Value-Based Payment in Medicare:Progress, Challenges, and Future Directions

Despite having the highest health care spending globally, the United States lags in key health outcomes compared to peer nations. Over recent decades, this con-cerning disconnect between spending and outcomes has spurred substantial national reforms focused on promoting “value” of care over “volume,” prompting the develop-ment of numerous value-based payment models. In this analysis, the authors provide an overview of the experience with value-based payment efforts in the United States, particularly within the Medicare program. They outline and evaluate four main value-based care paradigms: public reporting programs, pay-for-performance models, episode-based payment models, and population-based payment models. Across these models, they argue that there has been mixed success in achieving cost reduction and quality improvements. Although some episode-based and population-based models have shown modest savings, the overall efficacy of value-based care reforms remains sub-optimal, and many models have yielded unintended consequences that have exacer-bated existing health disparities. Considering this evidence alongside the current and emerging threats to value-based payment efforts, we identify several key areas for improvement across these models and discuss a path forward for strengthening value-based payment and delivery system reforms, highlighting key strategies to ensure that future value-based payment models achieve the goals of fostering high-quality, cost-effective, equitable care.