The healthcare industry is facing enormous pressure in the form of spiraling cost inflation, lagging quality indicators, rising insurance premiums, and increased demand for price transparency to deliver better health outcomes at lower prices. The historical fee-for-service business model that rewards the volume of treatments and encourages unnecessary care without reference to outcomes is being challenged by public and private payers. Payers are experimenting with value-based payment models, such as bundled payments, population health management, and capitated payments, that are shifting risk to healthcare delivery organizations in order to increase their accountability for the cost and quality of the care they provide.

CMS has committed to disbursing half of its total payments through value-based payment agreements by 2018, and a private payer alliance has likewise committed to a 75% target for its total payments received by 2020. CMS has demonstrated its commitment with the implementation of mandatory value-based payment through its Comprehensive Care for Joint Replacement initiative, which will remain in place with some changes despite moves in 2017 to scale back similar initiatives for other procedures. Such programs make providers accountable for the cost and quality of care across the acute care episode and the 90 days that follow.