Where healthcare is now on march to value-based pay
Skip to main content
MDHC_Logotype_white
Subscribe
  • My Account
  • Login
  • Subscribe
  • News
    • This Week's News
    • COVID-19
    • Providers
    • Insurance
    • Government
    • Finance
    • Technology
    • Safety & Quality
    • People
    • Regional News
    • Digital Edition
    • Health experts blame rapid expansion for vaccine shortages
      Profit up nearly 23% across U.S. community hospitals in 2019
      HHS freezes rule targeting community health centers' drug discounts
      Cerner names Erceg as new CFO
    • Health experts blame rapid expansion for vaccine shortages
      HCA launches joint venture to boost domestic PPE production
      Lilly: Drug can prevent COVID-19 illness in nursing homes
      Mobile labs take vaccine studies to diverse neighborhoods
    • Medicare ACO participants fell in 2021
      Louisiana gets reports vaccine providers are discriminating
      'We know this is real': New clinics aid virus 'long-haulers'
      The Check Up: Trenda Ray
      The Check Up: Trenda Ray of the University of Arkansas for Medical Sciences
    • UnitedHealthcare operating earnings fall by $2 billion in Q4
      CMS approves rule forcing insurers to ease prior authorization
      COVID-19 still a big uncertainty for insurers in 2021
      Health insurers' outlook boosted after Dems' Georgia win
    • Health experts blame rapid expansion for vaccine shortages
      HHS freezes rule targeting community health centers' drug discounts
      Biden signs executive orders to reverse, pause Trump-era rules
      CMS finalizes blood-based colon cancer screening coverage
    • Providers await new HHS coronavirus grant reporting deadline
      Operation Warp Speed Dr. Moncef Slaoui, Pfizer Group President Angela Hwang, Moderna CEO Stephane Bancel, CVS Health Executive Vice President Karen Lynch and McKesson CEO Brian Tyler participate in a panel discussion on the COVID-19 vaccine.
      Hospitals, drug companies strive to stand out virtually at JPM
      Intermountain, Trinity, Memorial Hermann behind $300M private equity fund
      Operation Warp Speed to bump up McKesson's stock price
    • A man in a room with servers.
      Momentum grows to outsource hospital tech functions in 2021
      5 things to know about Google's $2.1B Fitbit acquisition
      Providence bets on machine-learning, consolidating data centers
      Mental health treatment was most common telehealth service during COVID
    • Mobile labs take vaccine studies to diverse neighborhoods
      As virus surges, states reporting shortages of vaccine
      Sticking to Mediterranean diet is good for the brain
      Chance of COVID-19 triage care looms over Arizona hospitals
    • Cerner names Erceg as new CFO
      Elizabeth Richter will serve as acting CMS administrator
      Providence names new chief financial officer
      Wisconsin's top health official departing for federal job
    • Midwest
    • Northeast
    • South
    • West
  • Insights
    • ACA 10 Years After
    • Best Practices
    • InDepth Special Reports
    • Innovations
    • The Affordable Care Act after 10 years
    • New care model helps primary-care practices treat obesity
      doctor with patient
      COVID-19 treatment protocol developed in the field helps patients recover
      Rachel Wyatt
      Project to curb pressure injuries in hospitals shows promise
      Yale New Haven's COVID-19 nurse-staffing model has long-term benefits
    • Modern Healthcare InDepth: Breaking the bias that impedes better healthcare
      Videos: Healthcare industry executives describe their encounters with racism
      Michellene Davis
      Healthcare leadership lacks the racial diversity needed to reduce health disparities
      Dr. James Hildreth
      How medical education can help fight racism
      Quotes from rebadged employees
      Outsourcing IT, revenue cycle takes toll on internal culture
    • A woman with a wearable sensor talking to her provider.
      Wearable sensors help diagnose heart rhythm problems in West Virginia
      self service station
      COVID-19 pushes patient expectations toward self-service
      Targeting high-risk cancer patients with genetics
      A nurse holds up a phone with a message to a family member saying surgery has started.
      Texting, tablets help hospitals keep family updated on patient care
  • Transformation
    • Patients
    • Operations
    • Care Delivery
    • Payment
    • Highmark Health inks six-year cloud, tech deal with Google
      Study: 1 in 5 patients report discrimination when getting healthcare
      HHS proposes changing HIPAA privacy rules
      Android health records app launches at 230 health systems
    • California hospitals prepare ethical protocol to prioritize lifesaving care
      Amazon, JPMorgan Chase, Berkshire Hathaway disband Haven
      Digital pathways poised to reshape healthcare continuum in 2021
      Healthcare was the hardest hit by supply shortages across all U.S. industries
    • A woman with a wearable sensor talking to her provider.
      Wearable sensors help diagnose heart rhythm problems in West Virginia
      New care model helps primary-care practices treat obesity
      How hospitals are building on COVID-19 telehealth momentum
      Researchers: Hospital price variation exacerbates health inequities
    • MedPAC votes to boost hospital payments, freeze or cut other providers
      Most Next Gen ACOs achieved bonuses in 2019
      Congress recalibrates Medicare Physician Fee Schedule after lobbying
      CMS approves rule to encourage value-based drug pricing
  • Data/Lists
    • Rankings/Lists
    • Interactive Databases
    • Data Points
    • Health Systems Financials
      Executive Compensation
      Physician Compensation
  • Op-Ed
    • Bold Moves
    • Breaking Bias
    • Commentaries
    • Letters
    • Vital Signs Blog
    • From the Editor
