Increase in Value-Based Payments Surprises Some Health Financial Experts

A new national scorecard on payment reform shows commercial health plans have dramatically shifted how they pay physicians and hospitals, with 40 percent of their payments “value-oriented” in 2014, according to the Catalyst for Payment Reform (CPR). This means that two-fifths of commercial health insurance payments were no longer traditional fee-for-service.


Some financial experts have voiced their skepticism of this finding, including an executive at the Healthcare Financial Management Association.


“Although we do believe that provider organizations are increasingly entering into nontraditional payment arrangements and moving away from fee for service, we are surprised at the large increase in reported results . . . some of the potential explanation for the jump in responses could be due to a different pool of respondents from prior years, higher concentration of larger plans who may be more ready to leverage these types of arrangements, and the voluntary nature of survey participation, such that those that are actively pursuing payment reform likely were more likely to respond to those questions,” the executive said. (“Scorecard: 40 Percent of Payments Value-Oriented,” HFMA Weekly News, October 17, 2014)


Some of the key findings in the CPR report include:


  • Only 53 percent of the value-oriented payments of reporting insurers included financial risk for providers that fail to improve care or spend within a budget—arrangements were generally upside-only bonus payments.


  • One of the most common value-oriented payment arrangements among responding insurers was pay for performance, which offers bonuses to providers that met quality or efficiency goals.


  • 15 percent of payments are through arrangements where patients are attributed to a certain provider (e.g., accountable care organizations and medical homes).


  • Only 1 percent of payments flow through shared-risk arrangements and 0.1 percent are paid through bundled payments.


  • Hospitals are leading payment reform, with 38 percent of their commercial payments flowing through value-oriented payment arrangements.


  • Value payments in outpatient care accounted for just 24 percent of primary care physician payments and 10 percent of specialist payments.


To read more detailed information from Catalyst for Payment Reform, click here.




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