It’s hard to get a snapshot of where the specialty health care market is with value-based reimbursement (VBR). Our recent surveys of provider organizations and health plans provide an interesting view. Generally, while specialty organizations that serve consumers with complex health needs lag behind acute health care in their adoption of VBR, we see use and effects of these payment models continuing to increase.
Our provider organization survey found that 69% of specialty provider organizations participate in some form of VBR arrangement (see Where Are We On The Road To Value?: The 2019 OPEN MINDS Performance Management Executive Survey). Participation varied by market with 85% of primary care provider organizations in VBR arrangements compared with 72% behavioral health organizations, 58% of child service organizations, and 55% of intellectual and development disability or long-term services and supports organizations participating in the models.
Contrast this with the health plan perspective: 93% of health plans are tying fee-for-service payment to performance and, from 2017 to 2019, the number of health plans using some form of bundled payment or case rate rose from 39% to 59% (see Trends in Behavioral Health: A Population Health Manager’s Reference Guide on the U.S. Behavioral Health Financing and Delivery System).
Use of pay-for-performance increased from 86% in 2017 to 93% of all health plans in 2019, and bundled payments increased from 39% to 59%. For 2019, pay-for-performance was used consistently across all plans: 98% of commercial plans, 96% for Medicaid, and 89% for Medicare. And while 40% of commercial plans used bundled payments, 71% and 88% of Medicare and Medicaid plans use the model, respectively.
Increased use of bundled payments among commercial payers in particular indicates success for health care professionals as well as consumers, says OPEN MINDS Senior Associate Deb Adler:
The advantage for the consumer is fewer co-pays. With bundles a consumer pays once instead of one copay for each visit. For example, with a bundled payment for medication-assisted treatment, an evidence-based, increasingly common practice for substance use disorders, a bundled payment includes all services including medication management, individual and group therapy, peer counseling, and labs. The medication is frequently paid outside of the bundle. Bundled payments are becoming a more popular approach for payers to better align incentives because they are a win-win-win…”
How much of the health care spend is tied to VBR? Our survey of specialty provider organizations provides a few interesting insights. While 69% of specialty provider organizations are participating in VBR contracts, only 58% have seen revenue from these arrangements. There was one important change in the data: 16% of those organizations reported receiving 20% or more of their revenues from VBR, which speaks to a growing consolidation of the contracts and income among provider organizations. Ms. Adler notes:
Low revenue from VBR arrangements indicates that we need to increase medical expenditures tied to value-based incentives. It also reflects the fact that rewards are still rather low in performance-based incentives and often range from 3% to 6% in enhanced payments for performance-based contracts. In comparison, pay-for-performance is easier to administer through rewards or disincentives based on outcomes, which could explain why it’s penetrated all books of business.
Learn more about VBR with these resources from the OPEN MINDS Circle Library:
- There Is No “Plan B” Alternative To Value Creating A Value-Focused Competitive Strategy In A Changing Market
- How To Develop Alternative Payment Models: A Guide To Building Effective Bundled Payment Models
- The State of Value-based Care in 2018: 10 Key Trends to Know
- Care Delivery In A Value-Based Era – Evidence-Based, Practice-Based, Standardized & Measurement-Based
- The Management Lessons Driving Strategy In 2019
- Developing Case Rates? Better Find Your ‘Single Source Of Truth’
- Adjust Your Strategic Sails!
- When The Competition Succeeds At Pay-For-Performance, What Will You Do?
- Options For Alternative Payment Models For Behavioral Health
- Using Your Performance Metrics To Build A Value Proposition For Health Plans
And join me February 12 for the “How To Build Value-Based Payer Partnerships: An OPEN MINDS Executive Seminar On Best Practices In Marketing, Negotiating & Contracting With Health Plans” during the 2020 OPEN MINDS Performance Management Institute.