Providers Experimenting with Value-Based Payment Models

Citing improved outcomes and lower costs, healthcare leaders slightly favor fee-for-service over bundled payment models.

Providers are still in the early stages of the transition from fee-for-service to value-based care, according to the HealthLeaders Media survey, Value-Based Readiness: Setting the Right Pace.

Perhaps as a result, respondents are all over the map in terms of their exposure to the various value-based models, with providers experimenting with value-based payment models and programs to determine which is most appropriate for their organizations, and ultimately weighing improved outcomes on one hand and reduced costs on the other.

It probably comes as no surprise that respondents say that the fee-for-service with no value-based component payment model is the least effective model in terms of quality and cost improvements; more than one-third (37%) say that it offers neither improved outcomes nor lower costs.

This result is more than double the response of any other payment model on the list, and has the highest participation rate by respondents—only 7% say they have no involvement with this program.

On the other hand, full capitation (9%) receives the lowest response for yielding neither improved outcomes nor lower costs; however, it also has the lowest participation rate by respondents—40% report they have no involvement with this program, and only 10% report improved outcomes and lower costs, indicating that the model has yet to yield much value.

Notably, fee-for-service with upside rewards, such as performance awards (22%) has the highest response for improved outcomes and lower costs, although its response is only marginally higher than bundled payment programs (20%).

Interestingly, the top three responses for improved outcomes, no cost reduction are all fee-for-service based: fee-for-service with upside rewards, such as performance awards (27%), fee-for-service with no value-based component (23%), and fee-for-service with downside risk, such as reimbursement penalties (19%).

Looking to the future, respondents indicate that fee-for-service with upside rewards, such as performance awards (29%) is the first-ranked payment model they expect will evolve into one of their organization’s principal payment models for value-based care.

That model receives a significantly higher response than for the next two payment models, fee-for-service with downside risk, such as reimbursement penalties (16%) and shared risk, such as ACO (14%).

Note that, taken in aggregate, combining first-, second-, and third-place rankings, respondents say that the top three payment models are bundled payment programs (58%), fee-for-service with upside rewards, such as performance awards (55%), and shared risk, such as ACO (52%).

At the other end of the spectrum, the payment models receiving the lowest responses are partial capitation (2%) and full capitation (4%), indicating respondents’ low expectations that these value-based models will become their principal payment model.