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Employers’ Reform ‘Scorecard’ Shows Continuing Shift in Value-Oriented Pay

A national report released today shows a rise in “value-oriented” provider payment models among health insurance purchased through employers. California has much higher percentages of those types of payments than national averages, the report said.

Catalyst for Payment Reform, a not-for-profit corporation funded in part by employer groups, issued its annual National Scorecard on Payment Reform today. It’s not really a rating report, but rather provides baseline data to monitor changes in value-oriented care so researchers can pinpoint whether that leads to the twin goals employers and consumers most want: higher quality and lower cost.

“We’re not weighting them or saying which numbers are better or worse,” said Andréa Caballero, program director at Catalyst for Payment Reform.

“What we’re really seeing here [in the report] is a flurry of activity,” Caballero said. “California has always been pretty progressive in its different payment methods, but the rest of the nation has been going that way, as well.”

Caballero said the trend numbers have shown a clear move toward value-oriented care among employers. No one knows whether that model actually raises quality or lowers cost and figuring that out is the next step, she said.

“Now we have the really hard work of seeing whether this is really adding value,” Caballero said. “We have quantified the method, we can see where the dollars are flowing, we need to see what effect that really has, and we’ll be spending the next 12 to 18 months finding that out.”

According to today’s report:

  • Nationally, about 40% of commercial health plans payments are designed to encourage health care providers to deliver higher-quality and, in some cases, more affordable care. That is a significant jump over last year’s 11% number.
  • In California, about 55% of the plans’ payments were value-oriented,compared to 42% last year.
  • Of the value-oriented payments, roughly 53% put providers at financial risk for not meeting budgets or improving care, and 47% do not. Caballero said many value-oriented payments nationwide are “pay-for-performance” incentives with the possibility of financial reward but not risk.
  • Nationally bundled payments are rare — at about 0.1% so far.
  • About 38% of payments to hospitals are value-oriented, so they are most affected. That compares to 10% of specialists’ payments and 24% of payments to primary care physicians being value-based.

Caballero said there is some evidence pay-for-performance incentives do have an effect on quality. “But there has been no evidence it has affected affordability,” she said.

Value-oriented payment models may sound a little esoteric or wonky, but they cut to the heart of what health care reform is trying to accomplish, Caballero said.

“It matters because under the fee-for-service based systems, we’re paying for unnecessary care, and there’s variation in the care delivered. There isn’t any incentive to do it differently,” she said.

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