Risk selection reduces efficiency of value‐based healthcare

Diogo L. L. Leao, Milena Pavlova and Wim Groot

International Journal of Health Planning and Management, 2023, vol. 38, issue 5, 1088-1096

Abstract: Value‐based healthcare aims to improve efficiency and value for patients. Value‐based payment models are a form of provider reimbursement to achieve this. Studies on these models have found positive results, but may be biased by unintended consequences, such as risk selection. Risk selection is a multi‐dimensional phenomenon that occurs at the patient, hospital, and system level, and is a source of inefficiency and inequality in healthcare. Risk selection may occur because of selection bias in the outcomes that are evaluated and rewarded, or due to the selection of lower cost patients. Risk selection may also stem from professional reputation. The motivation to engage in risk selection may also arise from differences in the meaning of value. To mitigate these unintended consequences, several strategies can be adopted. These include making value‐based payment models attractive, but not mandatory, as well as incentivising transparent reporting of best practices, using adequate risk adjustment, expanding performance metrics, and including patient‐reported experience measures. Other mitigation strategies could include adopting a mixture of performance measures, using mixed methods of paying physicians, and implementing monitoring and evaluation mechanisms. However, such approaches are not flawless, and the problem may never be fully solved. This perspective serves as a warning for the constant presence of risk selection, as well as informing policy makers, politicians, and organisations implementing VBP models on ways to minimise the possibility of risk selection.

Date: 2023
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