The impact of value-based payment reforms on cost and quality to date has been modest. (a) Yet Sylvia Mathews Burwell, secretary of the U.S. Department of Health and Human Services (HHS), recently announced the aim of linking 85 percent of Medicare payments to quality or value and having 30 percent be made through alternative payment models (e.g., accountable care organizations [ACOs]) by the end of 2016. (b) HHS also hopes to engage non-Medicare payers in similar approaches. (c)

The motivation behind these initiatives is a realization that the current fee-for-service model encourages unnecessary utilization of healthcare services, contributes to the fragmented and uncoordinated care that many patients experience, and provides little incentive to deliver higher-quality or more efficient care.

The largest Medicare-sponsored effort to test new payment models--the ACO shared-savings model, in which groups of providers are held responsible for the quality and cost of care delivered to their patients, and share in cost savings that are generated from their interventions--has grown substantially, with 424 organizations serving roughly 7.8 million beneficiaries. To meet HHS's ambitious goals, the growth of such programs must accelerate even more dramatically. But the uptake of these models may be impeded by providers' resistance to making the significant investments and changes in care delivery approaches required for success in the new payment environment.

In September 2014, The Dartmouth Institute, Dartmouth-Hitchcock Health System, and The...