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Verma says value-based care provides a ‘very poor return in investment’

October 14, 2020

Topics: Quote of the Day

By Robert King
Fierce Healthcare, October 13, 2020

Seema Verma, the head of the Centers for Medicare & Medicaid Services (CMS), said that some value-based care payment models did not generate enough savings and quality outcomes.

Her remarks Tuesday during HLTH’s virtual conference come a few weeks after other Trump administration officials reported mixed results for bundled payment models in producing savings. Verma did tout models that required providers to take on financial risk at a faster pace, potentially alluding to the direction CMS wants to steer value-based care models.

“I think the issue we have in value-based care is that many of our models unfortunately are not working the way we would like them to,” she said. “They are not producing the types of savings the taxpayers deserve.”

It has been a “very poor return in investment,” Verma added.

Verma also gave praise to CMS’ Pathways to Success model that overhauled the program managing accountable care organizations (ACOs).

Pathways required ACOs to take on financial risk at a shorter period than the Medicare Shared Savings Program created under the Obama administration. This meant that ACOs had to pay back Medicare if it did not meet certain savings targets.

“We are already seeing significant savings and increases in quality,” Verma said of Pathways, which started in 2019.

Verma said that CMS isn’t shying away from value-based care, but she hinted at what direction the next wave of payment models could entail.

“I think it is important for providers to have skin in the game,” she said. “Just having upside risk doesn’t really produce the type of savings and quality measures that we want to see.”



By Don McCanne, M.D.

The policy community still seems to be fixated on the rhetoric of paying for value instead of volume, as they continue to support value-based models such as ACOs. CMS administrator Seema Verma now concedes that value-based models have provided a “very poor return in investment.”

Verma, who is driven more by ideology than by health policy that is designed to serve patients first, is not exactly giving up on value-based care, but rather she is focusing on a model design “for providers to have skin in the game.” She wants value-based models that are designed for providers “to take on financial risk at a faster pace.” Instead of emphasizing upside risk that rewards providers with Medicare dollars, she is now emphasizing downside risk that penalizes providers who then have to return money to Medicare.

Verma has long supported consumer-driven health care that requires patients to assume greater risk when accessing health care, but now she also wants to transfer even more risk from the government to the providers of health care. Forget patient care; it really is about the money.

Lack of affordability is one of the greatest problems in health care today. Making health care even less affordable by transferring more risk to the patient, such as with increased deductibles and not paying for out-of-network providers, is the opposite of the direction in which we should be headed. Government programs are noted for their parsimonious payment policies, often paying less than costs of care, and thus shifting more risk to the providers can threaten especially the safety-net system – again, the wrong direction on policy.

Many decades ago Nobel laureate Kenneth Arrow explained why markets do not work in health care, and yet the wish-they-would-work ideologues keep pushing their concepts on us. Our insistence on using markets in health care, such as our heavy reliance on private health plans, has resulted in the most expensive health care system yet one of the poorest performing when considering the tens of millions with inadequate insurance or no insurance at all. Our very high spending with poor performance is proof that, in health care, the markets are not bringing us high quality at low cost.

If we had a single payer Medicare for All system, we wouldn’t have to rely on the marketplace to manage costs since the government would use patient-friendly and provider-friendly administered pricing. Those who still contend that the government can’t do it right have to recognize that all other wealthy nations are providing health care for essentially everyone at an average per capita cost of half of what we spend.

More “skin in the game” punishes those who already are suffering the burden of having medical disorders. Our health care financing system should be designed to help relive those burdens, not cause more.

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About the Commentator, Don McCanne

Don McCanne is a retired family practitioner who dedicated the 2nd phase of his career to speaking and writing extensively on single payer and related issues. He served as Physicians for a National Health Program president in 2002 and 2003, then as Senior Health Policy Fellow. For two decades, Don wrote "Quote of the Day", a daily health policy update which inspired HJM.

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