Value-Based Care At Tipping Point, Or Not

Value-based payment reform is at a tipping point and from here we’re likely to become even more inundated with the strategy than we have to this point, as we move past the volume business in healthcare. The value-based model is moving forward rapidly, in full force with payers reporting more reimbursements because of the payment model.

Specifically, payers report that they are 58 percent along the continuum towards full value-based reimbursement, a 10 rise since 2014. Hospitals, too, are playing ball and reporting that they’re now 50 percent along the value continuum, up 4 percent in the past two years.

All of this data comes from one new study: Journey to Value: The State of Value-Based Reimbursement in 2016, a new national study of 465 payers and hospitals conducted by ORC International. The study was commissioned by McKesson, a follow up to a 2014 study that had “established a baseline for healthcare’s transition to value and made it possible for this new research to look at trends over the past two years,” according to a statement about the study.

Accordingly, if we trust the data, payers say that they estimate that about 60 percent of payments 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. Likewise, “the health plans project bundled payment will grow 6 percent over five years, edging ahead of capitation/global payment and shared risk growth.”

According a statement announcing the news, “Both hospitals and payers project bundled payment will top 17 percent of medical payment in five years. But just half of payers and only 40 percent of providers say they’re ready to implement bundles, and only a quarter have the tools in place to automate these complex models.

But a separate study by Health Catalyst suggests that provider organizations are struggling to make the transition to value-based care. Health Data Management reports that value-based care is proving to be a daunting challenge, as “organizations still try to remain economically viable in a fee-for-service world.”

Thus, “only a tiny percentage provide more than half of their care under value-based care arrangements, a target that federal agencies have set for the industry,” and nearly two-thirds of respondents of this study said that 10 percent or fewer of their contracts are tied to value-based care initiatives.

“Healthcare providers are struggling because this is a new way of doing business,” Dan Soule, vice president of product management for analytics vendor Health Catalyst, told the magazine. “It’s incredibly hard for these organizations to figure out how they provide care under value-based models and yet still support fee-for-service.”

The Health Catalyst survey represents 190 U.S. hospitals.

The OCR International study included 115 payers including Managed Medicare, Managed Medicaid and commercially focused. The study also included 350 hospitals representing a similar range of sizes and locations. 

Scott Rupp's picture

Scott Rupp


Scott E. Rupp is a writer and an award-winning journalist focused on healthcare technology. He has worked as a public relations executive for a major electronic health record/practice management vendor, and he currently manages his own agency, millerrupp. In addition to writing for a variety of publications, Scott also offers his insights on healthcare technology and its leaders on his site, Electronic Health Reporter.

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