The adoption of value-based reimbursement (VBR) models is expected to dwarf the fee-for-service (FFS) model by 2020, according to a national survey commissioned by McKesson. Information was collected from 350 hospitals and 115 payers.
Payers reported that they were 58% along the continuum toward full VBR––a 10% increase since 2014. Hospitals weren’t far behind, reporting that they were 50% along the value continuum, up 4% in the past two years.
Among other key findings: Payers estimated that nearly 60% of payments will be a mix of capitation/global payment, pay for performance, and episode of care/bundled payment in five years, with bundled payment growing fastest. Health plans projected that bundled payment will grow 6% over five years, edging ahead of capitation/global payment and shared risk growth. Both hospitals and payers projected that bundled payments will top 17% of medical payments in five years. However, half of payers and only 40% of providers said they were ready to implement bundles, according to the survey.
Network management, a key component of VBR, is also changing dramatically, McKesson found. More than 60% of payers had changed network strategy since 2014, with 53% currently using tiered and 42% using narrow networks. More than 80% said they were more selective about who were in their networks, with care quality the top criteria at 75% of payers. Hospitals said these network strategies were driving up patient confusion, denials, directory inaccuracies, referral-management problems, and network leakage.
The rapid rise of VBR is also intensifying system complexity, as evidenced by the finding that most providers were not meeting their goals, the survey found. Of the metrics in place for measuring VBR success, only 22% of hospitals were meeting their goals to reduce the administrative costs of care; 26% were meeting their goals to lower health care costs; 30% were meeting care-coordination goals; and 40% were 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.”
The McKesson survey also found that:
The data were released at the annual conference of America’s Health Insurance Plans (AHIP).