The movement toward value-based payment has been a defining feature of health care reform in the United States over the past decade. Despite substantial enthusiasm and investment, however, these efforts have been largely disappointing. Most of the Centers for Medicare and Medicaid Services (CMS) value-based payment models have failed to significantly reduce healthcare costs or improve the quality of care.

Perhaps more concerning is that many value-based payment programs have been regressive, which has hindered the pursuit of health equity. For example, Medicare’s Merit-Based Incentive Payment System (MIPS) has disproportionately penalized outpatient clinicians caring for poor adults.1 Similarly, Medicare’s three value-based hospital programs—the Hospital Readmission Reduction Program, the Hospital Value-Based Purchase Program, and the Hospital Acquired Conditions Reduction Program—shifted resources away from safety-net hospitals and potentially widened inequalities in care. . By more frequently penalizing institutions with high proportions of black adults, many of these programs have also unwittingly perpetuated structural racism.2

Value-based payment initiatives have failed to advance health equity largely because equity has not been prioritized in their design and implementation. Since many such payment programs are budget-neutral, they create winners and losers, rewarding some providers over others. Pre-existing structural differences often influence who wins and who loses. Practices and hospitals with the infrastructure and resources to quickly adapt to logistical and reporting requirements are much more likely to succeed in new programs. Additionally, because the spending targets used in some payment models are based on a provider’s past spending levels, providers whose patients have historically used fewer services due to a lack of access to care may face unrealistic expectations. When these disadvantages are ignored, referral disparities can become structurally embedded in new payment mechanisms, unfairly advantage some providers. These problems are magnified by Medicare’s current risk adjustment approach, which does not sufficiently consider all of the medical and social risk factors that influence spending and outcomes. By not explicitly considering equity, value-based payment programs implicitly prioritize well-resourced clinicians and health systems.

The responses elicited by value-based models also have important implications for health equity. Although the financial penalties included in these models are intended to encourage providers to provide high-quality care, the desire to avoid losses may also foster “gambling” that disproportionately harms low-income and historically marginalized populations. For example, recent evidence suggests that Medicare’s comprehensive care model for joint replacements may have hindered access to knee and hip replacements for black adults (who tend to have a higher burden of risk factors medical and social conditions than white adults), thereby widening racial disparities.3 In the MIPS program, well-resourced suppliers tend to strategically choose quality metrics that maximize their scores based on their existing performance – a process that often requires data analytics, external consultants, and other investments. – allowing them to earn financial rewards without necessarily improving care.4 This dynamic puts providers serving low-income populations at a disadvantage, as they tend to have fewer resources to devote to optimizing scores.1 More broadly, value-based models have encouraged increases in coding intensity (which do not necessarily reflect true changes in patient medical complexity) that most likely benefit well-resourced and capable healthcare systems. more robust coding.

A silver lining in the era of value-based payments has been Accountable Care Organizations (ACOs) – groups of providers who are incentivized to reduce spending below a benchmark – some of which have achieved savings for Medicare. However, health equity concerns persist. Recent evidence suggests that some ACOs may strategically drop “high-risk” beneficiaries (e.g., those with multiple chronic conditions and expected high medical expenses) or clinicians whose panels consist of large numbers of these patients in order to reduce expenses and increase their chances of earning a living. shared savings.5 In the absence of explicit incentives to invest in stocks, value-based payment models can elicit responses that widen the disparities.

In a significant change, the Center for Medicare and Medicaid Innovation recently announced a new model – the ACO Realizing Equity, Access, and Community Health (ACO REACH) model – in part in response to concerns about the inequitable effects of payment programs based on the value. This model explicitly names the promotion of fairness – not just value – as a central objective. Several provisions of COA REACH could help advance health equity.

First, the model includes a new “Health Equity Benchmark Adjustment” that supports ACOs caring for socioeconomically disadvantaged patients. This approach represents a marked departure from previous payment models; it recognizes that providers may need to spend more—not less—to serve members of marginalized populations. Specifically, CMS will increase spending benchmarks by $30 per month for each ACO member in the top decile of disadvantage. A smaller downward adjustment ($6 per month) will be applied for each member of the bottom five deciles. This calculation will incorporate markers of socioeconomic disadvantage at both the individual and neighborhood level. The net effect will be higher spending benchmarks for ACOs that care for the most disadvantaged patient populations, meaning a greater likelihood of shared savings for these provider groups. By capturing a wide range of social risk factors affecting health care utilization, this approach should reduce disincentives to serve members of marginalized groups.

Second, ACO REACH will require participating ACOs to develop and implement a health equity plan that involves identifying disparities in their patient populations, establishing an equity strategy, and adopting initiatives to reduce disparities. CMS is therefore taking another step towards using payments reform as a lever to encourage grassroots efforts that promote equity.

Third, CMS requires ACOs to collect and submit data on patient-reported demographics and social determinants of health. The lack of granular and reliable data on race, ethnicity, and health-related social needs has hampered health equity efforts. Mandating the collection of such data could facilitate evidence-based implementation of equity-focused interventions.

While these provisions represent a significant change, their effects will be limited to providers and patients who participate in the new model. For these reforms to have wider influence, policymakers will need to decide which provisions apply to other payment models and in what form. This process will require careful implementation and rigorous evaluation to answer key questions. One such question will be whether the proposed benchmark adjustment is sufficient to encourage providers to care for low-income patients and members of other underserved groups and large enough to allow providers to invest significant in the health of these populations. The value-based care movement has traditionally prioritized reducing spending, but promoting health equity requires spending more on underserved groups with unmet needs. If the baseline adjustment is not sufficient to fund this increased expenditure, ACO REACH may not achieve its objectives.

Another consideration will be the types of investments providers make in response to the benchmark adjustment. Faced with incentives to care for disadvantaged patient populations, CCOs can respond in a productive way (e.g., by improving care delivery for these populations) or in a profit-oriented way (e.g., by making a profit to them). more aggressive marketing). Additionally, the types of organizations that participate in ACO REACH will be important. Voluntary participation has limited the effects of other payment models, as providers likely to benefit tend to join and those who perform poorly tend to drop out. Finally, it remains to be seen whether the requirement of the health equity plan will motivate real action. While this idea is promising in theory, similar requirements — such as community benefits and needs assessment requirements for nonprofit hospitals — have proven weak in practice. Without proper oversight, this provision can become another administrative checkbox.

Value-based payment models implemented over the past decade have often been regressive, shifting dollars from patients, providers, and communities with fewer resources to those with more. ACO REACH reflects the efforts of policy makers to mitigate this unintended consequence. It also lays the groundwork for new action to address the long history of underinvestment in the health of low-income and marginalized populations. Could this new approach to value-based payment be a tool for progressive redistribution of health care resources that significantly advances health equity? This could be the central question of the next decade of payments reform.