The U.S. healthcare system finds itself at a pivotal moment, wrestling with the pressing need to transition from outdated fee-for-service models to value-based care frameworks that emphasize quality and outcomes over the sheer volume of services provided. At the Digital Medicine Society’s Healthcare 2030 Summit held in Washington, D.C., a gathering of industry leaders shed light on the formidable obstacles blocking this essential shift. Reimbursement structures, which play a critical role in shaping clinician decisions, treatment priorities, and the adoption of innovative practices, took center stage in the discussions. Despite growing enthusiasm for alternative payment models, scaling these approaches across the system remains an uphill battle, with systemic, structural, and cultural challenges standing firmly in the way. The insights shared by experts painted a complex picture of a healthcare landscape desperate for reform, yet resistant to the changes needed to achieve it.
This summit wasn’t merely a forum for identifying problems; it served as a crucible for dissecting the intricate web of issues surrounding healthcare payment reform. From policy advisors to payer strategists and employer representatives, the diverse voices highlighted how deeply embedded barriers—ranging from voluntary participation in payment programs to misaligned financial incentives—continue to thwart progress. The urgency of the situation is undeniable, as escalating costs and declining access to care threaten patients, providers, and payers alike. With the stakes so high, the discussions underscored that half-measures won’t suffice; only bold, coordinated action can pave the way for a system that truly prioritizes value. The path forward, though fraught with challenges, offers glimmers of hope through actionable strategies that emerged from the summit’s candid exchanges.
Systemic Challenges in Payment Reform
Voluntary Participation Hindering Progress
A significant roadblock to advancing value-based care lies in the voluntary nature of payment models offered by the Centers for Medicare & Medicaid Services (CMS). Health systems often engage selectively, opting into models only when financial benefits are assured, while steering clear of those that might result in losses. This cherry-picking approach fundamentally undermines the overarching goals of value-based care, which seek to prioritize patient outcomes over profit margins. As highlighted during the summit, such selective participation allows providers to manipulate the system for gain rather than commit to the broader mission of improving care quality. Experts like Lee Fleisher, CEO of Rubrum Advising and former CMS chief medical officer, pointed to the need for mandatory participation to ensure a level playing field. Without such a mandate, the transformative potential of alternative payment models remains stifled, as only a fraction of providers fully embrace the shift needed for systemic change.
The call for mandatory participation isn’t just a policy suggestion; it’s seen as a critical step to prevent the gaming of payment systems and to drive widespread adoption of value-based care principles. Summit discussions revealed that when providers can opt out of challenging models, the momentum for reform slows, perpetuating a cycle of inefficiency. Fleisher referenced recent policy efforts, such as executive actions pushing CMS to develop compulsory models for high-cost drugs, as evidence of growing recognition for this approach. This shift toward mandates could force health systems to adapt to models that prioritize long-term patient health over short-term financial wins. Moreover, mandatory participation would create a more equitable environment where all stakeholders are held to the same standards, fostering accountability and ensuring that the benefits of value-based care—improved outcomes and reduced costs—are realized on a national scale.
Misaligned Financial Incentives
Another profound barrier to payment reform is the stark misalignment of financial incentives within the healthcare ecosystem, particularly among commercial insurance payers. Profitability for these entities is often tied to the medical loss ratio, meaning their financial success increases alongside healthcare spending—a direct contradiction to the cost-reduction aims of value-based care. This structure incentivizes volume over value, perpetuating a cycle of escalating expenses that burdens the entire system. Nate Paulsen, vice president of payer strategy at Oshi Health, emphasized during the summit that payers control a significant portion of healthcare cash flow, whether sourced from CMS, employers, or states. Their current incentive models, therefore, wield immense influence over the direction of care delivery, often steering it away from efficiency and quality in favor of higher spending that boosts their bottom line.
Addressing this misalignment requires a fundamental rethinking of how profitability is structured in the payer landscape. Summit experts argued for decoupling financial success from spending growth, advocating for models that reward cost savings and improved patient outcomes instead. Such a redesign would align payer incentives with the core objectives of value-based care, creating a ripple effect across providers and patients. Paulsen noted that without this shift, efforts to curb costs and enhance care quality will continue to clash with the financial interests of key players controlling healthcare funds. The challenge lies in crafting policies and agreements that incentivize payers to champion efficiency, potentially through shared savings programs or performance-based rewards. Only by realigning these incentives can the system move toward a sustainable model where quality trumps quantity in every transaction.
