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Vital Directions from the National Academy of Medicine
September 26, 2016

Competencies and Tools to Shift Payments From Volume to Value

Author Affiliations
  • 1Duke-Robert J. Margolis Center for Health Policy, Duke University, Durham, North Carolina
  • 2Former United States Secretary of Health and Human Services, Washington, DC
  • 3Leavitt Partners, Salt Lake City, Utah

Copyright 2016 American Medical Association. All Rights Reserved. Applicable FARS/DFARS Restrictions Apply to Government Use.

JAMA. Published online September 26, 2016. doi:10.1001/jama.2016.14205

Health reform remains at the forefront of US policy debates because of continued growth in public and private health care spending alongside increasing capabilities of medical care—as well as persistent evidence of inefficiencies and significant variance in utilization, cost, and quality.1 Substantial bipartisan support has emerged for moving from fee-for-service payment due to failure of this payment model to support many innovative approaches to care delivery, and the administrative burdens on clinicians and patients.

Alternative payment models (APMs) have proliferated in federal, state, and commercial initiatives, including the Medicare and CHIP Authorization Act (MACRA) of 2015,2 with the hope of aligning financial support with higher-value care. The Health Care Payment Learning and Action Network3 has described a range of payment reforms and accompanying delivery models that represent a shift away from fee for service, for example, accountable care organizations, fixed-bundled payments for episodes of care, and primary care medical homes with shared savings.

Despite the promise and enthusiasm, early results have been mixed. Although some accountable care organizations have demonstrated notable improvements in care quality with financial success, most participants in Medicare’s major APMs have not yet realized significant savings.4,5 Consequently, there has been compelling interest in improving the design of APMs and the data available to support health care organizations in APMs.

Even with further policy refinements, the how of improving care, reducing costs, and thus succeeding under new financing models is not well understood. Although payment reform is crucial, it can move no faster than the pace of development of new capabilities and competencies of clinicians and health care organizations to deliver care effectively in a value-based system. Even though most APMs are still largely fee for service–based, pressure is increasing to delay MACRA and other payment reforms, especially for smaller health care organizations and those serving vulnerable populations, because most practitioners and health care entities are not ready for the new APMs.

Needed Competencies

US health care organizations have well-developed capabilities for fee-for-service payment systems, such as efficient scheduling to maximize throughput, electronic data capabilities for coding and billing, and care improvement initiatives to improve quality while maintaining fee-for-service margins. Equivalent capabilities are needed to transform population health management to deliver low-cost, high-quality care at the level of episodes of care and whole-patient care. Health care organizations and many companies in the health care industry are implementing a range of approaches, many of them proprietary, to succeed in APMs. No government or private entity can replace these efforts. But policy makers can support steps and public-private collaborations to identify needed competencies for success in APMs, gaps in these competencies, and tools and strategies that organizations can use to address the gaps and enhance progress.

The needed competencies are illustrated in a framework developed by the Accountable Care Learning Collaborative (ACLC), in consultation with other public and private initiatives to advance value-based care. The ACLC developed this framework through an initial expert advisory review and commissioning of a set of collaborative work groups to conduct an evidence review and resource review in each area, an iterative consensus process in each work group to identify key capabilities and best practices, and a high-level review to refine the overall structure of the identified competencies. The Box shows the range of topics addressed and examples of the key competency identified through the ACLC process.

Box Section Ref ID

Health Care Organizational Competencies for Reform

Governance and Culture
  • Leadership and policy development; provider accountability; board representation for clinicians, community, and patients; decision-making processes aligned with value-based objectives

Financial Readiness
  • Ability to assess longitudinal patient resource use; evidence-based mechanisms for management of financial and performance risk; established provider networks; mechanisms to distribute shared savings payments

Health Information Technology
  • Capacity to assess and implement products, platforms, and processes, for accessing and using health care data; reliable and timely acquisition of key actionable data for longitudinal patient management; analytics to predict intervention impact

Patient Risk Assessment
  • Ability to assess patient needs for chronic condition management and navigating the health system and to target strategies and specific resources to patients using a validated risk or impact assessment tool

Care Coordination
  • Longitudinal care team with well-defined roles and responsibilities, fostering continuity of care; mechanisms for access to well-targeted and community-based social services; reliable, straightforward sharing of encounters, tests results, and other key information across care team

  • Capacity to assess and implement high-impact interventions to make care safer, more effective, patient centered, timely, efficient, and equitable; provider and staff training; quality improvement initiatives are evidence driven, with impact measurement and adjustment

Patient Centeredness
  • Capacity to help individuals maintain or return to health, supported by patient-driven health measurement capacity; incorporation of patient perspective into governance, care system design, and individual interaction; capturing the individual patient's values, preferences, and expressed needs in care plans

To succeed in payment reform, health care organizations need to assess their competencies and fill critical competency gaps. Most organizations are only at early stages in the journey to succeed in bearing risk and improving patient outcomes. Policy makers can do more to help.

