Do Commercial Value-Based Models Work?

Two decades of innovation reveal mixed findings for quality, cost, and utilization—and unclear ways to resolve.

The results are in on the impact of value-based payments (VBP) and once again, they're mixed.

In what Health Affairs calls "the first-systematic review" of commercial VBP models, the study has yielded mixed results. The review, based on 59 studies published since 2000, found "mixed and modest effects" and that commercial VBPs were far more likely to improve healthcare quality then lower costs or steer utilization.

The conclusion? "Given the … nature of the findings, commercial insurers should identify ways to strengthen value-based payment programs or leverage other strategies to improve health care value."

What are these new ways and other strategies? Read on for the summary and HealthLeaders' analysis.

The results

Health Affairs analyzed 20 years of commercial VBP studies (2000­–2020) to assess quality, spending, and utilization. Studies for each category demonstrated either clearly positive/negative outcomes or mixed-to-no effect. The studies spanned VBP commercial models (P4P, bundled/episode-based payment, shared savings and risk, and population-based payment) with the following results:

• There were more positive outcomes for quality (81%) than for spending (56%) or utilization (58%).
   
• Shared risk was studied the most, bundled/episode models the least.
   
• Only P4P had positive outcomes across all three dimensions (quality, spending, and utilization).
   
• P4P and bundled/episode models aided quality; most other models either improved or did not.
   
• Spending studies were slightly more prevalent and their results the most mixed.

Shared risk outcomes were the most conflicting:

• More positive/mixed-positive studies across all dimensions.
   
• The most mixed-to-no effect on spending.
   
• One of the only models with clearly mixed-negative results.

Five study conclusions

The Health Affairs results are important for three reasons. First, less is known about commercial VBP versus other payer models. In addition, commercial coverage is responsible for higher spending and more quality variation compared to traditional Medicare. Finally, VBP evaluation methodology is often as inconsistent as VBP results. Key findings include:

• Something's got to give. After 20 years, the question remains: Can commercial VBP make a difference?
   
• Don't abandon benefit/delivery system innovation. Combining narrow networks with shared savings/risk models could prove effective.
   
• Providers need support, not just data. Payers should offer technical assistance, reporting tools, and shared learning.
   
• Streamline for success. Private and public payers may benefit from aligning VBP strategies.
   
• Hospitals, where are thou? How can VBP impact the high-cost and -utilization services that drive revenue?

In an interview with HealthLeaders, study co-author Roslyn Murray noted: "I don't necessarily think that VBP is the silver bullet to our healthcare spending problem." Citing commercial VBP's mixed results, underestimated costs, and the lack of significant quality improvements, Murray—a PhD student in the University of Michigan's Health Services Organization and Policy program—added: "It makes it a little concerning as to whether to spend more time, money, and energy on these models."

Murray cites pricing as the primary driver of healthcare cost, one that VBP may lack the levers to affect.

Additional HealthLeaders analysis

Health Affairs suggests that payers must either strengthen their commercial VBPs, look to other strategies, or both. How?

Don't leave tools on the table. The VBP studies are unclear on whether payers align "demand-side benefit designs with supply-side payments." But insurers definitely use this strategy. Anthem is tackling market and VBP challenges simultaneously by linking high-performing providers to its best plans and giving them added marketing support.

When healthcare moves forward, it often leaves things behind. The Health Affairs analysis shows that VBP strategies have been more sequential than concurrent. As new models emerge, others fade. Pure-play P4P has been eclipsed, yet its studies yield higher quality. Meanwhile, many cost-focused studies exclude net savings after incentives.

The industry may repeat this history with health equity. Health equity is the latest "add-on" to VBP model design. Understandably, there is little consensus on how to integrate equity: should it be assessed independently or as a component of other dimensions? Just as cost and utilization followed quality, heath equity is a trailing consideration looking for its place. Murray notes that as healthcare spending becomes an even-larger part of GDP, it compromises investment in the areas associated with social determinants of health (e.g., housing, education).

Find the balance. Many of CMS' VBP goals stress either cost or quality gains, and that one does not stifle the other. Among Health Affairs studies, only the Blue Cross Blue Shield of Massachusetts Alternative Quality Contract improved all dimensions, though inconsistently. Murray notes that the AQC studies "were by far the most methodologically rigorous and incorporated provider payouts to assess net savings."