9 Strategies to Incentivize Value, Not Volume, in Healthcare

The National Coalition on Health Care, a group of healthcare consumers, providers and payors, has made nine policy recommendations (pdf) to change healthcare provider incentives to reward value, not volume.

The recommendations are included in a new report, "Curbing Costs, Improving Care: The Path to an Affordable Health Care Future," that outlines a seven-part strategy to increase the value of healthcare. The first strategy is changing provider incentives to reward value, not volume. NCHC explained nine policy recommendations under this strategy, and the estimated budget impact of each recommendation based on existing estimates produced by the Congressional Budget Office or MedPAC; credible estimates from other sources; or NCHC's own savings estimates from existing CBO estimates of similar policy options.

1. Eliminate the Sustainable Growth Rate formula and move from fee-for-service payment toward pay-for-value.
Budget impact: Budget neutral

2. Expand participation in CMS demonstrations and pilots by allowing rolling applications from providers.
Budget impact: Not yet scored

3. Apply immediate payment incentives for participation in quality and value initiatives to the existing fee-for-service pay schedule.
Budget impact: Budget neutral

4. Sustain CMS funding for developing and implementing quality measures.
Budget impact: Limited increase in federal spending

5. Encourage episodic bundled payments either by expanding the Acute Care Episode Bundled Payments Demonstration nationally or by implementing a Centers for Excellence for Selected Surgical Procedures program in Medicare.
Budget impact: $0.45 billion in savings over 10 years

6. Equalize payment rates between certain services delivered in the outpatient and physician office settings.
Budget impact: $19 billion in savings over 10 years

7. Expand Medicare payment penalties for high rates of potentially avoidable healthcare-acquired complications and readmissions.
Budget impact: Greater than $52 billion in savings over 10 years

8. Implement short-term reforms to post-acute and home health payment systems.
Budget impact: $37 billion in savings over 10 years

9. Implement a value-based withhold in Medicare in the event that expected savings do not materialize.
Budget impact: Savings from this policy can be dialed up or down based on the size of the withhold and the range of providers to which it is applied. The authors recommended a goal of $64 billion.

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