Health system executives, industry leaders, regulators, researchers, consultants and practice managers are tasked with leading the transition to value-based care. But it’s the physicians and other clinicians who have to make it happen in their offices, exam rooms, operating suites and at patients’ bedsides.

Five recent reports, surveys and research articles demonstrate the challenges and opportunities facing industry executives charged with leading the transition to value-based reimbursement models.

Nearly two-thirds of surveyed providers say they operate under alternative payment models

In January 2015, the Centers for Medicare & Medicaid Services set the bar for the adoption of value-based reimbursement models for Medicare beneficiaries. The agency said it wanted 90 percent of all formerly fee-for-service payments to be made to providers under one of three VBR models by 2018:

  • Fee-for-service (FFS) with a link of payment to quality
  • Alternative payment models (APMs) built on fee-for-service architecture
  • Population-based payment

Graphic showing 65% of physicans work with patients using alternate payment methodsA survey of 866 physicians working at integrated delivery networks, physician-hospital organizations, accountable care organizations and large multispecialty group practices indicates that providers are making significant VBR progress but have more to do to meet the CMS’ target.

Some 65 percent of the physician respondents said they now operate under at least one type of APM, according to the survey, which was conducted by Capgemini Consulting and the Omnicom Health Group. Some 35 percent said they did not. The APMs include:

  • Pay-for-coordination
  • Pay-for-performance
  • Bundled payments
  • Capitated payments

The survey results echo projections made by McKesson in its white paper on value-based reimbursement, published last year. The 350 provider executives surveyed for the white paper estimated that 61 percent of payments to their organizations will come from VBR models by 2021. Those models include:

  • Capitation or global payments
  • Pay-for-performance
  • Episode of care payment or bundled payment
  • Shared savings
  • Shared risk
But nearly three-quarters of physicians continue to prefer fee-for-service medicine

The last leg on the journey to value may be the toughest to complete. Some 73 percent of 980 physicians in eight medical specialties who responded to a recent survey said they prefer FFS reimbursement to VBR systems like pay-for-performance (15 percent) and capitation (8 percent).

Bain & Company and the Research Now Group conducted the survey, which also found that doctors preferred FFS despite nearly half acknowledging that FFS is more expensive than other payment models. Some 48 percent said FFS increased costs compared with 27 percent who said pay-for-performance increased costs and 17 percent who said capitation increased costs.

Most of the physicians also preferred FFS despite acknowledging that pay-for-performance models did a better job of improving the quality of patient care. Some 46 percent said pay-for-performance improved the quality of care compared with 40 percent who cited FFS and 31 percent who cited capitation.

Physicians’ preference for FFS “demonstrates that financial logic alone is not enough to foster physician support,” Bain said. “Physicians are unwilling to change until it is clear that these models delivery the same or better clinical outcomes.”

Entrenched physician practice patterns will need to be changed for VBR to succeed

Three recently published research articles highlight some of the challenges that need to be overcome to enable the transition to VBR to reach its full potential.

  • A study in JAMA Internal Medicine compared the use of low-value services between hospital-based outpatient practices and community-based office practices and between hospital-owned and physician-owned community-based office practices. The study defined low-value services as: antibiotics for upper respiratory infections; CT or MRI scans for back pain or headaches; x-rays for upper respiratory infections or back pain; and specialist referrals for upper respiratory infections, back pain or headaches. The study found that hospital-based outpatient practices used more low-value services for common conditions than did community-based office practices. “These findings raise concerns about the provision of low-value care at hospital-associated primary care practices,” the researchers concluded.
  • A separate study in JAMA Internal Medicine reported the results of an analysis of physician test-ordering practices at three hospitals. When using the hospitals’ EHR systems to order diagnostic tests for inpatients, some patients’ medical records displayed the Medicare-allowable fees for the tests. Other patients’ medical records did not. Researchers wanted to learn whether price transparency affected the number of tests ordered per patient day. It did not. “There were no significant changes in overall test ordering behavior or associated fees,” the researchers said.
  • A study in the journal Health Affairs compared high-price physician practices with low-price physician practices on a number of outcome measures, including patient experience, quality of care and spending. High-price practices charged an average of $84.45 for an office visit, or 36 percent more than low-price practices, which charged an average of $62.06 for an office visit. On most outcome measures, there were no significant differences between high-price and low-price practices. For example, the rate of preventive and screening services, hospitalizations and spending were similar, the study said. “Our results suggest that transparency initiatives might have the unintended effect of steering patients to high-price providers who are no more efficient or not of higher quality than low-price providers,” the researcher said.

In January 2015, when the CMS announced its VBR adoption targets, the agency said, “All alternative payment models and payment reforms that seek to delivery better care at lower cost share a common pathway for success: providers must make fundamental changes in their day-to-day operations that improve the quality and reduce the cost of health care.”

The agency’s words are proving to be prophetic as the industry continues down the path to value-based reimbursement as the dominant health care financing mechanism in the U.S. As the reports, surveys and research show, significant progress is being made, but there’s much more work to be done.

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