Blog Defining the Path Toward Value

Posted January 13, 2017 by Adele Allison

The path forward to align value-based payment models across public and private health plans has been laid out by the Health Care Payment Learning and Action Network (HCPLAN). The HCPLAN was formed by The Alliance to Modernize Healthcare and sponsored by CMS as a public/private collaboration of health care stakeholders. This group of health plans, providers, patients, employers, consumers, states, federal agencies, and other partners recently created a framework with four categories along a continuum moving toward higher levels of value-based care and payment (See Figure 1). 1

The Roadmap to Value-Based Care and Payment

Figure 1. The Roadmap to Value-Based Care and Payment

Category 1 represents the traditional payment model. Plans pay a fee for each service rendered with no link to quality or value. Under category 2, plans pay differentially based on measurements of quality and value. Plans seek to support provider infrastructure through models such as the medical home in this category. (To learn more about the milestone of Category 2 with a closer look at the Patient-Centered Medical Home model, request our white paper on this topic. The next step in the evolution is Category 3, where providers start to enter into alternative payment models (APMs), although still on a fee for service archetype. A retrospective bundled payment would be an example, as is shared savings through an Accountable Care Organization. Finally, plans and providers move into Category 4. This is a mature community destination, where everyone focuses on true population-based payment (PBP). Under PBP, payment and risk is shared across the provider community based on the collective care and health of the patient. As we advance through this continuum, the complexities in process and the data requirements become ever greater.

Today, much of healthcare economics is still functioning under category 1. But the roadmap for fundamental change toward value has been laid out. Payers who understand the direction CMS is driving the healthcare ecosystem will be better positioned to work collaboratively with providers as they move along this continuum. Payers can begin identifying strategic business opportunities to support providers as they take the incremental steps to adapt to new payment and risk adjustment models. The stage is set for a new era of value in health care with payer-provider collaboration at the center.

Other blog posts in this series:

If you are interested in learning more about how DST can help you navigate through this changing environment, please contact us at 800.272.4799.

Adele Allison headshot
Adele Allison
Director, Provider Innovation Strategies


1 Health Care Payment Learning & Action Network. Accelerating and Aligning Population-Based Payment Models: Data Sharing – Draft White Paper. Published June 10, 2016. Accessed August 4, 2016.

The views expressed in this publication are solely those of the author and do not necessarily reflect the position or policy of DST Systems, Inc. or its affiliates, subsidiaries, joint ventures, officers, directors, or management.

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