Value-Based Care Implementation Delayed for Most Hospitals

June 10, 2016 - While the federal government has announced explicit goals for implementing value-based care models in the next few years, some healthcare providers may not be ready to completely do away with traditional fee-for-service reimbursement structures.

According to a recent Health Catalyst survey, less than one quarter of hospitals are estimated to achieve the Department of Health and Human Services (HHS) goal of tying 50 percent of Medicare payments to an alternative payment model by 2018.

“Transitioning from fee-for-service reimbursement to value-based payments is a goal that many healthcare organizations embrace but are having difficulty implementing as they juggle a number of other high priorities,” said Bobbi Brown, Health Catalyst’s Vice President of Financial Engagement.

“This survey reveals that they're making progress but they could use a little help – some of it financial and some of it technical in the way of better analytics to help identify at-risk populations and better manage their risk. The bottom line seems to be that while progress is slow, healthcare leaders are committed to making value-based care work.”

Transitioning the majority of patient care has proved to be major undertaking for most healthcare organizations. Out of the 78 respondents representing 190 hospitals, only three percent reported that half of their patient care will be connected to a value-based arrangement by the end of the year.

Most healthcare providers are likely to fall short of reaching the federal government’s goal in time. Approximately 23 percent of participants expect to connect 50 percent of their payments to value-based care models by 2019, a year later than the HHS goal.

In the short term, HHS expects 30 percent of Medicare payments to be linked to an alternative payment model by the end of 2016. However, some healthcare providers have yet to transition any of their patient care to risk- and value-based contracts.

Sixty-two percent of respondents stated that their organizations have less than ten percent of their care under a risk-based contract that CMS considers value-based, such as a Medicare accountable care organization or bundled payment program. Some of participants in this group also have yet to transfer any of their patient cases to a value-based care model.

Additionally, the survey revealed that hospitals with fewer than 200 beds found the transition to value-based care more challenging than other larger hospitals. Most of the respondents in this group reported that their organization was not part of any at-risk contract.

“A contributing factor may be that smaller hospitals are five times less likely than larger organizations to have access to sufficient capital to make risk-based contracting work,” stated the press release.

Despite the challenges with meeting the government’s goals, healthcare organizations are planning to quickly increase their participation in value-based and at-risk contracts.

All but one percent of participants anticipate entering into one or more at-risk contracts within the next three years. Sixty-eight percent expect half of their patient care to be tied to a risk-based contract in the same time frame.

Yet, only 23 percent predict that half or more of their care will be connected to a value-care care model in the near future.

When it comes to successively implementing value-based care models, the majority of respondents stated that organizations need big data analytics capabilities. Fifty-two percent cited analytics as the most important function for success.

In addition to big data analytics, 24 percent reported that cultural alignment on quality as having the most impact on value-based care success.

As the survey illustrated, using quality rather than quantity of care to calculate reimbursement is not as easy as it sounds. Value-based care models require hospital quality improvements, extensive data analytics functionality, and more economical healthcare budgets.

For most hospitals, it can be tricky to implement such a large and relatively new change in the system, especially with a MACRA decision in sight that could modify value-based care models even more.

However, HHS and other federal agencies have stuck to their value-based care goals so far. So, if healthcare providers wish to see Medicare reimbursements in the near future, they may need to invest in more value-based care strategies.

Dig Deeper:

• How Value-Based Care Payment Improves Patient Outcomes

• Hospital CEOs Share 3 Ways to Ensure Value-Based Care Success