Value-based models haven't reduced costs yet, study finds
- Value-based payment models had no impact on cost or clinical outcome reduction in their early years, a new study from the Health Financial Management Association concludes. The authors used commercial data from 2012-2014 and Medicare data from 2007-2015.
- Researchers attributed the finding to myriad of factors, including the limited prevalence of value-based models in many markets, lack of strong financial incentives for managing the total cost of care, healthcare organization preference for an incremental approach to risk and employer reluctance to change benefit design.
- The study also found markets with less consolidation and vertical alignment tended to have higher costs, while markets with well-organized provider networks had lower costs. HFMA President Joseph Fifer said in a statement that this suggests the type of consolidation may matter more than the volume of activity.
While population- and value-based models are rising in popularity and use, the study shows they have a ways to go before a discernible impact on whittling down the total cost of care.
Since these models were in their nascence during the time of analysis, the study authors concede more time and evidence are needed to get a clearer picture of their efficiency.
Considering the growing presence of population- and value-based models in both government and commercial plans, researchers analyzing the impact they have on cost will be sure to have that time and evidence in the near future. Just last month, UnitedHealth Group CEO David Wichmann told investors he expects 150 million U.S. consumers to be in value-based coordinated care programs by 2025.
A recent Change Healthcare survey of 120 payers found insurers are moving away from fee-for-service and more toward value-based care faster than expected. For the first time, private payers are leading the way in implementing value-based models, rather than government programs. The survey also found payers need time to actually implement these models, with more than a third of respondents saying they need at least one year.
Population- and value-based models aren't the the only market variables impacting costs. The HFMA study aimed to identify how other factors, including social determinants, demographics, disease prevalence and quality of care influence growth in the total cost of care for Medicare. Overall, 23 factors identified by the study's authors accounted for 82% of baseline cost variation and only 27% of variation in cost growth.
Researchers also found that employers in most markets were "reluctant to change benefit design or choose health plans that might be perceived as limiting their employees’ choice of provider," with some even being skeptical about the merits of population- and value-based models.
Study authors suggested government and commercial payers begin adopting "population-based models that represent sufficient revenue to incentivize providers to actively manage the total cost of care, while acknowledging that other models may turn out to be more appropriate in some circumstances."
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