Incorporating value into physician payment and patient cost sharing

The United States is simultaneously moving toward value-based payments for populations and precision medicine for individuals. During this evolution, innovations in payment and delivery that enhance tailoring of treatments to individuals while improving the value of care are needed. We propose one such innovation that would allow physician payment and patient cost sharing to better reflect the value of care by allowing the appropriateness of a service for a given patient in a given clinical situation to play a more meaningful role in the design of such incentives. We introduce the idea of a payment modifier, based on indication and appropriateness, and discuss its advantages and challenges to implementation.