Value-Based Care News

Doctors, Employers Disagree on Healthcare Payment Reform Strategy

Physicians and employers agreed that fundamental healthcare payment reform is needed, but differed on who should drive efforts and which APMs worked best, a survey showed.

Healthcare payment reform and value-based reimbursement

Source: Thinkstock

By Jacqueline LaPointe

- Healthcare providers and employers are moving to value-based reimbursement models to achieve the Triple Aim, but the stakeholders disagree on how to move healthcare payment reform efforts forward and by what means, a recent Leavitt Partners survey found.

The survey of over 620 physicians, 530 employers, and 5,000 consumers revealed that these stakeholder groups agree that fundamental changes are needed to improve the healthcare system. About 90 percent of physicians and 70 percent of employers and consumers believe that fundamental changes or a complete rebuild of the healthcare system are needed.

Very few physicians (10 percent) thought the healthcare system worked well and only minor changes were needed.

Employers and consumers tended to view the healthcare system in a slightly better light. About 26 percent of employers and 17 percent of consumers stated the system works reasonably well.

The three stakeholder groups also agreed that payers and the government are primarily responsible for issues in the healthcare system. Approximately 52 percent of providers, 31 percent of employers, and 28 percent of consumers blamed insurance companies, and another 31 percent of physicians, 32 percent of employers, and 47 percent of consumers blamed the government.

READ MORE: AMGA: Value-Based Reimbursement Transition Slower Than Expected

Few respondents pointed to hospitals (between 3 and 6 percent), doctors (1 to 6 percent), or patients (3 to 4 percent).

“In general, physicians, employers, and consumers agree that the healthcare system requires change; however, they disagree on what changes are needed, who is responsible for making changes, and which reform efforts hold the most promise,” wrote Lia Winfield, PhD, Leavitt Partners Senior Associate, Brooke Zollinger, MSc, Associate, and David Muhlestein, PhD, JD, Chief Research Officer.

Physicians and employers were particularly split on who is responsible for driving healthcare payment reform and value-based reimbursement efforts. The respondents identified a wide range of responsible parties, with most physicians placing responsibility in the hands of the government (26 percent), payers (20 percent), and health systems and hospitals (18 percent).

Chart shows that providers and employers disagree on who is to drive healthcare payment reform efforts.

Source: Leavitt Partners

Employers tended to pinpoint payers (20 percent), health systems and hospitals (20 percent), and the government (18 percent) as responsible for driving healthcare payment reform.

“Physicians and employers identify a variety of groups as being responsible for pushing reform,” Winfield et al. wrote. “Lack of agreement both within and between groups on who should drive reform makes progress difficult.”

READ MORE: Best Practices for Value-Based Purchasing Implementation

While transitioning the entire system to value-based reimbursement is already a challenge, physicians and employers also disagreed on the barriers to healthcare payment reform.

One-half of physicians cited regulatory burdens as the most significant barrier to healthcare payment reform. 

Chart shows that providers view regulatory burden as the top barrier to healthcare payment reform, while only 26 percent of employers thought the same.

Source: Leavitt Partners

Only 26 percent of employers identified regulatory burden as a top barrier, and an equal number pinpointed provider unwillingness to participate in reform efforts as the most significant barrier.

Researchers explained that physician uncertainty related to healthcare payment reform may be because of limited understanding of or engagement with value-based reimbursement. For example, only 4 percent of surveyed physicians stated they had an in-depth understanding of MACRA, Medicare’s newest value-based reimbursement program.

Most physicians (47 percent) stated that they recognized the name of the program but were unfamiliar with its requirements even though MACRA and its value-based reimbursement tracks launched in 2017.

READ MORE: Understanding the Top 10 Terms of Value-Based Purchasing

Additionally, the survey found differing perspectives on how to improve healthcare costs and outcomes among the stakeholder groups surveyed.

In terms of healthcare cost improvement, physicians and employers agreed that cost transparency tools would lower spending, with 50 percent of physicians and 60 percent of employers stating that this strategy would reduce costs.

The two stakeholder groups also pinpointed wellness and prevention efforts as top method for reducing healthcare costs, with 60 percent of each group selecting this response.

In addition, about one-half of physicians and employers agreed that better management of super-utilizers and improved behavioral and mental health management would lead to healthcare cost improvement.

While physicians and employers reached a consensus on a handful of cost containment strategies, employers reported increased optimism with alternative payment models as cost reduction tools. Almost one-half of employers (48 percent) reported that accountable care organizations (ACOs) assuming downside financial risk for outcomes will work extremely or very well to contain costs.

Just 22 percent of physicians thought at-risk ACOs would lower costs.

Approximately 46 percent of employers also thought greater bundled payment adoption would be an effective method for reducing costs, while just 21 percent of physicians felt the same.

Researchers stated that employers place more importance on value-based reimbursement as a cost containment strategy, while providers value healthcare payment reform efforts that include patient engagement.

However, improving patient engagement emerged as a major opportunity for healthcare payment reform. The majority of consumers surveyed stated that they were unfamiliar with value-based reimbursement and care delivery transformation terms.

“Thus, there is a need to create incentives for physicians to transition away from a fee-for-service environment and toward value-based payment models,” wrote the authors. “A business case for value must be made and continual engagement with providers on reform efforts and care delivery transformation is important.”

Healthcare leaders and policymakers should also focus on areas of agreement to push healthcare payment reform, they added. Reform efforts should emphasize wellness and prevention, super-utilizer management, improved behavioral and mental health care, and the development of cost transparency tools.

Physicians and employers were also split on which alternative payment and care delivery models were effective at improving patient outcomes.

Value-based reimbursement models pay providers not just for reducing spending, but also for improving patient outcomes. However, providers expressed concerns that current models have yet to positively impact patient outcomes.

Most physicians were unsure if alternative payment models, such as pay-for-performance models, ACOs, bundled payments, and capitated payments, influenced outcomes.

Chart shows that physicians are skeptical that alternative payment models positively impact patient outcomes.

Source: Leavitt Partners

Although physicians were most optimistic with pay-for-performance models and patient-centered medical homes as vehicles for improving outcomes. About 40 percent of providers felt these models could improve patient outcomes.

Managed care organizations and bundled payments received the most criticism from physicians, with 32 and 33 percent, respectively, saying that the models negatively impacted patient outcomes.

On the employer side, about one-third of respondents were unsure or disagreed that value-based reimbursement reforms, including capitated payments, episode-based payments, and pay-for-performance models, would have a positive impact on employee health and healthcare costs.

Chart shows that employers are more optimistic than providers on the ability of alternative payment models to improve patient outcomes.

Source: Leavitt Partners

Differing views on healthcare payment reform strategy among stakeholder groups could challenge the push forward with value-based reimbursement, researchers explained.

“These insights show that the incentives that exist today are not well understood, and not aligned to outcomes in a way that makes clear the responsibility of payers, providers, and consumers,” the report concluded. “Physicians do not want a reduction in pay, but they understand the need for financial incentives that encourage them to help patients be healthier. Consumers do not want to pay more for health insurance, but they can understand a system that challenges them financially to utilize resources to get healthier.”

“In an economic environment that mandates changes to the health care system, it is especially important to create a strong business case for providers to participate in value-based payment models.”