Is Value-Based Payment Failing U.S. Healthcare? | Andrew Ryan

Why It Matters

Continuing to depend on value‑based payment risks unchecked Medicare spending growth, while fee‑schedule and coverage reforms offer a more realistic path to sustainable affordability.

Key Takeaways

• Value‑based payment shows little to no Medicare cost reduction.
• CBO analysis finds VBP programs added $5 billion spending.
• Technology adoption, not physician incentives, drives long‑term cost growth.
• Reforming Medicare fee schedule and coverage authority is essential.
• Primary‑care burden increases under VBP without proven savings.

Summary

In a Health Affairs interview, Brown University researcher Andrew Ryan critiques the promise of value‑based payment (VBP) as a solution to Medicare’s affordability crisis. Drawing on a recent article he co‑authored, Ryan argues that empirical evidence—particularly a Congressional Budget Office review—shows VBP programs have failed to curb aggregate spending and have even added roughly $5 billion to Medicare costs.

Ryan highlights that early optimism around the Medicare Shared Savings Program evaporated once incentive payments, up‑coding, and selection effects were accounted for, revealing no net savings. He also dismisses the “zeitgeist” spillover hypothesis, noting that national spending growth slowed well before VBP initiatives and has risen again despite broader adoption. The core driver, he contends, is the relentless adoption and pricing of new medical technologies, not physician‑level incentives.

Quoting the article, Ryan states, “Value‑based payment hasn’t worked,” and points to systemic issues such as distorted fee‑schedule coding, limited CMS authority over coverage decisions, and the administrative burden VBP places on primary‑care clinicians. While acknowledging AI’s potential to improve efficiency, he warns against creating separate reimbursement codes and instead urges integration within existing fee structures.

The implications are clear: policymakers must shift focus from tweaking physician incentives to overhauling the Medicare fee schedule and granting CMS cost‑effectiveness authority for drugs and devices. Without such reforms, reliance on VBP will likely continue to miss the mark, leaving Medicare’s cost trajectory unchecked.

Original Description

Health Affairs’ Jeff Byers welcomes Brown University's Andrew Ryan to the pod to discuss his recent Forefront article that explores whether value-based payment and managed care can lead to addressing the core drivers of spending.

Related Links:

* Value-Based Payment And Managed Care Will Not Solve The Affordability Crisis ( https://www.healthaffairs.org/content/forefront/value-based-payment-and-managed-care-not-solve-affordability-crisis?utm_medium=podcast&utm_source=this+week&utm_campaign=forefront ) (Health Affairs Forefront)

* “All I Do Is Win”: Why Beating Benchmarks Doesn’t Mean That ACOs Are Reducing Costs ( https://www.healthaffairs.org/do/10.1377/forefront.20250410.624404/full/?utm_medium=podcast&utm_source=this+week&utm_campaign=forefront ) (Health Affairs Forefront)

Health Affairs This Week

Episode 236

February 27, 2026

★ Episode details: https://share.transistor.fm/s/aeb78371

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