Buy in from physicians and lack of enthusiasm from payers are seen as barriers to moving quickly into value-based models.
Health systems recognize that shifting to value-based payment models is “critically important” to long-term financial success. But progress is slow, in part because many doctors have yet to buy in, according to a new report.
“The State of Population Health: Second Annual Numerof Survey Report,” prepared with David B. Nash, MD, dean of the Jefferson College of Population Health, revealed a divide between healthcare leadership and what is happening on the ground: those who run systems recognize that fee-for-service (FFS) is not the future, yet most have not made the leap into assuming risk. And physicians—whose participation in the shift is essential—are resisting change.
As one health system leader put it, “moving from a system designed to thrive in FFS to one that must thrive in thrive in population health requires abandoning what people have done their entire careers.”
Payers are part of the problem, the report found. Though payers stand to gain the most if value-based care becomes the norm, agreements thus far still shield health systems from risk for the most part, and respondents report that “payer enthusiasm for entering into risk sharing agreements has declined.”
The report comes as providers start implementing the Medicare Access and CHIP Reauthorization Act (MACRA), which will push doctors and hospitals to adopt value-based models. While the early years of MACRA let providers start out slowly, larger systems will feel pressured to adopt alternative payment models (APMs). As time passes, providers will increasingly be ranked against each other, with reimbursement following those who perform best. CMS has said 50% of payment should be based on value-based models by 2018, and it has pursued a series of bundled payment models in quick succession, notably for joint replacement and cardiac care.
Numerof & Associates, based in St. Louis, Missouri, consults with stakeholders across healthcare that need help identifying barriers to make the transition to value-based case. Numerof invited 10,670 health system leaders; 537 responded, representing 5% of respondents and 14.3% of institutions. Authors reported strong distribution across urban, suburban, and rural systems, as well as different business models—government-run, academic, and community hospitals.
Nearly half (43%) of respondents see their ability to manage variation in physician quality as “average” or worse; similarly, 43% said making this shift is “critically important” to their ability to deliver better care at a lower cost. Among other findings:
Despite these steps, the shift to health systems taking on risk is slow. While more than 75% report their organizations had at least 1 risk-based contract with a payer, “exposure to risk in minimal.”
Many health systems face a knowledge or personnel gaps to make the transition, so they continue to do what they know. Some are setting up their own health plans to control the process.
Only 17% of respondents said their group is “very prepared” to take on risk. Still, health system leaders know that change is coming, despite this readiness gap. Said one, “We are not prepared for downside risk. With the MACRA rules and the push to move into the APM track, I’m skeptical that our organization has enough know-how and buy-in to pull it off.”
Ready or not, health system executives said value-based care and especially capitated contracts are coming. More than half (55%) said they are using these contracts now, and 24% reported these arrangements make up more than 10% of all revenue. Nearly all (96%) said this share will grow over the next 2 years, and most expect it will grow quickly.
The authors recommended that health systems that still see barriers to value-based care take steps to find and close them.
“Managing change requires objective assessment of where the organization currently stands, what gaps need to be addressed, and what actions are needed to close them,” they wrote. “The time to act is now.”