Paul Levy: Value-based payment is an 'energy-sapping distraction'

ACOs will fail because the rewards are not immediate, substantial or transparent enough to incent behavioral change among physicians, and ultimately will not solve healthcare's biggest problem, according to Paul Levy, former CEO of Boston-based Beth Israel Deaconess Medical Center.

In an opinion article for athenahealth's athenaInsight blog, Mr. Levy makes the case that various demonstration programs created under the ACA are doomed because they are structured as global payment systems. This means the provider organization or ACO is paid annually per capita based on the risk profile of its patient population. If they are able to deliver care at a cost below those annual per capita payments, they keep the difference. If not, they are financially responsible for making up the difference.

The problem with this structure, according to Mr. Levy, is that the financial rewards are too "minor, delayed and fuzzy," for individual physicians to make the choices necessary to power long-term success in these models. For example, a specialist who abides by the new care management protocols will find clinical volumes down and lower net income at year-end, and the primary care physician who plays by the rules will have to work longer hours for only minor incentive payments, according to Mr. Levy. Even those physicians who want to help out for the greater good will eventually be pushed to make choices that benefit their own practice, he wrote.

The real cost driver in the U.S. healthcare system is not overuse of unnecessary healthcare services, according to Mr. Levy. It's that patients do not make their own care decisions, nor do they have the price and value information they would need to do so.

"Given these challenges, value-based pricing, however well-intentioned, is likely to be an energy-sapping distraction, while we fail in the major task of addressing the disenfranchisement of consumers in their treatment decisions," Mr. Levy wrote.

Read the full opinion here.

 

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Almost half of physicians in Shared Savings ACOs aren't aware of their downside risk

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