Leading in the Value-Based Care Economy

The Evolution of Value-Based Care

Before the term ‘value-based care’ emerged in U.S. health care, leaders were challenged to transform a system that prioritized volume over outcomes. Despite decades of transition, the speed of change still blurs the line between experimentation and a sustainable new payment system.

The Centers for Medicare & Medicaid Services (CMS) is increasingly urging Medicare beneficiaries into accountable care arrangements. Providers are being asked to take more responsibility for quality and cost of care. Krista Nelson, CEO of Optum Health, emphasized this in a recent Newsweek webinar, highlighting how the health care landscape is evolving under CMS’s guidance.

CMS’s Vision for Value-Based Care

Nelson stated CMS’s goal is to ensure all Medicare beneficiaries have access to value-based care, not only through Medicare Advantage but across traditional Medicare as well. The agency’s explicit aim is to shift Medicare payments from a quantity-based approach to one rewarding quality.

Starting in 2026, physicians participating in Advanced Alternative Payment Models will receive higher annual updates: 0.75% compared to 0.25% for non-participants. CMS’s strategy includes expanding prospective payments and advanced shared savings, aiming to move beneficiaries toward accountable care arrangements with global downside financial risk. These changes reflect a broader ambition to improve quality while reducing costs.

Optum Health’s Approach

Optum Health plays a substantial role in delivering and managing care across various settings, providing Nelson with broad insights into the industry’s shift towards value-based care. She noted significant performance variations across markets, influenced by patient demographics, payer dynamics, and the maturity of local care models.

Optum Health’s Houston market exemplifies successful value-based care, with care for about one million patients focused on primary care. Nelson reported substantial reductions in total care costs and high patient satisfaction scores, attributing these results to investment, tools, and collaborations with payers and providers.

The Quadruple Aim

Nelson described the ‘quadruple aim’ of value-based care: enhancing quality outcomes while lowering costs and improving experiences for patients and clinicians. She cited research supporting these goals, although results vary by program and provider.

A 2018 study found physician-group ACOs in the Medicare Shared Savings Program reduced spending over time. However, hospital-integrated ACOs achieved smaller savings, indicating the impact of organizational structure on outcomes.

Recent CMS reports show significant savings and improved patient measures, but scaling to an industry-wide model remains difficult.

Challenges and Scaling

Achieving CMS’ broader goals requires overcoming scaling obstacles. Payers and providers must agree on risk measurement, reward systems, and investment financing. Rising medical costs and evolving Medicare Advantage scenarios add complexity to sustaining cost-reducing models.

Industry pressures, regulatory changes, and unexpected cost trends demand adaptive strategies. UnitedHealthcare’s 2025 forecast highlighted challenges in pricing assumptions versus actual costs, emphasizing the need for responsive planning.

The Path Forward

Despite mixed research outcomes, many industry leaders remain optimistic about the potential of value-based care. The market for these services continues to grow, but providers express concern over financial risks and administrative challenges.

CMS is refining its programs, prompting real-time adjustments by participating organizations. Nelson argued that the evolution of value-based care is ongoing, requiring modernization and adaptation to continue delivering effective patient care.

Nelson dismissed the notion of failure, emphasizing the need for progress and collaboration among stakeholders. The industry is advancing towards value-based care without a universal success benchmark or timeline, but with a commitment to evolving and improving care delivery.