Payers Say Value-Based Care Is Lowering Medical Costs, But Tech Isn’t Contributing Much

A new survey of health insurers has concluded that while value-based care seems to be lowering healthcare costs significantly, they aren’t satisfied with the tools they have to analyze value-based performance.

The report, which draws on a survey sponsored by Change Healthcare, including answers from 120 payers across several types of insurance, including managed Medicare, managed Medicaid and commercial plans.

The topline finding from the report was that value-based care (VBC) has lowered healthcare costs by 5.6% on average, with one-quarter of respondents reporting savings of more than 7.5%.

Meanwhile, the volume of fee-for-service payments has dropped dramatically as a percent of overall payments, now accounting for just 37.2% of all reimbursement among respondents. That number is expected to fall below 26% by 2021.

Not only that, 64% of payers said that provider relationships improved, and 73% said patient engagement improved. This suggests that providers have made some strides in delivering value-based care, as many had a hard time restructuring their business in the past.

That said, some payers haven’t met their own VBC goals. In particular, 66% of payers are investing administrative staffers to support episode-of-care programs given what the study terms “exceptional” medical cost savings. Also, one third to one-half said that episode-of-care models were either very or extremely effective at improving care quality.

However, payers haven’t made much progress as they’d like in rolling out episode-of-care programs. While 21% of payers said they were capable of rolling out a new episode-of-care program in 3 to 6 months, more than a third said the needed a year to launch such a program, 21% said it would take 18 months, and 13% said it would take up to 24 months or more. In other words, many payers are so far behind the curve that the programs they’re designing might be obsolete by the time they roll them out.

What’s more, they’ve had a tough time getting providers interested in episode-of-care programs. Forty-three to 58% reported that it is either very or extremely difficult to get providers to participate in these efforts. Not only that, even when they find interested providers, payers are having a hard time finding common ground with them on episode definitions, budgets, the details of risk and reward sharing and performance metrics. These disagreements could prove a major hurdle to overcome.

In addition, more than half of payers said they were not very satisfied with the current value-based analytics, automation and reporting tools, even though most of the tools were developed in-house by the payers themselves. It could be that given provider resistance, the payers aren’t quite sure about what to look for. Regardless, it seems that payers have a longer-than-expected road to travel here.

About the author

Anne Zieger

Anne Zieger

Anne Zieger is a healthcare journalist who has written about the industry for 30 years. Her work has appeared in all of the leading healthcare industry publications, and she's served as editor in chief of several healthcare B2B sites.