A recent report by Kaufman Hall looking at hospital utilization found that value-based reimbursement currently accounts for less than 10% of the total revenue at three-quarters of the nation's hospitals.
Payment reform, particularly the movement from volume- to value-based reimbursements is one of primary markers of the US healthcare reform, but the country is far behind many of its counterparts across the world.
A report from 2012 by Boston Consulting Group studying 12 countries found that the United States, with the higher per-capita costs in the study, ranked third from the bottom in the use of value-based care, just above Germany and Hungary.
With the movement having such a focus in the healthcare market, why does it continue to struggle? Below are four critical reasons why the adoption of value-based reimbursement has been a such a challenge.
A 2012 Forbes Insight study surveyed more than 200 hospital leaders in charge of leading their institutions on the charge for value-based care. The results of the survey were conflicting.
Almost three-quarters of the respondents think the shift to this reimbursement is impending, but many don't believe it will happen until five years out. In the same survey, providers were split on the importance of value-based reimbursement. When asked if they thought it was a "fad," 31% agreed; 34% disagreed and 34% were undecided.
To make this kind of change in the system, it will be a requirement to get hospital staff on board. These executives also said their biggest barrier to implementing the payment system was getting doctors on board with the change.
Patients will also play a role in the movement. Consumers making good financial choices and opting for lower-cost care is a requisite to making it work for providers. In the Forbes study, 67% of providers said they believe this will be a challenge because consumers aren't able to accurately judge the value of medical care—that consumer-driven plans may not drive purchasing based on value by consumers.
The report by the Boston Consulting Group noted that one of the major requisites for value-based reimbursement is support at the national level. The United States, the report said, lags behind other countries in providing key support for value-based care including: common national standards, IT infrastructure, national legal frameworks, the ability to link health outcomes and costs and policymaker engagement in the issue.
In order to track outcomes and manage population health, providers need data. This is another space where the United States is behind, according to the Boston Consulting Group report. Other nations not only have more rich data, but they are able to use it in a better manner.
The report noted there are providers, like Kaiser Permanente, that are able to use clinical outcomes to create best practices that are distributed across their health systems. There are also some successful national disease registries like the Cystic Fibrosis Foundation Patient Registry and the American College of Cardiology's CathPCI Registry.
Overall, however, data exchange is fragmented. "There currently exists no national mechanism for compelling providers to report outcomes to disease registries," said Peter Lawyer, one of the study's authors. "Nor is there a unique patient identifier in place that would enable research to combine data across different disease states to examine the effect of complex co-morbidities."
Payment system challenges
The shared savings model is the one most frequently used in value-based care. The challenge for providers with this model is that they must operate in the fee-for-service arena while anticipating and tracking their annual value-based bonuses.
Medicare's Shared Savings Program has been described as "a race to the bottom." Like radioactive half-life, the margin of savings is going to get smaller and smaller, and at some point, all the fat will be trimmed out of an organization. The financial incentive from the program is over.
And while it seems likely that will always be some complex services (such as heart surgery and kidney transplants) that will be reimbursed on a fee-for-service basis, Jeff Hoffman, senior partner at health care consulting firm Kurt Salmon, believes basic care providers who have gone down the MSSP route won't be able to survive for long with a foot in both fee-for-service and value-based care. Improved care translates to a decrease in billed services, and the provider starts to lose money. So when the savings payouts dwindle, hospitals must have a long-range plan to cover overhead and ongoing investment in needed infrastructure. MSSP, ultimately, is an opportunity to develop the tools, processes and the team to succeed in a care-based environment, but it is a short-term strategy.
According to an article on Health Catalyst's website, tracking reimbursements requires a different, more refined system than does fee-for-service. Providers have to account for various payers in different ways. When working with groups like an accountable care organization, for instance, it "requires considering questions like: for each defined population of patients, what was our financial performance and how did it compare to the contract? The ability to measure performance at this level of granularity will require much more sophisticated IT capabilities than most health systems now have," according to the report.
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