Introduction

There is growing interest in moving away from traditional fee-for-service payment models towards value-based payment systems that better align incentives in health care. One manifestation garnering particular attention is initiatives that combine global payments for population health with explicit quality incentives to improve care and lower costs. These models have seen increasing adoption, but remain heterogeneous in their design and implementation. 

This article reviews such initiatives, highlighting common themes like an emphasis on primary care coordination. It also examines available evidence on their impact, which indicates potential to reduce spending growth while maintaining or slightly improving quality.

Global Payments to Provider Groups

Definition and Purpose

Global payments represent a form of bundled payment, but encompass a broad set of services rather than a single treatment episode. In this model, a provider group receives a population-based preset payment intended to cover a comprehensive continuum of care.https://pubmed.ncbi.nlm.nih.gov/31216945/

The flexibility given to providers is intended to encourage efficiency, care coordination across patient conditions and sites of care, and a long-term outlook. Freed from a piecemeal fee-for-service chassis, groups can invest in initiatives like prevention and care management that take time to achieve returns.

Risks and Mitigation Strategies

However, such global payments also transfer financial risk to providers, potentially exposing them to significant losses. Safeguards are necessary to avoid creating incentives that lead to unintended consequences like underprovision of necessary care.

To mitigate excessive risk, global payment initiatives incorporate risk sharing arrangements in which providers assume accountability for only a portion of any surpluses or deficits. 

Explicit quality incentives are also included, rewarding performance on evidence-based process and outcome measures. This prevents incentives to inappropriately limit care strictly to improve the bottom line.

Design Choices and Variations

In operationalizing these models, the specific design details matter greatly. For instance, the global payment amount can derive from historical spending, regional benchmarks, or negotiated targets. Payments may actually replace existing systems or be “virtual,” built atop current fee-for-service payments.

Patients are prospectively or retrospectively attributed to provider groups. Contracts range from a single year to an open-ended agreement. Risk adjustment and reinsurance provisions account for patient complexity and outlier costs. Ongoing empirical research is still required to clarify optimal design choices.

Layering Explicit Quality Incentives

Supplements Global Payment

The second core component of these models is a set of quality incentives explicitly linked to performance. This recognizes that many key aspects of value remain difficult or impossible to adequately measure and attribute.

Layering on explicit incentives for quality indicators addresses this issue and balances the cost-control incentives from global payments. It aims to improve quality and prevent unintended consequences.

Measurement and Implementation

Included indicators span clinical process measures, health outcomes, and patient surveys on care experience. Performance can be gauged at the individual clinician or group practice level.

Choices must be made regarding the method of linking payments to quality, the incentive amount relative to the global payment, targets for scoring, and payment frequency or lag time.

Design Considerations

For instance, a group’s share of any savings or losses realized under the global payment can be made conditional on aggregated quality scores. Small incentive payments are preferred over large bonuses, which could disproportionately divert attention.

Absolute performance targets may work better than relative improvement over time to create clearer expectations. And shorter time lags between care delivery and incentive payment help reinforce desired behavior.

Strong Orientation Around Primary Care

Central Role of PCPs

A common theme across initiatives is a central role for primary care physicians (PCPs) as main contractors who coordinate patient care within and across settings. This aligns with broader trends.

Provider groups include PCPs, medical and surgical specialists, hospitals, post-acute facilities, and ancillary providers. But PCPs are pivotal for managing whole patient care and transitions.

Benefits of Robust Primary Care

Systems oriented around strong primary care have demonstrated improved outcomes and lower costs. Ongoing PCP relationships and a whole-person perspective facilitate preventive care and care coordination for complex needs.

And substitution of care from higher-cost specialists to PCPs offers savings. Global payments give PCPs flexibility to deliver comprehensive coordinated care.

Challenges and Limitations

However, transforming established systems that heavily emphasize specialized care poses challenges. PCPs require time, staffing, health IT, and other infrastructure to take on this elevated role.

Many clinicians will also need training in care coordination and team-based practice. Phasing in support, resources, and incentives will aid adoption of new mindsets and practice culture.

Evaluation of Spending and Quality Outcomes

Most initiatives are still early in implementation, but initial research provides useful insights. Rigorous study of long-term impacts will further inform optimal design.To date, evaluations consistently demonstrate global payments with quality incentives can slow health spending growth without compromising quality. 

Most find small improvements on key quality indicators as well.Magnitude of effects varies. But overall, the model shows promise to control costs while maintaining or improving care standards. Ongoing empirical research as these systems mature will offer more definitive conclusions.

Conclusion and Policy Implications

Increasing policymaker interest in blending global payments and quality incentives reflects growing recognition of the need for profound delivery system reform. These models appear well-aligned to improving value. But operationalization remains heterogeneous, and details matter greatly. Mitigating risks while creating synergistic incentives is complex.

 Additional research on design choices and long-term impacts will support evolution and adoption.