Changes are needed to accelerate adoption of risk-based payment arrangements

Sept. 18, 2019

In a recent Premier Inc. survey, leaders from hospitals and health systems revealed that Medicare remains the primary driver of their movement to risk-based payment arrangements. Across all payer types, most respondents indicate that less than 20 percent of their population was covered in a risk-based arrangement.

The survey, which Premier fielded in August 2019, was designed to understand how healthcare providers are working through two-sided risk-based payment models. Respondents totaled 177 healthcare professionals and physicians who sit in various parts of hospitals and health systems across the U.S., including the C-suite, population health, clinical integration, information technology and patient services.

Key findings:

·   29 percent reported that fee-for-service Medicare relationships are currently managed in a risk-based model.

·   22 percent reported that to be the case for Medicare Advantage.

·   64 percent of respondents reported that less than 20 percent of their patient population was covered by risk-based arrangements with employer-sponsored health plans.

·   Less than 20 percent of respondents reported having more than half of their population covered by Medicare fee-for-service risk-based arrangements.

·   Over the next five years, only 5 percent of respondents expect to have more than 80 percent of their population in risk-based arrangements.

Hospitals and health systems, however, remain interested in pursuing risk-based contracts, ranking Medicare Advantage, employer-sponsored health plans and fee-for-service Medicare as the three priority areas.

“The survey findings underscore that the movement to risk-based alternative payment models necessary to achieve this vision is progressing, but slowly,” said Blair Childs, Premier’s Senior Vice President of Public Affairs. “The survey also reveals the fundamental reasons for this slow pace, which largely amounts to needed economic incentives and access to data. This underscores the need for policy changes, as well as action by private organizations.”

The survey revealed that providers need more access to timely data as the shift to risk-based contracts unfolds. Timeliness of data was ranked as the second most significant barrier – behind only reimbursement inadequacy – standing in the way of hospitals’ and health systems’ shift to risk-based models in the Medicare fee-for-service program. Access to data was tied for third, along with competing or higher charge priorities, on the list of barriers (which included nine options).

“Strong partnerships between payers and providers are key to moving to risk-based contracts that will transform the way care is delivered and drive better outcomes and value,” said Carrie Nelson, MD, Chief Clinical Officer of Advocate Physician Partners, a care management collaboration with Advocate Health Care. “These partnerships need to be built on access to standardized claims data, shared risk, clarity of roles and responsibilities and transparent business relationships.”

Respondents also indicated that the data they receive from commercial payers is lacking. Ninety-six percent of those surveyed reported that the data they receive from commercial payers is inaccurate or not standardized, or both, if they receive it at all.

According to survey respondents, numerous barriers must be addressed to ease the transition to risk-based arrangements. This includes significant legislative changes related to performance benchmarking, increased flexibility as providers take on more risk, and changes to the Stark physician self-referral and antikickback laws that will allow providers to innovate care. Premier is actively engaged with legislators and government officials to help determine the best path forward.