The future of value-based purchasing (VBP) is uncertain. Current models have theoretical promise, but critics point to minimal achievements. Despite the rhetoric around paying for value over volume, the percent of health care spending involved in pay-for-performance contracts has stagnated or declined. In addition, the polled enthusiasm among health care industry leaders for value-based purchasing is declining.
In a recent 4Sight Health blog post, David Burda writes about the waning enthusiasm among industry executives towards value-based purchasing.
First, Burda discusses a health care executive survey by Definitive Healthcare, showing the biggest barriers and accelerators to value-based purchasing. The survey highlighted five major barriers: lack of resources, gaps in interoperability, unpredictability in revenue, changing regulations, and challenges collecting and reporting patient data.
Potential survey methodology limitations aside (it’s not clear how responses were placed into different buckets), these are formidable barriers that are unlikely to be changed soon. In terms of regulatory and policy changes, critics commonly point to the role MIPAA has played in the complexity of the value-based landscape. I would add that proposed changes to Stark and Anti-Kickback regulations are a timely example of regulatory change – both with potential promise and pitfalls. Although the intent might be to create less regulatory risk, these proposed rules might not provide enough clarity to make widespread VBP more popular or viable.
Further, organizations still face limited resources, which is of concern for smaller practices. An unintended consequence of pushing more VBP could be more market consolidation. Smaller and more rural providers are unlikely to have the internal resources to keep up with the growing requirements of VBP arrangements.
The survey results also asked executives to comment on what is accelerating VBP – most executives believe the more provider compensation is tied to value, the more VBP will grow. This is intuitive but unlikely to happen by itself without external forces pushing providers to abandon simpler and more lucrative fee-for-service business practices.
Other surveys in Burda’s post were dedicated to how many dollars are tied to value-based contracts. Premier, the North Carolina-based group purchasing organization, released the results of its survey of executives, for example. Less than 20 percent of respondents reported having more than half of their population covered by Medicare fee-for-service risk-based arrangements, with few respondents indicating that will grow substantially. (Nonetheless, Premier noted that hospitals “remain interested in pursuing risk-based contracts”, despite the lack of growth). Other surveys indicate that various types of VBP arrangements from alternative payment models and shared savings models, to ACOs and nursing facilities, all make up relatively small amount of total business.
Perhaps rightfully so: progress in VBP to actually achieve savings, increase quality, and streamline health care have been mired in significantly complex regulations (because of legitimate fears of gamesmanship) and weak incentives or risk associated with participation (because the fee-for-service status quo is a challenging beast and the upside incentives are small).
In general, its notable that these aforementioned surveys were health care industry focused. Surveys of the health care purchaser community, which have an entirely different financial relationship to the status quo, may conclude that there is still enthusiasm for the VBP movement – despite the lack of progress and appetite among the health care industry – because they see little or waning value from premiums they pay for employees.
In December, the Catalyst for Payment Reform, in partnership with the National Association of Health Care Purchasers, held a webinar on the progress of VBP, which largely confirm the results mentioned by Burda. The results found that, although the percent of total dollars flowing through pay for performance stagnated, dollars flowing through shared savings increased. Still, in the years’ analyzed “no at-risk payment method accounted for more than 4% of total dollars”.
In the end, it seems clear that the lack of appetite, especially for risk-based pay for performance, is likely because some providers could lose total compensation as a result.
What is there to do? For some, like those at the Catalyst for Payment Reform, increasing incentives and risk is the first place to go. The NAHCP hopes employers will hold health plans accountable (or look elsewhere for procuring high-value health care). The current stagnation indicates that some policy clearly needs to change, and health care leaders seem skeptical that innovation is likely without more providers and more dollars being attached to outcomes rather than volume.