Value-Based Care News

Value-Based Payments to Surpass Fee-For-Service Model by 2020

By Ryan Mcaskill

A new study from McKesson found that payers and providers believe value-based reimbursement platforms will grow.

- McKesson Health Solutions, along with research firm ORC International, released the 2014 State of Value-Based Reimbursement study. It is the result of a survey of 464 healthcare payers and hospitals. The results are eye-opening as the survey aimed to answer several questions including: how are payers/providers reacting to industry, how far along are they, what reimbursement models are being used and how are they aligning with value-based platforms?

One of the most important findings of the survey is that payers and providers expect value-based reimbursement to overtake fee-for-service by the year 2020. However, there are obstacles when it comes to integrating these models with other systems and value-based reimbursement will push the next-generation of healthcare IT.

According to the numbers:

Rapid adoption – Reimbursement models are changing quickly. Currently, 90 percent of payers and 81 percent of providers are already using some combination of value-based and fee-for-service payment platforms. Stakeholders using this method are waiting for expansion of value-based care and predict that value-based will make up two-thirds of the market by 2020, up from one-third today.

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  • Collaborative more successful - Collaborative regions, were one or two payers and providers stand out, are more aligned with value-based approaches than fragmented regions. Also the larger the institution the more value-based solutions are incorporated.

    Influence of care delivery model – Accountable care organizations are closer to adopting value-based reimbursement than non-ACOs. The study found that 45 percent of providers are part of an ACO and 59 percent of those that are not, anticipate joining one within five years.

    Pay-for-performance – The proportion of total business that aligns with pay-for-performance is expected to experience the most growth in the coming years. It should increase from 10 percent today to 18 percent in five years. Providers using a mix of reimbursement models that align with pay-for-performance will jump from 9 percent to 21 percent in five years.

    Existing HIT not aligned – Fifteen percent of payers and 22 percent of providers characterize pay-for-performance as “very difficult” or “extremely difficult” to implement. The biggest issue is a lack of standards, analytical tools and the need for better IT infrastructure to support these models.

    Primary obstacles – Integration of internal, vendor and collaborative IT systems topped the list of obstacles (41 percent of payers, 23 percent of providers) while data collection, access and analytics is also near the top (22 percent payers, 20 percent providers).

    Technology a catalyst – There is a lack of clinical buy-in and 20 percent of payers and 17 percent of hospitals see this as a major challenge. However, new technology solutions and tools will help enable this engagement.

    “Healthcare is at a tipping point,” Dana Benini, Vice President at ORC International, said in the report. “If we look at where institutions fall on the continuum towards value-based reimbursement and how that’s evolving, we see that the pace of change is a lot faster than many believe. This is particularly apparent in the growth of accountable care. The number of ACOs has tripled in just two years. There are winners and losers emerging from this transition, and healthcare stakeholders are faced with adapting quickly to make sure they fall on the right side of that equation.”