The Promise of ACOs and Bundled Payments Remains Cloudy

Tony Berberabe, MPH
Published Online: Wednesday, March 12, 2014
Evidence that demonstrates how best to implement newer value-based purchasing (VBP) programs like accountable care organizations (ACOs) and bundled payments is lacking, according to a report that assessed the state of knowledge about these programs.

Despite a decade of study involving these reforms there is little information about how best to execute such strategies or judge their success, says the report “Measuring Success in Health Care Value-Based Purchasing Programs - Summary and Recommendations,” issued by the RAND Corporation, a health policy research organization. RAND conducted its research after a request was made by the Office of the Assistant Secretary for Planning and Evaluation (ASPE) in the Department of Health and Human Services (HHS).

The stalwart of value-based purchasing, fee-for-performance, has undergone the most research, says the report, but more research is needed to understand the impact of the newer models—ACOs and bundled payments—which create stronger financial incentives for providers.

In a release from RAND, Cheryl Damberg, lead author and a senior principal researcher at the company said, “The evidence from the past decade is that pay for performance had modest effects on closing the quality gap. Newer payment reform models such as ACOs are in their early stage of implementation and little is known at this point about their impacts on cost and quality, and how best to design these programs to succeed in achieving desired goals.”

She continued, saying that newer reforms “have sharper teeth—putting health providers at financial risk for spending above negotiated targets—that may trigger significant changes by providers.”

The RAND report reviewed 129 pay-for-performance programs, ACOs, and bundled payment initiatives and issued the following recommendations to HHS:
  • Develop a national VBP strategy that outlines what the federal government’s goals are for VBP and thus what constitutes success, the priority areas for measurement, a timeline for increased focus on outcomes, and other high-priority measurement areas.
  • Develop a well-defined, coordinated research strategy to generate the information required to fill gaps in the knowledge base. Because federal initiatives to develop, test, and evaluate VBP programs are occurring in different settings, the opportunity exists to coordinate the evaluation work being performed across the various VBP initiatives.
  • Chart a new strategy and process for developing measures to support federal VBP programs. Efficient, streamlined performance measures are vital for the transition to VBP, the authors write. These measures should incorporate not just processes of care, but also patient outcomes and proper use of services.
The report is available for download here.
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