Measurement and Administrative Burdens
Overwhelming and Irrelevant Metrics
One of the most criticized aspects of the current healthcare payment system is the overwhelming burden of quality metrics imposed on providers, many of which fail to measure meaningful outcomes. At the summit, leaders pointed out that clinicians are bogged down by an array of often irrelevant indicators—such as flu shot rates or routine eye exams for diabetic patients—that don’t necessarily reflect whether patients are healthier or more engaged in managing their conditions. Mona Siddiqui, senior vice president at Highmark Health, highlighted that despite decades of piling on such measures, healthcare costs have surged, access to care has diminished, and patient satisfaction has taken a nosedive. The consensus was clear: these metrics create an administrative quagmire that distracts from the true goal of improving health, instead focusing on easily quantifiable data that lacks real impact on well-being.
The push for simplification emerged as a key solution during the summit discussions, with experts advocating for a narrowed focus on core indicators like total cost of care and patient satisfaction. Reducing the sheer volume of metrics would alleviate the strain on providers, allowing them to dedicate more time and energy to actual patient care rather than paperwork. Siddiqui and others stressed that the current system, often dubbed the “quality measure industrial complex,” prioritizes data collection over patient engagement—a factor strongly linked to better outcomes and lower costs. Streamlining metrics to emphasize what truly matters could refocus the healthcare industry on its primary mission: ensuring patients receive effective, accessible care. This shift would not only improve provider morale but also pave the way for payment models that reward genuine improvements in health rather than compliance with arbitrary benchmarks.
Administrative Strain on Providers
Beyond the irrelevance of many quality metrics, the sheer administrative strain they impose on healthcare providers represents a significant barrier to reform. Summit discussions revealed that clinicians spend an inordinate amount of time documenting and reporting on these measures, often at the expense of direct patient interaction. This burden contributes to burnout and frustration among healthcare professionals, who find themselves navigating a labyrinth of requirements that add little value to their core work. The excessive focus on documentation diverts resources from innovation and care delivery, creating a vicious cycle where administrative demands overshadow clinical priorities. Experts at the event argued that this overload not only hampers provider efficiency but also undermines the very goals of value-based care by prioritizing process over outcomes.
Tackling this administrative strain requires a concerted effort to rethink how quality is assessed and reported in healthcare. Summit leaders proposed leveraging technology, such as automated data systems, to reduce manual reporting tasks and free up clinicians for patient-centered activities. Additionally, aligning metrics with actionable health goals—rather than an endless checklist of tasks—could minimize unnecessary workload. Fleisher and others at the event noted that patient engagement, often sidelined in favor of easily measurable data, should be a central focus of any revised measurement system. By cutting down on bureaucratic red tape and emphasizing meaningful indicators, the healthcare system could restore balance, enabling providers to focus on delivering high-quality care without the constant weight of administrative overload. This approach would support payment reform by ensuring that resources are directed toward patient health rather than paperwork.
Untapped Potential of Stakeholders
Employers as Key Players
Employers, as major contributors to healthcare spending, hold immense potential to drive payment reform, yet their role remains largely untapped, according to insights shared at the summit. Healthcare ranks as the second-largest expense for many companies, trailing only payroll, with costs projected to rise sharply by 9-9.5% in the coming year—the steepest increase in over a decade. Jonathan Taylor, vice president of health solutions at Aon, stressed that businesses can no longer afford a passive stance on these escalating expenses. Encouraging employee accountability through incentives for preventive care and healthy behaviors was highlighted as a critical strategy to reduce reliance on costly crisis interventions. By proactively addressing health before issues escalate, employers could significantly curb expenditures while improving workforce well-being, aligning with the broader aims of value-based care.
Empowering human resources (HR) departments to take a strategic role in managing healthcare costs also emerged as a vital step during the summit discussions. Too often, HR teams accept payer renewal rates without negotiation, contributing to unsustainable cost increases that either burden employees or erode company profitability. Taylor argued that treating healthcare expenses as a core business decision—rather than a routine administrative task—could transform how employers influence the system. By leveraging their purchasing power to demand better rates and advocate for value-based models, companies could push payers and providers toward more efficient practices. This shift would not only help control costs but also position employers as active partners in reform, using their influence to prioritize outcomes over volume and drive systemic change from a unique and powerful vantage point.
