Health care spending in the United States is a global outlier. Excessive spending drives state and federal budget crises and crowds out other public investments. It leads to premium increases, the erosion of plan benefits, and punishing out-of-pocket spending. Health care quality is inconsistent and not commensurate with spending. Shocking inequalities in access and outcomes are pervasive. While many solutions have been proposed, the path forward remains elusive. Rigorous and innovative research coupled with systematic policy translation is required to drive change.

Payment reform is concerned with how healthcare providers, systems, and insurers are reimbursed for the services provided. The primary goal of payment reform models is to achieve quality and efficiency of care and overall better patient and population health outcomes, while controlling healthcare costs. Despite some successes, many reforms have not delivered on their promise while other challenges have emerged. Here at  CAHPR, we are dedicated to generating evidence to guide and inform these payment reforms within the US healthcare landscape.

The Affordable Care Act created the most significant changes to Medicare since its inception to create new incentives for health care providers to deliver higher quality care at a lower cost. Under the direction of the Centers for Medicare and Medicaid Services (CMS) Innovation Center, these policies continue to evolve, such as through the Accountable Care Organization Realizing Equity, Access, and Community Health (ACO REACH) Model. ACO models are by far the most common population-based alternative payment model deployed in Traditional Medicare. Understanding whether these models are successful in reducing spending growth, and how they can be modified to achieve this goal, is central to the future of Traditional Medicare. 

Private plans for Medicare beneficiaries – known as Medicare Advantage (MA) – have grown remarkably, increasing from 24% of beneficiaries in 2010 to 51% in 2023. Under MA, private insurers are paid using risk-adjusted per beneficiary per month rates, an approach that CMS and others believe will encourage efficient resource use and quality. Yet many stakeholders argue that MA plans are overpaid and have questioned the program’s value. In light of unprecedented enrollment growth, understanding how MA can be reformed to deliver on its promise is essential. 

A number of trends are changing how physician markets are organized.Over 70% of physicians are now employed by a health care system or corporate entity, including publicly traded and private equity firms. Rural providers have been the focus of consolidation activity, with the impacts on rural markets unclear. And many high performing health systems are entities that integrate insurer and provider functions, in which clinical and financial incentives are linked. Research at CAHPR aims to understand this evolving landscape that has critical implications for competition, choice, access, and the structure of healthcare services. 

Many US states are enacting their own efforts to enhance the accessibility, quality, fairness, and affordability of health insurance. These policies include but are not limited to surprise billing protections, health insurance exchange oversight, health price transparency tools, policies on competition and consolidation and price limits for medical services. However, the impacts of these policy innovations and the specific design features that drive success or failure are not yet clear. CAHPR researchers are studying the effectiveness of various state policies on prices, spending, utilization, as well as on healthcare labor. These findings have the potential to provide guidance to other states considering similar approaches to regulate healthcare prices.