Better quality, lower costs when providers and payers share risk
A capitation payment model results in better value and outcomes than a fee-for-service model, according to Integrated Healthcare Association’s California Regional Health Care Cost & Quality Atlas. The report measured clinical quality, utilization and total cost of care in the Golden State.
Preventive screening rates for patients of providers who take on full financial risk was 11 percentage points higher than FFS providers. The report said 60,000 more women would have been screened for breast cancer and hundreds would have been treated for breast cancer earlier if all California providers shared risk with payers.
Capitation also leads to lower costs. On average, patients cared for by risk-sharing providers paid $268 per year out of pocket compared to $672 for patients with FFS providers. The difference was higher for patients with chronic conditions. Risk sharing reduced cost of care by 3.5%, including 13% less for pharmacy costs.
Payers, including CMS, have increasingly turned away from FFS and toward value and bundled payments. Proponents of value-based care say that it rewards providers for offering high quality with lower costs. However, providers remain leery of taking on more risk.
The report analyzed and compared data from seven payers of providers that take on no risk, only professional risk and full risk. The members comprised about 55 percent of the statewide commercial enrollment. The researchers excluded Kaiser Permanente since that integrated system’s more than six million members would "dominate the results."
The report found that regions in California vary on how much risk providers take on. IHA said that 45% of the commercially insured population in Southern California are cared for by providers who share risk. That’s compared to just 18% in Central California and 24% in Northern California.
On the national level, CMS wants providers to take on more risk earlier, but practices warn that they'll drop out if forced to take on more risk. Physician-led accountable care organizations are dropping out of the Medicare Shared Savings Program faster than hospital-led ACOs.
A recent survey found that ACOs will leave bundled payment programs if forced to take on more risk. The National Association of ACOs found that nearly three-fourths of surveyed groups said they would drop out of the MSSP if they are forced to assume risk. The group warned that requiring more risk would lead to an "exodus" from the Medicare program.
Though CMS views risk as a critical driver to improved care and lower cost, some research shows that experience and not risk is what leads to success. An Avalere study found ACOs need time to transition to value-based care. John Feore, director at Avalere, noted to Healthcare Dive recently that operational changes, changing physician behavior, infrastructure investments, care redesign and physician buy-in requirements require time. Upfront costs and ongoing expenses may also temporarily limit financial success.
- Integrated Healthcare Association How Does Provider Financial Risk Sharing Affect Cost and Quality?