Her experience points to a promising idea that has been at the center of health care reform for more than a decade: Instead of paying doctors and hospitals for every test and procedure they perform, pay them for keeping patients healthy. In this model, called value-based care, doctors and hospitals are paid based on the health outcomes they achieve and the overall cost of caring for their patients, rather than simply for the volume of tests and procedures they order. Do that, the theory goes, and you align everyone\u2019s incentives \u2014 doctors, hospitals, insurers, and patients \u2014 around what actually matters.<\/p>\n
The idea is sound. The results, so far, have fallen short. The Congressional Budget Office found that the federal government\u2019s major payment-reform programs \u2014 a central tool for implementing value-based care \u2014 cost $5.4 billion more<\/a> than they saved between 2011 and 2020. These value-based care programs have not yet bent the cost curve.<\/p>\n But buried in the data is an encouraging sign: The programs that have actually worked share a common feature. They are often physician-led, and they hold doctors genuinely accountable for the total cost and quality of their patients\u2019 care. When primary care teams are given both the tools and the real financial responsibility to manage health, they deliver better results \u2014 for patients and for the system.<\/p>\n Why hasn\u2019t that spread more broadly? There are two main reasons.<\/p>\n First, the doctors doing the work often see little of the savings they generate. Consulting companies and management firms that run these programs can capture 40 cents of every dollar saved<\/a> \u2014 money that should be going to front-line care. Second, these programs often don\u2019t cover the sickest and most vulnerable patients who need coordinated care the most.<\/p>\n Despite these limitations, accountable care can work. In 2022, Medicare\u2019s flagship program resulted in savings of nearly $2 billion<\/a>, with the biggest gains coming consistently from physician-led, primary care-centered organizations.<\/p>\n Still, given the comparatively small savings of value-based care, the temptation is to abandon this effort. That would be a mistake. Instead, health care officials need to get serious about making these programs better. <\/p>\n It begins by raising the stakes. Most value-based programs have been structured so that providers \u2014 doctors or hospitals \u2014 receive a bonus if they save money but face no penalty if costs run over. Programs with no downside risk are programs without real accountability. And without real accountability, the incentive to fundamentally change how care is delivered simply isn\u2019t there. The Trump administration has taken a meaningful step here, eliminating these half-measures and launching new programs with longer contracts \u2014 up to 10 years \u2014 that give practices the time to invest in the kind of care coordination our colleague mentioned above has seen in her practice. Research shows it works<\/a>: Programs with longer track records and stronger accountability have consistently delivered bigger savings.<\/p>\n It also means having more specialists lead many value-based care programs. Focusing on primary care is important, but it alone cannot bend the cost curve. Cardiologists, orthopedic surgeons, oncologists, radiologists \u2014 these and other specialists account for the majority of what Medicare spends, and for too long they have operated entirely outside any accountability for cost or outcomes. <\/p>\n New programs from the Centers for Medicare & Medicaid Services<\/a> are beginning to change that, requiring specialists in areas like heart failure and chronic back pain to share in the financial consequences of their decisions, reducing payment to those who exceed spending targets. That\u2019s the right direction. <\/p>\n The next step is extending it much further \u2014 where payers like CMS or private insurers set a target payment for a whole episode of care (like a joint replacement) so that every provider (in this case, the surgeon, the hospital, etc.) has an incentive to manage costs efficiently. Experts have estimated that bringing specialists into this accountability framework could save as much as $100 billion a year<\/a>. That potential has barely been tapped.<\/p>\n Longer value-based care contracts between payers and providers also allow something that short-term thinking punishes: investing in patients\u2019 long-term health. A doctor who prescribes an effective obesity medication today \u2014 one that could prevent diabetes, heart disease, and joint problems years from now \u2014 shouldn\u2019t be penalized because the savings show up after the contract ends. Smarter payment design would reward exactly that kind of forward-looking care.<\/p>\n The ultimate goal is accountability \u2014 with hospitals, specialists, and primary care doctors all responsible for the total cost of a patient\u2019s care while paying attention to good health outcomes. Maryland has been running an experiment along these lines for a decade<\/a>, and sets a budget for how much money can be spent overall by hospitals in the upcoming year. The results show that even hospital systems can operate under spending constraints without sacrificing the quality of care. Cost discipline and good medicine are not in conflict. When every player is accountable, the incentives align much better.<\/p>\n None of this is easy. Moving to longer contracts and greater accountability will create anxiety among providers, particularly smaller practices and safety-net organizations serving low-income communities. Strong risk adjustment and guardrails against excessive volatility are essential.<\/p>\n