Everyone knows the destination: having 100 percent of payments for medical care determined by the value, not amount, of care. But getting there poses different challenges for health plans and providers.
A new white paper from McKesson Health Solutions outlines those challenges and provides a roadmap for health plans and providers that hope to arrive at the desired value-based reimbursement (VBR) destination with better health for enrollees and patients and better business health for their organizations.
MHS released the 46-page white paper, Journey to Value: The State of Value-Based Reimbursement in 2016, at the recent AHIP Institute & Expo in Las Vegas. It is based on a survey of senior executives at 465 health plans and hospitals conducted by ORC International and commissioned by McKesson. The white paper follows-up to a similar 38-page VBR benchmark survey and report by ORC International and McKesson that was released in 2014.
Progress Being Made Toward Full VBR Business Model
Like the 2014 survey, this year's survey asked health plans and hospitals where they were on the value-based reimbursement continuum. On one end of the continuum is full fee-for-service, where all reimbursements from payers to providers are based on volume of care. On the opposite end of the continuum is full VBR, where all reimbursements from payers to providers are based on value of care. Findings from the survey include the following:
- The health plans in this year's survey said 58 percent of their business is VBR-based, up 10 percent from 2014.
- The hospitals in this year's survey said 50 percent of their business is VBR-based, up four percent from 2014.
Although both industry segments made progress toward their full VBR goal over the past two years, health plans are further along than hospitals and are getting there faster than their hospital counterparts, the survey results in the white paper reveal.
The data underscores the importance of the market payers and providers operate within. Those in collaborative, provider-centric, or payer-centric regions were further along the continuum to full VBR than those in fragmented regions where there is little or no collaboration.
VBR Progress for Health Plans Compared to Hospitals
The health plans involved in VBR now projected that in five years 65 percent of their payments to hospitals will be value-based through models as capitation or global payments, pay-for-performance, episode of care or bundled-payment arrangements and shared-savings plans with various risk levels. Hospitals involved in VBR now projected that 61 percent of their reimbursement will be through the same models five years from now.
A possible explanation for the different VBR paces between the two segments is the different economic views of VBR held by health plans and hospitals. According to the survey results in the white paper:
- 61 percent of health plans said the transition to VBR will have a positive impact on their profitability compared with 41 percent of the hospital respondents.
- 33 percent of the hospitals said the transition to VBR will have a negative impact on their profitability compared with 16 percent -- or less than half -- of the health plan respondents.
- About a quarter of each segment said VBR will have no significant impact on their profitability.
Simply put, many hospitals may not be in a hurry to get to their full VBR destinations because they think they'll only lose money when they get there.
Using Metrics to Measure VBR Progress and Performance
Some useful information included in the white paper is a detailed list of the metrics health plans and hospitals currently are using to measure the success of their VBR efforts.
Despite their differences of opinion on progress and profitability toward VBR, payers and providers are very much aligned on the metrics to use. Examples of VBR metrics being used by both health plans and hospitals include:
- Improvement in patient outcomes
- Improvement in clinical quality measures
- Improvement in patient/member experience
- Improvement in care coordination
- Lowering overall health care costs
- Reducing administrative costs of care
Ranking the Capabilities and Processes Required for VBR Success
Payers and providers also are very much aligned on what they identified as “extremely important” or “very important” capabilities and processes for VBR success. In rank order, the 10 most important VBR capabilities and processes cited by the survey respondents are:
- Care coordination
- Standardizing clinical measures
- Integrating workflows
- Patient/member engagement
- Real-time data exchanges
- Standardizing pay methodologies
- Predictive analytics
- Better business intelligence
- Clinical transformation teams
- Patient/member incentives
As suggested by the white paper, by putting the above capabilities and processes in place and using the identified metrics to measure their VBR progress, both payers and providers will reach their VBR goals faster and with optimized clinical and financial results.
To learn more, download the white paper, Journey to Value: The State of Value-Based Reimbursement in 2016.
Related: Learn about McKesson's Reimbursement Solutions