Verma says value-based care models haven't made good return on investment

Seema Verma interviewed by Steve Forbes at Forbes Healthcare Summit
Centers for Medicare & Medicaid Services Administrator Seema Verma said that Obama-era payment models have given little return on investment in terms of savings and quality outcomes. (Forbes/GettyImages)

Seema Verma, the head of the Centers for Medicare & Medicaid Services (CMS), said that some value-based care payment models did not generate enough savings and quality outcomes.

Her remarks Tuesday during HLTH's virtual conference come a few weeks after other Trump administration officials reported mixed results for bundled payment models in producing savings. Verma did tout models that required providers to take on financial risk at a faster pace, potentially alluding to the direction CMS wants to steer value-based care models.

“I think the issue we have in value-based care is that many of our models unfortunately are not working the way we would like them to,” she said. “They are not producing the types of savings the taxpayers deserve.”

It has been a “very poor return in investment,” Verma added.

She did not elaborate on which models specifically did not perform well.

RELATED: CMS: Number of ACOs taking on financial risk doubles under Pathways to Success

However, Center for Medicare and Medicaid Innovation Director Brad Smith pointed in a separate speech last month to bundled payment models that tie Medicare payments together for certain procedures into one bundle for a total cost of care. Smith said that the bundled models did not lead to significant quality and savings improvements, but he said the models did spur transformation among providers.

Smith said that models which focused on a global budget fared much better, giving Maryland’s Total Cost of Care model as an example. Under the model, Maryland has a per capita limit for Medicare costs in the state.

Verma also gave praise to CMS’ Pathways to Success model that overhauled the program managing accountable care organizations (ACOs).

Pathways required ACOs to take on financial risk at a shorter period than the Medicare Shared Savings Program created under the Obama administration. This meant that ACOs had to pay back Medicare if it did not meet certain savings targets.

“We are already seeing significant savings and increases in quality,” Verma said of Pathways, which started in 2019.

Verma said that CMS isn't shying away from value-based care, but she hinted at what direction the next wave of payment models could entail.

“I think it is important for providers to have skin in the game,” she said. “Just having upside risk doesn’t really produce the type of savings and quality measures that we want to see.”

CMS is currently evaluating all of the models, and Verma said a major problem has been that the models were set up to encourage participation among providers.

“They weren’t set up to garner savings to produce necessarily better outcomes for patients,” she said.