Health insurers are betting on value-based payments, broadly defined, but providers still seem skittish.
Forty percent of all commercial in-network payments are now value-oriented, designed for performance or waste reduction, according to estimates by the the non-profit 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 the Catalyst for Payment Reform, whose estimates are based on voluntary disclosures from health plans with 65 percent of the nation's commercially-insured lives.
The year-over-year jump suggests that value-based payment is growing somewhat rapidly, said Suzanne Delbanco, executive director of the Catalyst for Payment Reform.
"These results illustrate that health plans are responding to employer demand and their own need to try new payment methods," Delbanco said in a media release. "Now we have to start the next chapter: rigorous evaluation. The tough question is whether these efforts are leading to better quality, more affordable care. We need to take a hard look at which models work to know which models to spread."
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 indicative of the critical mass some believe is needed for comprehensive payment reform, at least not yet.
Many providers still don't have financial "skin in the game," according to Catalyst for Payment Reform.
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.
"To employers and others helping to foot the bill for health care, many new payment methods often feel like 'cost plus arrangements,'" Delbanco wrote in a Health Affairs post. "Instead, purchasers would like to see risk sharing across payers and providers."
Providers may be leery of sharing risk in part because that's so new, while pay-for-performance is a familiar and fairly established concept, Delbanco said.
The problem is that "the evidence that pay-for-performance helps to contain costs is mixed," Delbanco wrote. It's possible, she said, that "without financial 'skin in the game,' providers won't change how they deliver care significantly."