The number one concern we hear from the physician practices we work with every day is the shift from fee-for-service to value-based alternative payment models. Change is always difficult, especially when reimbursement is affected. In this article, we review discussion from a Health Affairs panel about the need for reviewing current value-based efforts, share value-based and alternative payment model reimbursement statistics, and share a case study from one of our outpatient physician practices.

A Deloitte study revealed, the majority (78 percent) of physicians prefer traditional payment models over value-based payment models (22 percent). A Becker review of the Deloitte study highlighted other areas of concern including: 78 percent of physicians are most concerned with getting penalized for factors they cannot control and 70 percent worry it will limit their ability to make care decisions for the patient.

These concerns were addressed at a recent Health Affairs forum, Securing the Future of Value-Based Payment. The forum was held in Washington DC on April 18th of 2017 and included panels on current value-based payment programs for hospitals and physicians, developing new value-based programs for physicians and hospitals, and a discussion on the best way to measure both. The esteemed panel included Ashish Jha, MD, MPH, director of Harvard Global Health Institute and author of, JAMA Forum: Value-Based Purchasing: Time for Reboot or Time to Move on?

Dr. Jha is a pay for performance advocate, but he feels that most value-based purchasing plans are not succeeding. While he points out that some programs, like the Hospital Readmission Reduction Program has had some success, most have not. Dr. Jha says that for a pay for performance model to succeed, it must have the following three design features:

  1. Incentives that are large enough to motivate hospitals to make sizable investments in improving care
  2. A focus on a small number of high-value measures that will motivate clinicians to engage in changing practice
  3. A simple design that will enable clinical and organizational leaders to know how they are doing

Is the current Medicare measurement under the value-based programs an exercise in compliance or actual quality improvement? The panel at Health Affairs believes the refocus begins with targeting measurement to capture what matters most, minimizing burden, and adapting to a transforming delivery system that strives to clinically integrate care.

While there is ongoing and necessary discussion around the shift from volume to value, there is data available to start the discussion around how the shift to value has affected reimbursement. Beth Jones Sanborn of Healthcare Finance shared the following statistics in her article, Payments tied to alternative payment models climb as value-based barrels forward.

  • In 2016, the total national spending on pay-for-quality hit $354.5 billion.
  • Traditional fee-for-service and other legacy payments not linked to quality still owning the majority with 43 percent of healthcare dollars, compared to 62 percent in 2015, a drop of almost 20 percent.
  • Pay-for-performance or care coordination fees, garnered 28 percent of healthcare payments compared to 15 percent in 2015.
  • Finally, 29 percent of healthcare payments came from shared savings, shared risk, bundled payments, or population-based payments, the LAN report said, compared to 23 percent in 2015.

While this article did not discuss any of the penalties assessed, it did highlight the significant shift towards value-based reimbursement. While we agree that there needs to be more discussion, it seems like the tides are shifting. The critical theme across all of the resources shared in this article is the need for effective measurement. At Care Experience, we have the tools and expertise to help you transition seamlessly in this shift from volume to value.

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