Insurers Seeking More for Their Money

This article published with permission from The Burrill Report.

Top private health plans in the United States took a big step toward value-based care in the last two years, but still have a long way to go, according to a survey of health insurers that collectively cover 67% of privately insured Americans. It found that about 11% of payments to doctors and hospitals are value-oriented, up from an estimated 1% to 3% in 2010.

“We make the vast majority of payments for health care on a fee-for-service basis without any rewards for quality and efficiency,” says Suzanne Delbanco, the group’s executive director. “We know traditional fee-for-service payment creates incentives for waste and inappropriate care.”

As health care costs grow worldwide, hospitals, doctors and health insurance companies are creating tools and policies to bring costs down while, at the same time, implementing incentives to promote quality care. Catalyst for Payment Reform, a non-profit working on behalf of large employers and other health care purchasers, is tracking their progress.

Using a national survey, the organization monitors what percentage of physician or hospital payments are value-based, among other metrics. Based on their initial estimate in 2010 that 1% to 3% of payments were value-based, the organization set a goal that 20% of all physician payments be value-based by 2020.

“It looks to me like we are on a fast track and we may get there before 2020,” Delbanco says.

Catalyst collected data from 57 health plans representing approximately 104 million covered Americans that pay either personally or through an employer for health insurance. Their 2013 survey found that about 11% of payments to doctors and hospitals are value-oriented — meaning that the payments are tied to how well the provider delivers care or creates incentives to both improve quality and reduce waste. Roughly 90% of payments were traditional fee-for-service, in that providers were reimbursed for every test and procedure they performed, regardless of necessity or outcome.

The organization defined value-oriented payments as those reflecting qualities and methods designed to spur efficiency and reduce unnecessary spending. If a payment method addressed only efficiency and not quality, it was not considered value-oriented. Other metrics from the survey and reported in the National Scorecard on Payment Reform include what percentage of hospital admissions are readmissions within 30 days of discharge for members 18 years of age and older, and what portion of value-oriented payments place doctors and hospitals at financial risk for their performance.

The 2013 survey data and resulting National Scorecard on Payment Reform were obtained from the National Business Coalition on Health’s annual eValue8 health plan survey. eValue8 is a national, voluntary request for information to health plans.

As a caveat, Catalyst for Payment Reform notes that the health plans responding to the questions on payment reform are mostly larger than the average health plan in the U.S., and so the scorecard results may be skewed because larger companies are likely more capable of implementing new forms of payment than smaller ones.

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