Annals of Health Law
VALUE BASED PURCHASING
payment to cover an entire “episode of care.” This section will look into
how this reimbursement model is structured and what CMS is hoping to
accomplish with this demonstration program.
Section IV will investigate the potential flaws of these two federal
demonstration projects by looking into the weaknesses of these programs
and possible unintended consequences. This section will examine the
validity of the potential criticisms and whether the benefits of these
programs will outweigh the criticisms. In this section, the paper will also
explore possible modifications that could be made to the current programs.
While the Value-Based Purchasing Program and the Bundled Payment
Initiative are steps in the right direction, their current structure is too narrow
in scope and with far too many weaknesses to make fundamental changes in
how health care is reimbursed and in the quality of health care being
A. The Statistics18
The United States spends more on health care than other developed
countries. 19 In 2006, the United States spent $2.1 trillion, the equivalent of
sixteen percent of the national GDP, on health care. 20 This translated to a
per capita rate of $7,026 annually. 21 Unlike other developed countries that
provide near-universal coverage, the United States has a significant
uninsured population. In 2006, close to fifty million people, (over sixteen
percent of the U.S. population) were without health insurance coverage, 22
and, therefore, likely without consistent access to health care services.
According to a report from the Robert Wood Johnson Foundation, “the
increased attention to health care costs is merited and likely reflects the
recent trend of health insurance premiums—the most visible indicator of
healthcare costs—growing at a much faster rate than workers’ earnings.” 23
Data from the Kaiser Family Foundation-Health Research and Educational
18. As this paper is not intended to delve deeply into why health care costs are rising,
but rather, explore the programs intending to deal with this concern, there will only be a brief
discussion of the reasons behind, and the future of, high health care costs.
19. Kaiser Family Foundation, supra note 1.
20. SARAHGOODELL, M.A.&PAULB.GINSBURG,PH.D.,HIGH ANDRISINGHEALTH
CARE COSTS: DEMYSTIFYING U.S. HEALTH CARE SPENDING [hereinafter DEMYSTIFYING] 1
(Robert Wood Johnson Found./The Synthesis Project, Princeton N.J., eds. 2008).