Moving the needle on payment reform: The shift to value-based models

A policy guide for countries, states, and health plans

Bridging the gap between seemingly contradictory objectives of concurrently improving quality while maintaining costs at manageable levels.

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Governments across the globe continue to face the same central policy challenge: how to improve population health, while keeping costs at controlled and affordable levels. And while lessons have been learned from both successful and less successful healthcare reform attempts, optimizing the value delivered by a healthcare system continues to grow in relevance as costs continue to rise, demand continues to grow, and technology continues to advance.

Each journey towards value will vary depending on the configuration of the systems that pursue it. This is a function of how medicine is practiced, the regulatory and legislative authority the government wields, and the relationships between stakeholders and how healthcare is financed, to name only a few factors. Yet, no matter how different the actual organization of healthcare systems internationally, the way in which physicians, hospitals, and other organizations are paid has an undeniable impact on the financial and quality outcomes of care delivered. As a result, changing reimbursement incentives to align with desired outcomes through payment reforms will alter both the cost trajectory for healthcare expenditure and the outcomes of care experienced by patients.

Our report aims to bridge the gap between those seemingly contradictory objectives of concurrently improving quality while maintaining costs at manageable levels. Based on our analysis of delivery reform across the globe, we suggest that a key reason for the difficulties experienced in meeting both objectives simultaneously is rooted primarily in the policies initiated and how the incentives driving each side of the value equation (both cost and quality) are ( mis )aligned. The purpose of this report is to inform policy makers how to approach reforms that enhance system value through modifying payment incentives.

In addition to offering international insights and examples of leading practices from four case studies, this paper offers policy makers a framework for approaching value-based payment (VBP) reforms and tackling some of the tradeoffs inherent in any policy implementation. There is no one-size-fits-all manual to solving the problem of producing higher quality while also making healthcare more affordable, nor should policy makers expect one. However, by focusing on principles that have been proven to work, our report offers a framework for policy makers that can increase the likelihood of reform success. This report can help policy makers and related stakeholders apply our adaptable framework and lessons learned from past case studies in their own pursuit towards aligning incentives and driving healthcare delivery reform in a sustainable, value-based manner.


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