On the face of it, the industry is making great strides toward adopting value-oriented payment models, but the question of whether or not the industry is also reducing costs and improving care quality remains unanswered.
Forty percent of all commercial in-network payments are now value-oriented, designed for performance or waste reduction, according to estimates released Tuesday by the nonprofit research group Catalyst for Payment Reform.
The other 60 percent of commercial health insurance reimbursement remains mostly in fee-for-service, with some payments using bundling or capitation without quality incentives.
But the 40 percent in alternative reimbursement represents a big increase.
Last year, only about 10 percent of commercial payments were in value-oriented models, according to Catalyst for Payment Reform, whose estimates are based on voluntary disclosures from health plans with 65 percent of the nation’s commercially-insured lives.
According to the group’s research, 38 percent of all hospital payment contracts this year are value-based, along with 24 percent of outpatient primary care contracts and 10 percent of all outpatient specialist contracts.
All of which is encouraging, but not necessarily enough.
“Value-oriented payment really only matters if we’re succeeding – if we’re reducing costs and improving quality,” said Andrea Caballero, Catalyst for Payment Reform’s program director during a webcast discussing the results of its annual scorecards for payment reform. “And for many of the methods that we measured, we really don’t have the evidence yet whether they are working. So evaluation of these methods will be our next big challenge.”
“The (national) scorecard documents unprecedented change in how we’re paying doctors and hospitals in the commercial sector,” said Suzanne Delbanco, PhD, the nonprofit’s executive director. “The key now is to turn to learning which methods are effective at improving both the quality and the affordability of care.”
In all of the value-based contracts studied by the group, 53 percent require providers to accept some financial risk and lose money if they fail to improve in certain clinical areas, such as readmissions, while 47 percent are so-called upside-only contracts.
Providers are much more comfortable in shared-savings programs, said Susan DeVore, president and CEO of Premier, a healthcare improvement company. They are not interested in taking on the risk of full capitation.
In order for the journey to value-based models to succeed and for a high-functioning healthcare system to develop, she said, there must be high-functioning provider-payer partnerships in which payers offer financial incentives to providers to move away from the fee-for-service status quo and make investments in operational management tools like electronic health records; make available near-real time claims data; and bring more people into their high-value networks.
This story is based on a report appearing on Healthcare Payer News. Healthcare Finance News Managing Editor Stephanie Bouchard contributed to this story.