New payment models emphasize outcomes, value
The United States has the highest per capita health care expenditures in the world, accounting for approximately 17% of the national gross domestic product in 2015.1 In fact, from 1980 to 2010, the cumulative difference in health care spending between the United States and Switzerland, the country with the second-highest per capita health care expenditures, amounts to approximately $15.5 trillion.2 Over the last two decades, health care costs have continued to increase dramatically, and at current rates, have been estimated to increase about 40% over the next 25 years.3
Despite the high costs, health care outcomes are often much worse than those of other countries; the United States currently ranks 42nd in life expectancy and 56th in infant mortality rates.4 There is also significant geographic variation in the quality of health care, as some states have life expectancies and infant mortality rates that are worse than countries ranked in the 100s.4
Given the poor health outcomes, significant barriers to access care, and rising health care costs, legislation and payment models have shifted dramatically in an attempt to transition from a fee-for-service model that incentivizes high-output health care to one that emphasizes value and quality of care. Passage of the Patient Protection and Affordable Care Act (ACA) and the Medicare Access and CHIP Reauthorization Act (MACRA) represents a long-standing adjustment to value-based compensation that incorporates quality outcomes, cost savings, patient satisfaction, and preventive care. In fact, the Centers for Medicare & Medicaid Services has a goal of tying 50% of traditional payments to quality metrics by 2018.4
By linking payments to outcomes, these alternative payment models provide incentives to coordinate care, ensure quality care provision, and prevent overtreatment or improper care. It has been estimated that up to $425 billion of the health care expenditures in 2011 were from failures in care delivery, care coordination, and improper overtreatment.5 With these legislative changes, the goal of health care delivery will be focused on improving the value and efficiency of care, measuring the outcomes achieved relative to the cost.6
- GBoDHFC Network. Evolution and patterns of global health financing 1995-2014: development assistance for health, and government, prepaid private, and out-of-pocket health spending in 184 countries. Lancet 2017; 389:1981-2004.
- "Health Expenditure and Financing" Organisation for Economic Cooperation and Development. http://stats.oecd.org/Index.aspx?DataSetCode=SHA. Accessed July 15, 2017.
- GBoDHFC Network. Future and potential spending on health 2015-40: development assistance for health, and government, prepaid private, and out-of-pocket health spending in 184 countries. Lancet 2017; 389:2005-30.
- "Oncology Care Model"; Center for Medicare and Medicaid Innovation. http://innovation.cms.gov/initiatives/Oncology-Care/. Accessed July 15, 2017.
- Berwick DM, Hackbarth AD. Eliminating waste in US health care. JAMA 2012; 307:1513-6.
- Porter ME. What is value in health care? N Engl J Med 2010; 363:2477-81.
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