Study: Payment reforms are more widely adopted—but not having the desired effect
Adoption of “alternative payment methods” grew from 10.9 percent of payments to providers in 2012 to 53 percent in 2017.
A new study by a health care employer group finds that although providers are adopting payment reforms that aim to improve quality and affordability of health care, the industry overall is moving slowly and cautiously—meaning that reforms are having a limited effect.
As part of the larger health care reform movement that included the Affordable Care Act, many in the health care industry have called for payment reforms as a way to set quality standards while at the same time reducing wasteful health care spending.
Related: Waste accounts for a quarter of health care spending
Catalyst for Payment Reform (CPR) released a set of national scorecards that shows providers are tending to adopt weaker versions of payment reform and largely declining to take on more risk. CPR’s study, which was funded by the Robert Wood Johnson Foundation, looked at the types of value-based care and found that most of them had little downside for providers if they didn’t meet quality standards.
Little appetite for risk
The good news from the report was that adoption of value-oriented or “alternative payment methods” grew from 10.9 percent of payments to providers in 2012 to 53 percent in 2017. But 90 percent of those methods were built on fee-for-service systems, which could mean that providers still had more incentive to provide quantity of care over quality.
The study further found that only 6 percent of total dollars in 2017, the latest year for which that data was available, flowed through payment methods that had downside financial risk to providers. The researchers found that that number has been relatively consistent since 2012 when it was 5.7 percent.
CPR officials said the numbers show that current payment reform approaches are having less impact than they should. “The results of these analyses are disappointing and a wake-up call that we are moving too slowly and essentially missing the mark,” said Robert S. Galvin, MD, chair of CPR’s board. “Not all payment reforms are equally effective and it’s time to put our energy toward payment methods that don’t rely on fee for service but, instead, empower health care providers to manage our populations and assume financial risk for their performance.”
Quality and cost are both in the mix
The study examined data from the years 2012-2017. The rate of growth of payment reforms was greater in the earlier years of that time period, the study showed. Shared savings payment reforms were the most popular, followed by pay-for-performance—both methods set incentives for providers to reduce unnecessary care and therefore lower costs. Bundled payment reforms, where providers are paid a single, “bundled” payment for an episode of care, were a small percentage and grew only slightly through the five-year time period, representing 1.6 percent of dollars paid to providers in 2012 and 2 percent in 2017.
CPR officials say that in today’s market, payment reform cannot just be about improving quality, it must also look at affordability. The study noted that in 2013, 7.45 percent of patients with commercial health insurance were unable to receive care due to cost concerns. By 2017, that number had risen to 9.68 percent of patients.
“Given the growing recognition that high prices are the major reason health care costs continue to rise while the use of services remains flat, CPR’s view now is that it’s not real payment reform if it doesn’t address prices,” said Suzanne Delbanco, PhD, executive director of CPR.
Read more: