Survey Reveals that Value-Based Reimbursement is on the Rise

What is the state of value-based insurance design so far for 2014? According to a survey commissioned by McKesson and conducted by ORC International, pay-for-performance (P4P) is on the rise.

What is the state of value-based insurance design so far for 2014? According to a survey commissioned by McKesson and conducted by ORC International, pay-for-performance (P4P) is on the rise.

Health leaders from 114 payers and 350 health systems were asked to rate their organization on the continuum of care, from fee-for-service (FFS) to value-based reimbursement (VBR). In total, 64% of payers and 62% of providers felt they were equal to other industry stakeholders, while 12% of payers and 16% of providers felt they were lagging behind.

Another insight gained from the questionnaire was that the larger institutions tended to be further along to VBR in the continuum of care, and collaborative regions were closer to VBR than fragmented regions. A total of 29% of small facilities said VBR will have a positive financial impact on their operations whereas 40% of large facilities believed it had benefits. In addition, accountable care organizations (ACOs) were more likely to be closer to VBR than FFS when compared to non-ACOs.

“The study demonstrated several dramatic themes in the transition occurring throughout healthcare delivery. We asked payers and providers many of the same questions, and found that in some instances, payers and providers are completely aligned in their expectations and experiences surrounding value-based reimbursement. They are also in agreement on some of the key issues that stakeholders face in the transition to value-based reimbursement,” read the report. “Among the key findings, respondents project that pay-for-performance as a value-based model will experience the most growth and encompass a larger share of the reimbursement market.”

However, survey analysts said that while participants rated P4P and VBR as the most critical components to their organizations’ reimbursement models, they are also the most difficult to effectively implement.

Other survey findings included:

  • 90% of payers and 81% of health systems are using a mix of VBR models combined with FFS. Those participants using these mixed reimbursement models predict that VBR will make up two-thirds of the market by 2020 (up from one-third today).
  • For insurers using VBR, P4P is used the most (65%). Capitation, global payment, and total cost of care followed (64%).
  • More than half of payers (60%) felt a shift to VBR will have a positive financial impact; 35% of health systems shared this notion.
  • When asked to rate their top 3 areas of focus to improve overall financial performance, about two-thirds of providers ranked revenue capture and clinical outcomes as their first and second priorities. 40% ranked administrative costs as a top are of focus and only 28% listed consumer engagement.

“To remain relevant and competitive, payers, hospitals, health systems, and clinicians must respond now to integrate value-based models into their existing systems,” said the report. “The winners will be those who act and collaborate decisively. But good decisions require timely and accurate information. There is a strong need to benchmark and monitor the pace of change in the payer-provider landscape, understand how key stakeholders are reacting, and know, to the extent possible, how things will play out over the next several years.”

Around the Web

Value-Based Reimbursement Coming, but Not Without Challenges [Healthcare Payer News]