New data shows that from 2012 to 2017, the percent of payments to doctors and hospitals flowing through value-oriented or “alternative payment methods” in the commercial sector grew from 10.9% in 2012 to 53% in 2017. Released by Catalyst for Payment Reform(CPR), additional findings included an overwhelming majority of value-oriented payment – 90% as of 2017 – is built on a fee-for-service foundation and just 6% of total dollars as of 2017 flowed through payment methods that pose downside financial risk to providers. This has been relatively consistent since 2012 (when CPR first started tracking) when it was 5.7%.

“CPR was founded to catalyze payment reform that will transform healthcare,” said Robert S. Galvin, MD, CEO, Equity Healthcare and Chair, CPR Board. “The results of these analyses are disappointing and a wake-up call that we are moving too slowly and essentially missing the mark. 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 healthcare providers to manage our populations and assume financial risk for their performance.”

The Scorecards examined data on the implementation of healthcare payment reform in the commercial sector in the United States for 2012, 2013, 2016 and 2017. Over that time, there was an early investment in pay for performance (12.8% of payments in 2014), but by 2016 shared savings payment arrangements (23.7% of payments in 2016, then 29.7% in 2017) were the most common type of payment reform. Bundled payment remained flat and in the low single digits throughout this period, representing 1.6% of dollars paid to providers in 2012 to 2% in 2017.

Between 2012 and 2017, the rate of growth in payment reform was greatest at the beginning and has slowed in the most recent years of measurement. From 2012 to 2013 the amount of dollars flowing through value-oriented payment methods more than doubled from 10.9% to 27.1%. But from 2016 to 2017, the most recent year over year measurement available, the percent of dollars flowing through value-oriented payments only grew from 48.5% to 53%.

While it is challenging to measure how many Americans with commercial insurance have been touched by payment reform, CPR tracked the percent that generally receive their care from a provider with a payment reform contract. This steadily increased from 2% in 2012 to 24% in 2016 (the most recent year for which data are available). This figure is based on the patient population commercial health plans attribute to a provider to calculate healthcare costs/savings or quality of care scores. “Attributed” patients can include those who choose to enroll in, or do not opt out of, an accountable care organization, patient centered medical home, or other delivery models in which patients are attributed to a provider.

To assess the impact of payment reform on the quality and affordability of care, with the help of an expert, multi-stakeholder advisory committee, CPR selected a set of metrics to examine how well the healthcare system is performing on these dimensions. There are too many variables in the healthcare system to determine payment reform’s sole impact. For example, the incentives in health insurance benefit design may influence patient outcomes (e.g., if patients with diabetes have high cost sharing for lab tests, they may not test their HbA1c regularly, which could negatively impact their blood sugar control). However, CPR gathered these metrics to help inform whether sweeping changes in healthcare provider payment correlate with better health system performance. CPR found performance improving on some of the metrics, worsening on others, and remaining unchanged in still others.

Regarding the affordability of care:

  • In 2013, 7.45% of patients with commercial health insurance were unable to receive care due to cost concerns.

  • In 2016 and 2017, 9.48% and 9.68%, respectively, of patients with commercial health insurance were unable to receive care due to cost concerns.

“Given the growing recognition that high prices are the major reason healthcare 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.

Regarding the quality of care:

  • There were small upticks between 2012 and 2017 in the percent of commercially insured patients with diabetes who had their blood sugar measured with HbA1c tests (88.7% in 2012 and 90.49% in 2017), in the percent of patients given instructions on how to recover at home (85% in 2012 to 87% in 2017) and in the percent of children receiving recommended vaccinations (68.4% in 2012 to 70.4% in 2017).

  • At the same time, however, there were small increases in commercially insured patients with diabetes who had poorly controlled blood sugar (31.38% in 2012 to 36.44% in 2017), hospital-acquired pressure ulcers (21.7 patients in the general patient population out of every 1,000 in 2014 to 23 out of every 1,000 in 2017), and cesarean sections among women with low-risk births in the general patient population stayed constant.

  • Readmissions remained flat between 2012 and 2017 – 8.2% of commercially insured patients admitted to the hospital are readmitted within 30 days.

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