The Historical Development of Value-Based Care: How We Got Here

Abstract

The original architects of Medicare modeled the payment system on the existing fee-for-service (FFS) structure that historically dominated the health-insurance market. Under the FFS paradigm, health-care expenditures experienced an exponential rise. In response, the managed care and capitation models of health-care delivery were developed. However, changes in Medicare reimbursement, along with an increasing volume of orthopaedic procedures and escalating implant costs, call into question the cost-effectiveness of this service line. The success of the Medicare Acute Care Episode (ACE) Demonstration Project proved the feasibility of value-based care and ushered in a new era of bundled payment initiatives.