Value-Based Payment Hits the Tipping Point

0

The rapid pace of change in healthcare payment continues unabated, with payers reporting they are 58% along the continuum towards full value-based reimbursement, a 10% leap since 2014, according to a press release from McKesson. Hospitals aren’t far behind, reporting they’re now 50% along the value continuum, up 4% in the past two years.

These insights and more are revealed in “Journey to Value: The State of Value-Based Reimbursement in 2016,” a new national study of 465 payers and hospitals conducted by ORC International and commissioned by McKesson.

Among the findings: Payers estimate that nearly 60% of payment will be a mix of capitation/global payment, pay for performance (P4P), and episode of care/bundled payment in five years, with bundled payment growing fastest. Health plans project bundled payment will grow 6% over five years, edging ahead of capitation/global payment and shared risk growth. And both hospitals and payers project bundled payment will top 17% of medical payment in five years. But just half of payers and only 40% of providers say they’re ready to implement bundles, and only a quarter have the tools in place to automate these complex models.

Network management, a key component of VBR, is also changing dramatically. Over 60% of payers have changed network strategy since 2014, with 53% using tiered and 42% using narrow networks now. And over 80% say they’re more selective about who are in their networks, with care quality the top criteria at 75% of payers. But hospitals say these network strategies are driving up patient confusion, denials, directory inaccuracies, referral management problems, and network leakage.

VBR’s fast rise is also intensifying system complexity, as evidenced by the finding that the majority of providers are not meeting their goals. Of the metrics in place for measuring VBR success, a mere 22% of hospitals are meeting their goal to reduce administrative cost of care, only 26% are meeting goals to lower healthcare costs, just 30% are meeting care coordination goals, and 40% are meeting goals for improving patient outcomes.

“Payers and providers are clearly beginning to scale VBR,” said Rod O’Reilly, president of McKesson Health Solutions. “The swift pace of change, coupled with the daunting complexity of these payment models, is putting extreme pressure on the healthcare system. As we move beyond pilots, the ability for payers and providers to automate the complexity inherent in these models will be a deciding factor to success.”

Respondents were comprised of senior executives, director level and above, across medical management, finance, technology, and strategy who were familiar with value-based reimbursement activities at their organization.

The study included 115 payers across a range of organization sizes and included Managed Medicare, Managed Medicaid and commercially focused; with 38% covering 100,000 to 500,000 lives, 35% covering 500,000 to two million lives, and 27% covering two million lives or more. Payers encompassed multiple regions, with 24% payer-centric, 24% provider-centric, 34% collaborative (where one or two payers and hospitals lead the region), and 17% fragmented (where there are no clear leaders among payers or hospitals).

The study also included 350 hospitals representing a similar range of sizes and locations. From the sample of hospitals, 19% have less than 100 beds, 40% have between 101 and 250 beds, and 41% have more than 250 beds. As for regions, 20% of hospitals are in payer-centric, 29% are in provider-centric, 27% are in collaborative, and 20% are in fragmented regions.

Share.
// Uncomment below to display word count of article //

531 words

About Author

ADVANCE Staff

Comments are closed.