IHI 2017: Don Berwick shares his take on value-based care and CMS’ decision to cancel mandatory bundled models

Doctor examining patient
Don Berwick, M.D., president emeritus and senior fellow at the Institute for Healthcare Improvement said the fee-for-service payment model discourages providers from participating in activities that encourage care coordination, investments in telemedicine and holistic approaches to care. (Getty/kazoka30)
Don Berwick
Don Berwick, M.D.

ORLANDO, Fla.—Although he says he wishes the healthcare industry could transition more quickly to value-based care, Don Berwick isn’t as sold on the complex incentive payment models used to reimburse that care.

Don Berwick, M.D., president emeritus and senior fellow at the Institute for Healthcare Improvement (IHI), described the industry’s fee-for-service payment structure as “very toxic” during a press briefing Monday at the organization’s 29th annual National Forum on Quality Improvement in Healthcare.

The model, he said, produces incentives to do more and, in some cases, too much, such as ordering more tests and procedures. It also discourages providers from participating in activities that encourage care coordination, investments in telemedicine and holistic approaches to care.

However, the former administrator of the Centers for Medicare & Medicaid Services said he is “more cautious” about approaches to value-based payments.

Those models are sometimes a “code for ‘give me more money because I’m so valuable,'" he said. 

Berwick used the example of the pharmaceutical industry’s move to value-based pricing of certain drugs, which in some cases has led to drug manufacturers demanding higher prices for so-called wonder drugs. “Maybe it’s used as an escape hatch to keep prices up, not down,” he said.

The other problem, he said, is some incentive programs are based on such complicated formulas that providers can’t figure out what to do.

Instead, Berwick advocates for a system that pays for care to make patient populations healthy and pays most healthcare professionals a fair salary.

RELATED: CMS puts an end to mandatory cardiac, hip fracture bundled payment models

But Berwick said he believes CMS made a mistake when it recently ended mandatory cardiac, hip fracture bundled payment models, which paid multiple providers with a single lump-sum payment for a complete episode of care.

That program, he said, was an incentive for providers to think about the patient’s entire episode of care (a month before the surgery through 90 days of rehab) and who they could work with to prevent complications. “It was a more holistic way of thinking,” he said, noting that the data showed bundled payments worked and achieved better care for lower costs.

The agency’s decision to pull back on planned expansions of the program is a missed opportunity, Berwick said. However, he said he supports CMS’ efforts to simplify quality measures that focus on the patient.

Berwick will deliver the final keynote presentation at the conference on Wednesday and will discuss the need for the healthcare industry to become less competitive and more collaborative.