Before ‘value-based care’ became a staple in U.S. health care, leaders were already exploring systems that emphasize outcomes over volume. Despite decades of transition, distinguishing between experimentation and a solid new payment system remains challenging.

Signals from the Centers for Medicare & Medicaid Services (CMS) are increasingly clear. The agency is shifting more Medicare beneficiaries into accountable care arrangements and urging providers to focus on quality and cost of care. Krista Nelson, CEO of Optum Health, addressed these shifts during a Newsweek webinar, highlighting their impact on health care operations.

Every Medicare eligible [person] should have access to value-based care, Nelson said at a virtual fireside chat on August 17. She noted that CMS aims to provide value-based care not only through Medicare Advantage but also through a model available to all traditional Medicare recipients.

CMS describes its value-based programs as an effort to move Medicare payments from quantity to quality. Starting in 2026, physicians qualified through Advanced Alternative Payment Models will receive a higher annual update to the Medicare Physician Fee Schedule. This strategy involves expanding prospective payments and shared savings while encouraging providers to manage global financial risk.

The proposed 2027 Medicare Physician Fee Schedule continues this direction, encouraging participation in accountable care organizations and urging clinicians toward value-based pathways. Over 700,000 providers and organizations will be involved in accountable care initiatives by 2026.

Health care leaders face the challenge of interpreting payment signals and responding while the value-based model evolves. This was the focus when Nelson spoke on leadership in this emerging economy.

Optum Health, part of UnitedHealth Group, provides care across various settings, giving Nelson a broad perspective on the industry’s shift. She emphasized the variation in performance across markets, influenced by patient populations, payer relationships, and physician practices. Successful replication of value-based care across different markets can be complex.

Optum Health’s Houston market exemplifies successful value-based care, focusing on primary care and achieving significant cost reductions and high patient satisfaction. These achievements illustrate the ‘quadruple aim’ of improving quality while reducing costs and enhancing patient and clinician experiences. Nelson cited research supporting the effectiveness of value-based care with varying results across programs.

CMS plans to scale accountable care models through initiatives like the Medicare Shared Savings Program, ACO REACH, and the upcoming LEAD Model. Nelson emphasized that scaling involves not just policy but also agreement among providers and payers on risk measurement, success rewards, and financing.

The health care industry faces rising medical costs and changing Medicare Advantage environments. Organizations grapple with these challenges while regulators push to lower costs. Recent studies challenge optimistic views on savings from Medicare’s accountable care programs, indicating mixed results and creating uncertainty.

Despite debates over risk sharing and outcome measurement, many executives see value-based care as a path to sustainability. The market for value-based care services is expected to grow significantly. Providers, however, express concerns about financial risks and administrative demands.

Nelson argues that value-based care hasn’t failed but must evolve continuously to adapt to changing forces, ensuring necessary care delivery.