---
confidence: likely
created: 2026-02-17
description: VBC adoption shows a wide gap between participation and risk-bearing with 60 percent of payments in value arrangements but only 14 percent in full capitation revealing that most providers take
  upside bonuses without accepting downside risk
domain: health
related:
- federal-budget-scoring-methodology-systematically-undervalues-preventive-interventions-because-10-year-window-excludes-long-term-savings
- home-based-care-could-capture-265-billion-in-medicare-spending-by-2025-through-hospital-at-home-remote-monitoring-and-post-acute-shift
- GLP-1 cost evidence accelerates value-based care adoption by proving that prevention-first interventions generate net savings under capitation within 24 months
- Does prevention-first care reduce total healthcare costs or just redistribute them from acute to chronic spending?
- attractor-molochian-exhaustion
related_claims:
- double-coverage-compression-simultaneous-medicaid-cuts-and-aptc-expiry-eliminate-coverage-for-under-400-fpl
- medicaid-work-requirements-cause-coverage-loss-through-procedural-churn-not-employment-screening
- upf-driven-chronic-inflammation-creates-continuous-vascular-risk-regeneration-explaining-antihypertensive-treatment-failure
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- hypertension-shifted-from-secondary-to-primary-cvd-mortality-driver-since-2022
- uspstf-glp1-policy-gap-leaves-aca-mandatory-coverage-dormant
reweave_edges:
- federal-budget-scoring-methodology-systematically-undervalues-preventive-interventions-because-10-year-window-excludes-long-term-savings|related|2026-03-31
- home-based-care-could-capture-265-billion-in-medicare-spending-by-2025-through-hospital-at-home-remote-monitoring-and-post-acute-shift|related|2026-03-31
- GLP-1 cost evidence accelerates value-based care adoption by proving that prevention-first interventions generate net savings under capitation within 24 months|related|2026-04-04
- Does prevention-first care reduce total healthcare costs or just redistribute them from acute to chronic spending?|related|2026-04-17
source: HCP-LAN 2022-2025 measurement; IMO Health VBC Update June 2025; Grand View Research VBC market analysis; Larsson et al NEJM Catalyst 2022
type: claim
---

# value-based care transitions stall at the payment boundary because 60 percent of payments touch value metrics but only 14 percent bear full risk

As of the most recent HCP-LAN measurement, 59.5% of US healthcare payments are tied to value and quality in some form, while 40.5% remain pure fee-for-service. But the composition matters enormously: only 19.6% of payments are in risk-based arrangements, and just 14% flow through fully capitated models. Medicare Advantage leads with 64% of payments in value-based arrangements, while commercial and Medicaid lag at roughly half still in FFS. The VBC services market is projected to reach $4.45 trillion by 2030.

CMS is pushing aggressively -- 14.3 million Medicare beneficiaries are in ACOs as of January 2026, the mandatory TEAM bundled payment model launched covering $18B in hospital payments, and the 10-year LEAD model starts January 2027. CMMI's stated goal is 100% of Medicare beneficiaries in accountable care by 2030. But the gap between "touching value" and "bearing risk" reveals the core structural challenge: most providers are happy to accept upside bonuses for quality metrics while avoiding the downside risk that actually drives behavioral change.

Larsson, Clawson, and Howard frame this through three simultaneous crises: a crisis of *value* (20-40% of spending is wasted on low-value or inappropriate care), a crisis of *evidence* (only 3% of pharmaceutical trials compare multiple products), and a crisis of *purpose* (clinician burnout from managing complexity rather than caring for patients). Payment reform alone cannot solve these -- it requires a systems approach where outcomes measurement, payment alignment, digital infrastructure, and delivery organization all move together.

The Making Care Primary model's termination in June 2025 (after just 12 months, with CMS citing increased spending) illustrates the fragility of VBC transitions when the infrastructure isn't ready.


### Additional Evidence (extend)
*Source: 2014-00-00-aspe-pace-effect-costs-nursing-home-mortality | Added: 2026-03-10 | Extractor: anthropic/claude-sonnet-4.5*

PACE represents the extreme end of value-based care alignment—100% capitation with full financial risk for a nursing-home-eligible population. The ASPE/HHS evaluation shows that even under complete payment alignment, PACE does not reduce total costs but redistributes them (lower Medicare acute costs in early months, higher Medicaid chronic costs overall). This suggests that the 'payment boundary' stall may not be primarily a problem of insufficient risk-bearing. Rather, the economic case for value-based care may rest on quality/preference improvements rather than cost reduction. PACE's 'stall' is not at the payment boundary—it's at the cost-savings promise. The implication: value-based care may require a different success metric (outcome quality, institutionalization avoidance, mortality reduction) than the current cost-reduction narrative assumes.


### Additional Evidence (extend)
*Source: 2024-08-01-jmcp-glp1-persistence-adherence-commercial-populations | Added: 2026-03-15 | Extractor: anthropic/claude-sonnet-4.5*

GLP-1 persistence data illustrates why value-based care requires risk alignment: with only 32.3% of non-diabetic obesity patients remaining on GLP-1s at one year (15% at two years), the downstream savings that justify the upfront drug cost never materialize for 85% of patients. Under fee-for-service, the pharmacy benefit pays the cost but doesn't capture the avoided hospitalizations. Under partial risk (upside-only), providers have no incentive to invest in adherence support because they don't bear the cost of discontinuation. Only under full risk (capitation) does the entity paying for the drug also capture the downstream savings—but only if adherence is sustained. This makes GLP-1 economics a test case for whether value-based care can solve the "who pays vs. who benefits" misalignment.


