Healthcare Reform

Gail Wilensky: Physician payment and SDoH challenges loom large on nation’s path to value

November 30, 2021 3:50 pm

The focus on paying for care on the basis of value delivered has grown significantly in the past decade. Yet most physicians still receive payments on a fee-for-service basis, despite the increasing employment of physicians by hospitals and health systems.

Value-based payment (VBP) remains an important means for achieving greater cost effectiveness of health in the United States. But if the nation is to achieve the Triple Aim goals of value-based care, there also needs to be more focus on steps to reduce the cost of keeping people healthy.

This broader charge cannot be accomplished without addressing two primary obstacles to cost-effective health and healthcare delivery:

  1. The need to extend VBP incentives to all physicians, including both primary care providers and specialists
  2. The need to address other factors that contribute to high healthcare costs in the nation, such as social determinants of health (SDoH)

Physician payment challenges

Adopting the VBP model for salaried physicians is a straightforward matter. But many physicians, especially specialists, are accustomed to receiving FFS payment and may not welcome VBP incentives.

Nonetheless, the VBP model has been shown to be a significant way to help eliminate, or at least reduce, the use of low-value services, and physicians may be more receptive to it as a result of the COVID-19 pandemic. The reason is that many physicians who historically relied on FFS faced increased risk during the pandemic, when their patients dramatically reduced their use of healthcare services for fear of exposing themselves to the coronavirus. If the nation is to make headway in reducing its huge expenditures on healthcare, it must take advantage of any opportunities to move physicians partly or completely away from FFS payment and its perverse incentive to provide more and more complex services, despite whether it is the best care for the patient. The approach taken will necessarily differ between primary care and specialty care.

Primary care. Most VBP strategies  have focused on payment to primary care physicians. The payment strategies have included the use of alternative payment models by commercial payers as well as by state Medicaid programs.

UnitedHealth Group has reported that physicians delivering care to its Medicare Advantage (MA) population are responding strongly to the incentives under value-based care models to deliver the “right care at the right time.”a

An analysis of the insurer’s MA population found significantly higher rates of patient engagement and positive outcomes among physicians in VBP arrangements than among physicians paid straight FFS payments. The study found, for example, that patients of physicians in VBP arrangements had:

  • An 80% rate of receiving breast cancer screening versus 74% among patients of physicians being paid FFS (FFS physicians)
  • An 82% rate of receiving colon cancer screening versus 74% among patients of FFS physicians
  • An 89% rate of having controlled blood sugar versus 80% among patients of FFS physicians
  • An 84% rate of receiving an eye exam versus 74% among patients of FFS physicians
  • A 97% rate of having a medication review versus 92% among patients of FFS physicians

These comparisons all looked at a global capitated model, where the incentives to keep patients healthy are greater than in FFS models.

Specialty care. Because primary care accounts for only about 6% to 8% percent of the nation’s healthcare spending, it is even more important to use VBP strategies when reimbursing specialists and specialized care.b Yet developing and implementing payment reform for specialty care has proven to be more challenging. The authors of a recent Health Affairs Blog post suggest the Center for Medicare and Medicaid Innovation could help to address this challenge by developing longitudinal models for many specialty conditions, as has been done for pregnancy and childbirth, degenerative joint disease care and acute surgical episodes.c Unfortunately, although they have existed for a while, the bundled payment models for specialty areas have not been widely adopted.

Optum, which is the largest provider of MA plans, has reported results among its MA members that point to possibilities for achieving better results at lower costs by using VBP models:d

  • MA members reported fewer hospital admissions, shorter hospital lengths of stay and faster recovery times compared with Medicare FFS patients.
  • Among patients at highest risk, 80% reported interacting with care navigators and in-home clinicians, averaging 9.3 visits per member.
  • Patients with chronic conditions exhibited 30% to 40% better medication adherence.
  • The cost of care was 30% lower when compared with that for FFS patients.
  • Out-of-pocket spending for seniors was $700 compared with $2,000 on average for seniors under FFS.

Given the lower spending rates overall — and particularly the lower out-of-pocket spending reported by seniors in MA plans that are using VBP strategies — this area appears ripe for further growth. Yet many physicians continue to lack access to data-driven tools to help them practice value-based care, and many are not fully aware of the costs of the treatment they select, much less feel comfortable discussing costs with their patients.

Despite ongoing efforts to provide more reliable and easily accessible information on quality and prices in healthcare to both physicians and patients, much work remains to be done. Value-based care will continue to see slow growth as long as physicians and patients are not comfortable discussing the full range of care alternatives and their associated costs.

SDoH challenges

As important as the movement toward VBP has been, another important movement toward improving health outcomes and promoting greater cost effectiveness of health is the focus on SDoH — the non-medical factors that affect health outcomes, such as early childhood development, economic opportunities and education. Studies have shown that these factors are even more important to predicting health outcomes than medical care for most people in all but a few very selected moments in their lives.

Focusing on conditions that affect early childhood development is particularly important because they can enhance a person’s opportunities for better health throughout a lifetime. Conditions such as obesity, cardiovascular disease, cancer and mental health problems often began with poor health habits early in life. It is especially important to address issues of food insecurity during pregnancy and early childhood as well as early childhood education — especially for people living in poverty.

Efforts to address drug abuse are also very important for young adults and especially for pregnant women because of the serious medical conditions that can be passed on to the unborn child by a substance-abusing mother.e

Many SDoH issues represent societal problems that healthcare organizations cannot solve  by themselves. But these organizations have a societal and mission-related obligation to be part of the solution by finding ways to address SDoH head-on through strategies such as community partnerships, outreach and engagement.

It’s about improving outcomes

We are a country that spends a lot on healthcare. Increasing the use of VBP programs and focusing more attention on SDoH would allow us to improve our health outcomes. 


a. UnitedHealth Group, “Global capitation payments result in the highest-quality primary care for seniors,” August 2020.

b. Patient-Centered Primary Care Collaborative, “Spending for primary care,” Fact sheet, March 2020.

c. Crook, H.L., Saunders, R.S., Roiland, R., Higgins, A., and McClellan, M.B., “A decade of value-based payment: lessons learned and implications for the Center for Medicare and Medicaid Innovation, Part 2,” Health Affairs Blog, June 10, 2021.

d. UnitedHealth Group,  “Medicare Advantage beneficiaries receive better value and spend 40% less,” April 8, 2021.

e. Wilensky, G.R., “Addressing social issues affecting health to improve U.S. health outcomes,” JAMA, April 19, 2016.


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