THE 'EDGE REPORT BLOG

Value-Based Reimbursements: A Progress Report

The U.S. healthcare system continues its transformation from a fee-for-service to value-based reimbursement (VBR) model, and the majority of states are now buying into value-based care.

statistics
Figure 1: Data sourced from http://statevbrstudy.com/; image from HealthEdge​

 

Health Plans Embracing Value-Based Reimbursement

From a payer perspective, many plans are moving decisively to VBR. For example, Aetna, Humana, and Cigna are moving their provider contracts into value-based care payment models and investing in ACOs:

  • As of the beginning of 2017, more than 40 percent of Aetna’s healthcare spending was based on a value-based care payment model and the plan, known as Aetna 2020, has a goal to have 75 percent of their spending in a value-based model by 2020.
  • At Humana, 66 percent of their 1.8 million Medicare Advantage members are currently treated through value-based care payment models as of September 30, 2017. In fact, Humana decreased healthcare spending by 20 percent in 2015 due to the advancement of VBR. Furthermore, according to a recent Humana study, total health care costs for practices in value-based arrangements were 15 percent lower than original fee-for-service Medicare. Compared with Humana standard Medicare Advantage settings, total health care costs were 4 percent lower. These results reflect practices in value-based agreements with Humana and/or patients affiliated with those practices.
  • Cigna announced in June 2016 that it created a new service company, CareAllies, Inc., to deliver the systems, capabilities, and management services to providers that are looking to invest in a variety of value-based and risk-sharing models.

 

CMS Goals for Value-Based Reimbursement

CMS Chart
Figure 2: Sourced from https://cms.gov/

The Center of Medicare and Medicaid Services (CMS) is leading the transition to VBR and has been since the passage of the Medicare Access and CHIP Reauthorization Act (MACRA) in 2015.

In March 2016, the CMS announced that it reached its 2016 goal of tying 30 percent of all Medicare payments to alternative payment models 11 months ahead of schedule.

By 2018, CMS plans to have 90 percent of Medicare fee-for-service payments in value-based purchasing categories that are linked to value-based payment.

 

Value-based Reimbursement from a Physician Perspective

Bar Chart
Figure 3: Sourced from AAFP 2017 Study

Fifty-four percent of family physicians indicate their practices participate in value-based payment models according to a study conducted by the American Academy of Family Physicians (AAFP) in September 2017 (see Figure 3).

Significantly more family physicians are hiring care coordinators and behavioral health support in 2017 than in 2015 and only 14 percent report they are doing nothing to prepare for VBR — down from 26 percent in 2015.                                                                                                                                                                                                               

Final Thoughts

The switch from fee for service to VBR is on the march and continues to advance with payers, providers, and state and federal governments participating and setting tangible goals. VBR will continue to be one of the most important levers to contain cost in the overall system.

But, all of this begs the question: What is your plan doing to prepare for VBR?

Discover how HealthRules Payor can help your organization embrace new business models and payment reform. Register for our March 22 webinar: "Value-Based Payments - Getting from here to there..." to hear how HealthEdge customer Independent Health leverages technology-driven strategies to adopt value-based payments. Register now!

 

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