### Additional Evidence (confirm)
*Source: 2025-03-01-medicare-prior-authorization-glp1-near-universal | Added: 2026-03-15*

Medicare Advantage plans bearing full capitated risk increased GLP-1 prior authorization from <5% to nearly 100% within two years (2023-2025), demonstrating that even full-risk capitation does not automatically align incentives toward prevention when short-term cost pressures dominate. Both BCBS and UnitedHealthcare implemented universal PA despite theoretical alignment under capitation.


### Additional Evidence (extend)
*Source: 2025-03-17-norc-pace-market-assessment-for-profit-expansion | Added: 2026-03-16*

PACE represents the 100% risk endpoint—full capitation for all medical, social, and psychiatric needs, entirely replacing Medicare and Medicaid cards. Yet even at full risk with proven outcomes for the highest-cost patients, PACE serves only 0.13% of Medicare eligibles after 50 years. This suggests the stall point is not just at the payment boundary (partial vs full risk) but at the scaling boundary—capital, awareness, regulatory, and operational barriers prevent even successful full-risk models from achieving market penetration. The gap between 14% bearing full risk and PACE's 0.13% penetration indicates that moving from partial to full risk is necessary but insufficient for VBC transformation.


### Additional Evidence (extend)
*Source: 2025-12-23-cms-balance-model-glp1-obesity-coverage | Added: 2026-03-16*

The BALANCE Model moves payment toward genuine risk by adjusting capitated rates for obesity and increasing government reinsurance for participating MA plans. This creates a direct financial incentive mechanism where plans profit from preventing obesity-related complications rather than just managing them. The model explicitly tests whether combining medication access with lifestyle supports under risk-bearing arrangements can shift the payment boundary.


### Additional Evidence (extend)
*Source: [[2026-02-01-cms-balance-model-details-rfa-design]] | Added: 2026-03-16*

CMS BALANCE Model demonstrates policy recognition of the VBC misalignment by implementing capitation adjustment (paying plans MORE for obesity coverage) plus reinsurance (removing tail risk) rather than expecting prevention incentives to emerge from capitation alone. This is explicit structural redesign around the identified barriers.


### Additional Evidence (extend)
*Source: [[2025-01-01-nashp-chw-state-policies-2024-2025]] | Added: 2026-03-18*

CHW reimbursement infrastructure demonstrates the same payment boundary stall in the SDOH domain: 20 states with approved SPAs after 17 years, with billing code uptake remaining slow even where reimbursement is technically available. The bottleneck is not policy approval but operational infrastructure — CBOs cannot contract with healthcare entities, transportation costs are not covered, and 'community care hubs' are emerging as coordination infrastructure. This parallels VBC's 60% touch / 14% risk gap: technical capability exists but the operational infrastructure to execute at scale does not.


### Additional Evidence (extend)
*Source: [[2026-03-20-fierce-healthcare-obbba-domino-effect]] | Added: 2026-03-20*

Fierce Healthcare's 2026 outlook shows the OBBBA domino mechanism: Medicaid work requirements → coverage loss → newly uninsured seek ER care → uncompensated care absorbed by health systems → financial stress → less investment in VBC infrastructure → VBC transition slows. This provides a specific causal pathway for how policy-induced coverage disruption directly undermines VBC adoption by forcing health systems to absorb uncompensated care costs that would otherwise fund infrastructure investment.


### Additional Evidence (extend)
*Source: [[2026-03-20-obbba-vbc-enrollment-stability-mechanism]] | Added: 2026-03-20*

VBC transitions face a second stall mechanism beyond the payment boundary: population stability. OBBBA's work requirements and semi-annual redeterminations fragment continuous enrollment, preventing VBC plans from capturing prevention investment payback even when payment models are correctly structured. CHW programs with 12-18 month payback periods fail when members churn before savings realize. This is a structural barrier independent of risk-bearing levels.

---

Relevant Notes:
- [[healthcare is a complex adaptive system requiring simple enabling rules not complicated management because standardized processes erode the clinical autonomy needed for value creation]] -- the systems framework for why payment reform alone fails
- [[four competing payer-provider models are converging toward value-based care with vertical integration dominant today but aligned partnership potentially more durable]] -- the structural models competing to deliver on VBC
- US healthcare incentives are fundamentally misaligned because every participant profits from sickness not health -- the underlying incentive structure that VBC attempts to correct
- [[the physician role shifts from information processor to relationship manager as AI automates documentation triage and evidence synthesis]] -- AI as infrastructure enabling the VBC transition
- [[CMS 2027 chart review exclusion targets vertical integration profit arbitrage by removing upcoded diagnoses from MA risk scoring]] -- CMS is tightening the FFS-to-VBC transition by closing profitable FFS-like mechanisms within MA, pushing the industry toward genuine risk-bearing
- [[medical care explains only 10-20 percent of health outcomes because behavioral social and genetic factors dominate as four independent methodologies confirm]] -- the 86% of payments not at full risk are systematically ignoring the factors that matter most for health outcomes

Topics:
- health and wellness