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Some State Leaders Argue for Value-Based Payments

Health experts have long argued that value-based payment would both improve quality and decrease/control healthcare costs. Now, five state governors have put into writing a set of policies and initiatives they believe could reduce the share of the economy consumed by health care. Value-based payment figures substantially into their “blueprint” for improving health care.


They wrote: “Reorienting the system on value needs to be our greatest priority. Congress and the Administration should work with states and make a clear commitment to value-based healthcare purchasing.” (A Bipartisan Blueprint for Improving Our Nation’s Health System Performance, February 23, 2018)


Five governors—two Republicans, two Democrats, and an independent—issued the blueprint. They said a broader shift to value-based care requires several steps, including:


  • Measuring the value of all healthcare providers and payers and providing public transparency
  • Using information and incentives to drive an evolution of primary care to team-based care with accountability for the health and cost of populations
  • Holding providers accountable for the end-to-end costs and outcomes for episodes of care
  • Using Medicaid and state employee benefits to generate critical mass that can reorient the system toward value
  • Aligning priorities for value-based purchasing across all federal agencies


In addition to the focus on value-based purchasing, the blueprint includes several core beliefs:


  • Competition and Aligned Incentives. Material, lasting improvement to our health care system requires harnessing private sector innovation and competition to the benefit of all. When ingenuity and capital are focused on what we most value, we see incredible innovation and productivity gains. Enabling competition requires alignment of the incentives of all stakeholders with what we value, sufficient transparency, and appropriate regulation. In our current healthcare system, providers compete to provide more care, not necessarily better care. This misalignment of incentives, which rewards volume instead of value, is the most significant root-cause challenge in our system and addressing it should be our greatest priority.
  • Government Action. Targeted government action is justified and required when market forces, alone, will not achieve our objectives, such as protecting vulnerable individuals without the resources to independently secure health care.
  • Reform. Reform must address the underlying drivers of costs and cost increases, including the current lack of value-based competition in our health care delivery system (e.g., hospitals, medical service providers, and pharmaceuticals) and lifestyle-induced disease.
  • Consistent Expectations. Our expectations for our healthcare system should be consistent nationally. Every citizen in every part of the country deserves a high performing system. We need a single, holistic, integrated framework to improve our system over time. But within a national framework one size will not fit all. Many aspects of health care, such as population characteristics, market structure, and variance in local governance (e.g., tribal authorities), differ significantly across markets. The execution of a national strategy will necessarily vary by state and region.
  • Stability. It is more practical and less risky to build from the elements of our system that are stable. For example, our primary coverage and financing mechanisms – employer-sponsored insurance, Medicare, and Medicaid – are imperfect and would benefit from reform, but they are also well understood and much more stable than is often believed. These mechanisms should be the foundation of efforts to expand affordable health care coverage.


(From: “A Bipartisan Blueprint for Improving Our Nation’s Health System Performance,” February 23, 2018)


To read the document, click here.



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