Although there have been modest successes in “bending the cost curve,” healthcare spending in the U.S. continues to reach unprecedented heights.  Over the next decade, healthcare costs are on track to nearly double, going from $2.9 to $5.2 trillion.1  What’s worse is that while the U.S. spends far more per capita on healthcare than any other major developed country, it consistently ranks near the bottom on many measures of quality and performance.  Given the current state of healthcare in the U.S., it’s no surprise that the entire system is under intense pressure to deliver better, more cost-effective solutions.

In particular, payers are actively exploring ways to replace the current fee-for-service (FFS) model – which incentivizes high-cost, high-volume care – with alternative, value-based payment models that link payment to performance and shift financial risk to providers.  Payers are also taking steps to limit reimbursement for and access to products and services that don’t show sufficient economic and clinical value.  At the same time, consumers are raising their expectations for the healthcare they receive and pay for, especially as the use of high deductible plans increases.

Two recent announcements have further accelerated the transition to value.  In early 2015, the Centers for Medicare and Medicaid Services (CMS) announced a goal of increasing Medicare payments through value-based models from 20% in 2014 to 50% in 2018.2  A short time later, the Health Care Transformation Task Force, a 28-member alliance of providers, payers, employers, and various other partners, committed to transitioning 75% of its members’ healthcare payments to value-based arrangements by 2020.3  In short, the shift to value is rapidly approaching!

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