Engaging Other Stakeholders for Broader Impact
Beyond employers, the summit emphasized the importance of engaging a wider array of stakeholders to overcome payment reform challenges. Patients, community organizations, and state-level regulators all have roles to play in reshaping the healthcare landscape, yet their involvement often remains minimal. Discussions highlighted that patients, as the ultimate beneficiaries of care, must be empowered to demand transparency and quality from providers and payers alike. Community groups can advocate for local health needs, ensuring that payment models address disparities and access issues. State regulators, meanwhile, can complement federal efforts by tailoring policies to regional challenges, creating a more responsive framework for reform. The collective input of these groups could amplify the push for value-based care, ensuring that diverse perspectives shape a system that serves all populations effectively.
Coordinating these varied stakeholders presents its own challenges, but the summit underscored that such collaboration is essential for sustainable change. Creating platforms for dialogue—where patients, employers, regulators, and providers can align on shared goals—was proposed as a way to bridge gaps in understanding and priorities. For instance, joint initiatives between state governments and local businesses could pilot innovative payment models that balance cost control with quality care. Similarly, patient advocacy groups could partner with payers to develop metrics that reflect lived experiences rather than abstract data points. By fostering these partnerships, the healthcare system could move toward a more inclusive approach to reform, where every stakeholder contributes to a shared vision of value over volume, ultimately strengthening the foundation for lasting improvements in care delivery and cost management.
Path to Meaningful Reform
Need for Bold Systemic Change
The overarching message from the summit was that the current healthcare payment system is unsustainable, and incremental adjustments are insufficient to achieve the scale required for value-based care to thrive. Half-hearted reforms and minor tweaks have failed to address the root causes of inefficiency, leaving costs spiraling and patient outcomes lagging. Experts across policy, payer, and provider spheres agreed that bold systemic changes—such as mandatory participation in alternative payment models—are non-negotiable for progress. Restructuring financial incentives to reward quality over quantity, rather than perpetuating volume-driven spending, was also flagged as a cornerstone of meaningful reform. Without such sweeping changes, the system risks remaining trapped in a cycle of rising expenses and declining access, unable to meet the needs of an increasingly burdened population.
This call for systemic overhaul extends beyond individual policies to a broader reimagining of how stakeholders interact within the healthcare ecosystem. Summit discussions stressed the importance of coordinated action, where CMS mandates, payer incentive redesigns, and provider accountability measures work in tandem to create a cohesive framework. The diversity of perspectives at the event—from policy experts advocating for mandates to employer representatives pushing for cost control—underscored that no single solution will suffice. Instead, a multi-pronged strategy that tackles voluntary participation, misaligned incentives, and administrative burdens simultaneously offers the best chance for success. Only through such comprehensive efforts can the industry break free from entrenched practices and build a payment system that prioritizes patient health and fiscal sustainability over outdated profit motives.
A Hopeful yet Urgent Outlook
Reflecting on the summit, it became evident that while the barriers to healthcare payment reform are daunting, they are not insurmountable. The candid exchanges among leaders revealed actionable strategies—mandatory participation in CMS models, realigned payer incentives, streamlined quality metrics, and active employer engagement—that could steer the system toward a future where value trumps volume. Each of these approaches addresses a distinct yet interconnected challenge, offering a roadmap for reform that balances urgency with practicality. The shared frustration with the current state of affairs was palpable, yet so was the determination to forge a better path. This blend of realism and resolve suggests that the healthcare industry stands at a critical juncture, poised for transformation if stakeholders can muster the collective will to act decisively.
Looking back, the summit served as a clarion call for immediate, coordinated steps to dismantle the obstacles hindering payment reform. Leaders left with a clear mandate to push for policies that enforce participation, rethink financial structures, and reduce administrative clutter, ensuring that every dollar spent advances patient well-being. Future considerations must include fostering partnerships across the ecosystem, from empowering employers to involving patients and community voices in shaping new models. The insights gained point to a pivotal opportunity: by embracing bold reforms and aligning all players around a common goal, the healthcare system can evolve into one that delivers better outcomes at lower costs. The path ahead demands sustained effort and collaboration, but the foundation laid at this event offers a promising start for turning vision into reality.
