The release on October 25, 2016 of results from the Health Care Payment Learning and Action Network’s (LAN) data collection effort was a milestone in the national effort to move from legacy payment systems to alternative models. It underscores the nationwide commitment to reform the way the public and private sectors pay for health care services. It also shows we are making some progress.

The LAN obtained data provided voluntarily by plans that administer benefits for 67 percent of the United States’ covered population. The results, which looked back on 2015, revealed that 62 percent of payments were made using traditional fee-for-service, while 23 percent of payments were made using Alternative Payment Methods (APMs). The remainder were made using fee-for-service paired with a pay-for-performance program designed to reward health care providers if they met or beat quality standards. This figure falls short of the Department of Health and Human Services and LAN goal of 30 percent of payments being made through APMs by 2016. However, the data are based on claims paid by health plans during 2015, so it is reasonable to believe that we will achieve the 2016 goal by the end of the year.

Regardless of the fact that a new and very different administration will be in place next year, payment reforms will likely continue across all market segments (Medicare, Medicare Advantage, Medicaid, and commercial). There is clear momentum, as each type of payer and purchaser has its own compelling reasons to continue reforms in search of better value from health care spending.


The results of specific health care delivery and payment reform programs are mixed, but trending positive. On the cost front, in August of this year, the Centers for Medicaid and Medicare Services (CMS) reported that over 400 accountable care organizations (ACOs) with shared risk and shared savings arrangements produced more than $466 million in programs savings in 2015. ACOs with shared savings arrangements generated $429 million of the $466 million. Additionally, CMS reports that more ACOs achieved shared savings in 2015 than in 2014.

On the quality front, CMS reports that the average quality performance of shared savings ACOs improved by over 15 percent from 2014 to 2015 on four measures: screening for risk of future falls, depression screening and follow-up, blood pressure screening and follow-up, and providing pneumonia vaccinations. While there are not yet agreed upon standards that would allow us to evaluate programs in a rigorous and comparable way, many more evaluations are happening and some stakeholders are starting to come together around this need.

Yet, no matter how rigorous and consistent we make our approach to evaluation, we will still have to interpret results in context. What are the local market dynamics? What are the capabilities of those involved? What are the characteristics of the targeted population? It will be a long time yet before we can conclude, across the board, that a particular payment method does or does not work.

We also have to keep in mind that the U.S. health care system is remarkably adaptable. Evaluations of individual payment reform programs may not reveal how the larger health care system responds to each program’s success or failure. If a program leads to higher quality and lower costs, it’s possible that quality was neglected elsewhere in the system or that savings were negated by higher prices for—or increased volume of—other services not addressed by the program. These potential unintended consequences require that we take a much more expansive view to understand the full impact of these sweeping payment changes on the health care system as a whole.

Seeing The Big Picture

How should we go about getting this aerial view? It will be nearly impossible to isolate any causal relationships between payment reforms and health care system outcomes. There are too many variables — benefit designs, prices, the underlying health status of the population, imbalances in the workforce, to name a few.

What we can do is identify indicators that can serve as correlates for health system outcomes. These might include metrics at the intersection of quality and efficiency, such as readmissions, emergency room use, length of stay, ambulatory care sensitive conditions; other metrics could examine the impact on the economy and affordability of health care for U.S. households; still others could gauge the impact on the structure and organization of health care providers, particularly whether reforms continue to be correlated with further consolidation. And finally, we can’t forget about the patient experience in this changing payment and delivery reform landscape.

With funding from the Laura and John Arnold Foundation and the Robert Wood Johnson Foundation, and the help of an advisory board of experts, we at Catalyst for Payment Reform will spend the next two years developing and piloting the methodology to measure the impact those reforms are having on the health care system. We’d love to hear your ideas on how we should proceed, particularly regarding which metrics could serve as solid indicators of the impact of these sweeping changes to payment on the functioning of our health care system.