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Value-based care is conventionally classified as an alternative payment model. That classification mistakes the output for the system.
ost value-based care (VBC) arrangements do not compensate providers for value at the time value is produced. They establish a contractual methodology under which the economic consequences of care are measured, reconciled, and settled long after the performance year closes. Money does move, so there is a payment layer. But the payment layer is a consequence, not a system. What produces the result is an adjudication architecture: a standard fixed in advance; a settlement date set years out; and clause-level rules governing attribution, benchmark construction, reconciliation, and appeal. In this Forefront article, I argue that these features lead to value-based care being misclassified as an alternative payment model. That classification mistakes the output for the system.
Accountable care organizations (ACOs) entering agreement periods in 2024 were trended against a prospective factor the Centers for Medicare and Medicaid Services (CMS) had fixed at 4.9 percent. Actual expenditure growth ran far above it. The National Association of ACOs put the figure near 8 percent and urged CMS to pause the policy; analysts at Milliman documented the resulting benchmark drag. ACOs that outperformed the market still lost ground because the benchmark was trending against a number set years earlier that the market had long since passed.