Summary Recommendations for Vital Directions

Policy makers should match support for improving the design and evaluation of payment reform models with corresponding support for clinicians and health care organizations to develop the competencies needed to succeed. Four vital directions are highlighted:

  • Support public-private precompetitive collaboration. Collaborations aiming to provide tools and resources accelerate the development of APM competencies include such initiatives as the Premier’s Population Health Management Collaborative, the Health Care Transformation Task Force, the ACLC, and the National Academy of Medicine’s Leadership Consortium on Value and Science-Driven Health Care. The Centers for Medicare & Medicaid Services (CMS) and the Department of Health and Human Services (HHS) should actively participate and the federal government should provide financial support for using these initiatives to develop better publicly available resources for providers. For example, CMS “learning networks” for particular Medicare payment reforms should be conducted in closer collaboration with private-sector efforts on similar payment reforms with specific goals for improved resources for health care practitioners and organizations. Priorities should include better tools for different types of clinicians and organizations to assess gaps and for tracking and evaluation of progress in APM capabilities through the development, refinement, and wider use of meaningful measures of key competencies needed for delivering care effectively in APMs.

  • Develop evidence of the benefit of improved competencies. Collaboration on competency assessment and development should be based on a stronger foundation of empirical evidence. The federal government should support research on the benefits of improved competencies for organizational quality and cost performance. This improving evidence base will lead to a better understanding of what competencies are truly needed for success and the best ways to develop them.

  • Align federal payments with value-based health care. Aligning federal payments for health professional education with value-based health care competencies will help more medical schools and other health care professional education programs make needed changes to reflect the new kinds of skills that health professionals need to succeed in a health care system focused on value.

  • Implement rewards for data exchange capacities. Health information technology is critical to the success in patient-centered delivery reforms that improve quality and lower costs. Building on efforts to support data interoperability, it is important to focus on the roadmap developed by the Office of the National Coordinator for HIT and important for CMS to focus payment policies for health information technology more directly on use case–demonstrated competencies in data exchange and to reduce administrative barriers to data exchange caused by some interpretations of current privacy rules.

Reforming health care payment policies is not enough to transform health care. Although payment changes are needed to make value-based care reforms financially viable, real health care reform—changes in the actual delivery of care—continues to be very challenging for health care professionals and organizations to implement successfully. Promoting successful delivery reform through greater awareness of needed competencies for reform, and better evidence on how health care organizations can develop these competencies, will enable greater competition to create more value in health care, more effective investments by health care organizations in improving care, and most importantly, better outcomes and lower costs for patients.

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Article Information

Corresponding Author: Mark B. McClellan, MD, PhD, Duke-Robert J. Margolis Center for Health Policy, 100 Fuqua Dr, Box 90120, Duke University, Durham, NC 27708 (

Published Online: September 26, 2016. doi:10.1001/jama.2016.14205

Conflict of Interest Disclosures: Both authors have completed and submitted the ICMJE Form for Disclosure of Potential Conflicts of Interest. Dr McClellan reported receiving personal fees from Johnson & Johnson. Both Dr McLellan and Mr Leavitt founded the Accountable Care Learning Collaborative.

Funding/Support: The National Academy of Medicine’s Vital Directions initiative is sponsored by the California Health Care Foundation, The John A. Hartford Foundation, the Robert Wood Johnson Foundation, and the National Academy of Medicine’s Harvey V. Fineberg Impact Fund.

Disclaimer: This Viewpoint on health care payment models provides a summary of a discussion paper developed as part of the National Academy of Medicine’s initiative on Vital Directions for Health & Health Care ( Discussion papers presented in this initiative reflect the views of leading authorities on the important issues engaged and do not represent formal consensus positions of the National Academy of Medicine or the organizations of the participating authors.

Additional Contributions: Coauthors of the National Academy of Medicine discussion paper were Susan DeVore, MSM, Premier Inc, Elliott Fisher, MD, MPH, Dartmouth College, Richard Gilfillan, MD, Trinity Health, Stephen Lieber, Healthcare Information and Management Systems Society, Richard Merkin, MD, Heritage Provider Network, Jeffrey Rideout, MD, Integrated Healthcare Association, and Kent Thiry, MBA, DaVita Healthcare Inc. Elizabeth Finkelman, MPP, served as the initiative director.

National Academies of Sciences, Engineering, and Medicine. The Role of Public-Private Partnerships in Health Systems Strengthening. Washington, DC: The National Academies Press; 2016. doi:10.17226/21861.
Medicare Access and CHIP Reauthorization Act of 2015, Public L 114-10. Published April 16, 2015. Accessed September 8, 2016.
Health Care Payment and Learning Action Network. Alternate payment model (APM) framework: final white paper. Published January 12, 2016. Accessed September 8, 2016.
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Nyweide  DJ, Lee  W, Cuerdon  TT,  et al.  Association of pioneer accountable care organizations vs traditional Medicare fee for service with spending, utilization, and patient experience. JAMA. 2015;313(21):2152-2161.