Jason Shafrin
While CMS has a target of getting 100% of Medicare beneficiaries into value-based payment (VBP) programs–such as accountable care organizations–by the end of the decade, implementing VBP in practice will be challenging. An editorial by Navathe et al. (2024) in Health Affairs provides some key considerations.
- Providers forego certain revenue for uncertain ‘bonus’ payments. “One flaw is built into many VBP incentive designs: They require participants to forgo revenue for the opportunity to earn just a fraction of it back as shared savings. The math doesn’t work. These VBP contracts ask participating organizations to relinquish $1 for the uncertain opportunity to receive 50 cents in the future. For instance, hospital-led ACOs participating in the MSSP forgo revenue from hospitalizations in the hope of realizing a fraction of that revenue in the shared savings.” Additionally, the amount of ‘savings’ typically grows over time so provider face a continuously rising bar.
- Ghost savings. CMS evaluates VBP success based largely on risk-adjusted cost savings. The goal of risk adjustment is to make sure providers are not penalized for treating a sicker patient population. However, there are 2 ways improve your risk-adjusted cost savings: …
