Upside-only pay surges as risk-based pay, clinical results remain flat, scorecard finds

• The share of downside payment in employer plans has stagnated, moving from 5.7% in 2012 to 6% in 2017.
• Shared savings arrangements increased from 23.7% of payments to providers in 2016 to 29.7% in 2017.
• Value-based payment advocates urged employers to push providers to take on more downside risk.

Employer-sponsored plans, which cover half of Americans, in recent years have charged into payment models that offer bonus payment options. But both risk-based payment and performance on clinical indicators generally have been stagnant.

Key findings from the latest National Scorecard on Payment Reform by the Catalyst for Payment Reform (CPR), which tracks value-based payment (VBP) trends among employer-sponsored insurance (ESI) plans, included:

• The share of “alternative [provider] payment methods” increased from 10.9% in 2012 to 53% in 2017.
• The overwhelming majority of VBP — 90% in 2017 — is built on fee-for-service.
• Downside risk was limited to 6% of total provider payments.

The results are based on reports from health plans covering 89 million people, or half of the commercially insured.

The small share of downside-risk payment has remained consistent since 2012, when it accounted for 5.7% of spending on hospitals and physicians. For instance, bundled payment arrangements increased from 1.6% of spending on providers in 2012 to only 2% in 2017.

Among the growing types of upside payments were shared savings arrangements, which increased from 23.7% of payments in 2016 to 29.7% in 2017.

Quality measures show little change

The same ESI plans reported only small improvements or declines in clinical quality measures, including:

• An increase in patients with diabetes who had their blood sugar measured with HbA1c tests (88.7% in 2012 to 90.5% in 2017)
• An increase in patients given instructions on how to recover at home (85% in 2012 to 87% in 2017)
• An increase in children receiving recommended vaccinations (68.4% in 2012 to 70.4% in 2017).
• An increase in patients with diabetes who had poorly controlled blood sugar (31.4% in 2012 to 36.4% in 2017)
• An increase in hospital-acquired pressure ulcers (21.7 per 1,000 patients in 2014 to 23 in 2017)
• An unchanged rate of cesarean sections among women with low-risk births (about 26%)
• An unchanged 30-day readmission rate (8.2% of commercially insured patients)

What does it all mean?

Although the analysis did not examine any correlation between risk-based payments and greater improvements in clinical outcomes, compared with upside-only arrangements, the leaders of the tracking effort said a shift toward risk-based payments apparently is needed.

“Most of us would agree we need to increase the potency of provider risk,” said Suzanne Delbanco, PhD, executive director of CPR, although she acknowledged not all providers are ready for downside risk.

Foong-Khwan Siew, PhD, manager of health plan performance for the National Alliance of Healthcare Purchaser Coalitions, said ESI plans are moving toward greater risk for providers with their increasing — although still infrequent — use of bundled payments.

“It’s great to share savings, but it is really important to have downside as well as upside risk to get us where we need to go,” Siew said.

Delbanco see indications that more employers are moving toward narrow networks, which would increase pressure on providers to take on downside risk. For example, narrow networks are core components of the expanded direct-contracting and accountable care models created by employer plans.

Cost concerns continue

The report card’s tracking of healthcare affordability also showed a worrying sign. The share of patients with commercial insurance who were unable to receive care due to cost concerns increased from 7.45% in 2013 to 9.68% in 2017.

Delbanco said the next phase of healthcare reform efforts should focus on prices.

“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,” Delbanco said.