A new study from the Healthcare Financial Management Association, Leavitt Partners, and McManis Consulting found that the penetration of value-based payment (VBP) models is not yet enough to generate cost savings and is also not affecting clinical quality outcomes at the market level.
A new study from the Healthcare Financial Management Association, Leavitt Partners, and McManis Consulting found that the penetration of value-based payment (VBP) models is not yet enough to generate cost savings and is also not affecting clinical quality outcomes at the market level.
The study, supported by The Commonwealth Fund, used commercial data from 2012 to 2014, and Medicare data from 2007 to 2015, to conduct 2 quantitative analyses. The first examined correlations between the penetration of population-based VBP models and total cost of care for Medicare and commercial payers.
The second looked at other market factors related to baseline Medicare costs and cost growth. A qualitative study of 9 geographically and demographically diverse markets was also conducted. The study is called What Is Driving Total Cost of Care? An Analysis of Factors Influencing Total Cost of Care in U.S. Healthcare Markets.
Researchers analyzing performance results of accountable care organizations (ACOs) and other population-based VBP models found that:
The study found no statistically significant correlation between the penetration of VBP models and growth in the total cost of care for Medicare (2012 to 2015 data) or commercial payers (2012 to 2014 data) in more than 900 markets throughout the United States.
Researchers cited the limited prevalence of VBP models in many markets, the lack of strong financial incentives for managing the total cost of care, healthcare organizations’ preference for an incremental approach to risk, and employers’ reluctance to change benefit design in a tight labor market, among other factors.
This study also noted the impact of industry consolidation on Medicare’s total cost of care:
There are other market factors, including disease prevalence, socioeconomic factors, demographics, and quality, that may influence growth in the total cost of care for Medicare, the study said.
Overall, baseline cost variation was more readily explained than cost growth; the 23 factors identified by researchers explained 82% of baseline cost variation, but just 27% of variation in cost growth.
Researchers recommended that both government and commercial payers move toward population-based models that represent sufficient revenue to incentivize providers to actively manage the total cost of care, while acknowledging that other models may turn out to be more appropriate in some circumstances.
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