform: Cross-cutting lessons from state and regional innovation in the United States

To help contain health care spending and improve quality of care, health services practitioners and policy makers are trying to move away from fee-for-service toward value-based payment, which links providers' reimbursement to the appropriateness, outcomes, and efficiency of health services, rather than the volume of those services. With funding from the Robert Wood Johnson Foundation, eight grantees in six states and three regions of the country are designing and implementing value-based payment reform projects. In this presentation, we describe the context, specific objectives, strategies, progress, and early implementation of the eight projects. We also summarize “midterm” lessons from those case studies. The projects are diverse, but share common facilitators: the presence of a neutral, third-party convener; external regulatory and economic pressures to reduce cost and improve quality; integrated delivery systems positioned to integrate patient care and bear financial risk; and a data infrastructure capable of collecting utilization, cost, and patient outcomes data and converting that data into actionable information for providers, health plans, employers, and consumers. Common barriers to successful implementation of payment reform include: lack of sustained leadership from employers and other health plan sponsors; resistance among providers to bearing financial risk; reluctance of health plans to share data; fragmented care settings, entrenched billing and payment systems that are costly to adjust to new payment models, and information systems that are only partially responsive to the data requirements of value-based payment. A number of key cross-cutting lessons have emerged from these case studies. Delivery system redesign--in the form of patient-centered medical homes and accountable care organizations--is not a strict precondition for value-based payment reform, but the evidence in five of the six states reviewed in this presentation does suggest that such delivery system redesign markedly facilitates the creation of value-based payment models: shared savings; patient-centered, bundled payment based on episodes of care; and global (capitation) payment. Data sharing among payers, providers, and purchasers is another core requirement in the transition from fee-for-service to value-based and person-centered payment. Value-based payment reform requires not only time and resources, but a true culture change. Private health plans, providers, and purchasers (for example, self-insured employers; employee benefit trusts, which hold the assets of some employee benefit plans, and public programs) must cooperate on an unprecedented scale. The role of employers and consumer groups -- currently underdeveloped – will be crucial for the success of payment reform.