Value-Based Payment’s Role in Addressing US Health Spending

Health Affairs, the leading journal of health policy thought and research, today released a Considering Health Spending Research Brief describing the research linking value-based payment to reduced US health spending. The brief is titled:

In 1970 US health care amounted to 6.9 percent of gross domestic product; by 2019 that percentage had increased to 17.7 percent. “Value-based payment” refers to a variety of models designed to countermand this growth and improve value by incentivizing stakeholders to address the drivers of excess health spending. These drivers may include prices, administrative waste, clinical waste, and other factors.

The brief describes some of the current value-based payment arrangements, which include bundled payments, capitation, accountable care organizations (ACOs), and other models. These models have been implemented both in government programs such as Medicare and Medicaid and by private insurers. As the brief notes, much of the research focuses on models implemented by the Center for Medicare and Medicaid Innovation, and the brief describes these findings. It also references the small amount of data about the private insurance models that are available.

The brief lists these key findings from the literature:

  • More than half of health care payments in the US are still based on fee-for-service.
  • Savings attributable to ACOs range from just less than 1 percent to just more than 6 percent of per person spending.
  • The effects of bundled payments vary across procedures and patient populations.
  • Research on savings from capitation is limited.

Considering Health Spending Research Briefs are supported by the National Pharmaceutical Council and by Elevance Health. Briefs are produced by Health Affairs staff on the basis of research conducted to support the Health Affairs Council on Health Care Spending and Value.

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