    • Wellstar CEO calls adapting for the pandemic her bold move
      Howard P. Kern
      Recognizing the value of telehealth in its infancy
      Dr. Stephen Markovich
      A bold move helped take him from family doctor to OhioHealth CEO
      Dr. Bruce Siegel
      Why taking a hospital not-for-profit was Dr. Bruce Siegel’s boldest move
    • Barry Ostrowsky
      Ending racism is a journey taken together; the starting point must be now
      Laura Lee Hall and Gary Puckrein
      Increased flu vaccination has never been more important for communities of color
      John Daniels Jr.
      Health equity: Making the journey from buzzword to reality
      Mark C. Clement and David Cook
      We all need to 'do something' to fight inequities and get healthcare right, for every patient, every time
    • Dr. Bruce Siegel
      By protecting the healthcare safety net, Biden can put us on the path to a stronger country
      Healing healthcare: some ideas for triage by the new Congress, administration
      Dr. Sachin H. Jain
      Medicare for All? The better route to universal coverage would be Medicare Advantage for All
      Connectivity: a social determinant of health that can exacerbate all the others
    • Letters: Eliminating bias in healthcare needs to be ‘deliberate and organic’
      Letters: Maybe dropping out of ACOs is a good thing for patients
      Letters: White House and Congress share blame for lack of national COVID strategy
      Letters: VA making strides to improve state veterans home inspections
    • Sponsored Content Provided By Optum
      How blockchain could ease frustration with the payment process
      Sponsored Content Provided By Optum
      Three steps to better data-sharing for payer and provider CIOs
      Sponsored Content Provided By Optum
      Reduce total cost of care: 6 reasons why providers and payers should tackle the challenge together
      Sponsored Content Provided By Optum
      Why CIOs went from back-office operators to mission-critical innovators
  • Awards
    • Award Programs
    • Nominate
    • Previous Award Programs
    • Other Award Programs
    • Best Places to Work in Healthcare Logo for Navigation
      Nominations Open - Best Places to Work in Healthcare
      Nominations Open - Health Care Hall of Fame
      Nominations Open - 50 Most Influential Clinical Executives
    • 100 Most Influential People
    • 50 Most Influential Clinical Executives
    • Best Places to Work in Healthcare
    • Health Care Hall of Fame
    • Healthcare Marketing Impact Awards
    • Top 25 Emerging Leaders
    • Top 25 Innovators
    • Top 25 Minority Leaders
    • Top 25 Women Leaders
    • Excellence in Nursing Awards
    • Design Awards
    • Top 25 COOs in Healthcare
    • 100 Top Hospitals
    • ACHE Awards
  • Events
    • Conferences
    • Galas
    • Webinars
    • COVID-19 Event Tracker
    • Leadership Symposium
    • Healthcare Transformation Summit
    • Women Leaders in Healthcare Conference
    • Workplace of the Future Conference
    • Strategic Marketing Conference
    • Social Determinants of Health Symposium
    • Best Places to Work Awards Gala
    • Health Care Hall of Fame Gala
    • Top 25 Minority Leaders Gala (2022)
    • Top 25 Women Leaders Gala
  • Listen
    • Podcast - Next Up
    • Podcast - Beyond the Byline
    • Sponsored Podcast - Healthcare Insider
    • Video Series - The Check Up
    • Sponsored Video Series - One on One
    • Carter Dredge
      Next Up Podcast: Ready, set, innovate! Innovation and disruption in healthcare
      Next Up Podcast: COVID-19, social determinants highlight health inequities — what next?
      Ceci Connolly
      Next Up Podcast: How to navigate the murky post-election waters
      Next Up Podcast: Saving Rural Health
    • An older man wearing a mask receiving a vaccine.
      Beyond the Byline: Verifying information on the chaotic COVID-19 vaccine rollout
      doctor burnout
      Beyond the Byline: How healthcare supply chain struggles contribute to employee burnout
      Beyond the Byline: Covering race and diversity in the healthcare industry
      Beyond the Byline: How telehealth utilization has impacted investor-owned company earnings
    • Leading intention promote diversity and inclusion
      Introducing Healthcare Insider Podcast
    • The Check Up: Chip Kahn
      The Check Up: Chip Kahn of the Federation of American Hospitals
      The Check Up: Trenda Ray
      The Check Up: Trenda Ray of the University of Arkansas for Medical Sciences
      The Check Up: Dr. Kenneth Davis
      The Check Up: Dr. Kenneth Davis of Mount Sinai Health System
      The Check Up: Dr. Thomas McGinn
      The Check Up: Dr. Thomas McGinn of CommonSpirit Health
    • Video: Ivana Naeymi Rad of Intelligent Medical Objects
  • MORE +
    • Advertise
    • Media Kit
    • Newsletters
    • Jobs
    • People on the Move
    • Reprints & Licensing
MENU
Breadcrumb
  1. Home
  2. Providers
January 28, 2015 12:00 AM

Where healthcare is now on march to value-based pay

Bob Herman
Melanie Evans
  • Tweet
  • Share
  • Share
  • Email
  • More
    Print
    Trinity Health CEO Dr. Richard Gilfillan (second from right, with Trinity staff), is leading a new task force of providers and insurers committed to having 75% of their business under new payment models by 2020.

    U.S. healthcare providers and insurers start from widely divergent places as some of the largest move to put most of their business into payment models that reward lower cost and higher quality care.

    A new task force made up of providers, insurers and employers has committed to shift 75% of its members' business into contracts with incentives for health outcomes, quality and cost management by January 2020.

    “We're making a public commitment together, all four segments, providers, patients, payers and employers, all of us saying we're going to work together to accomplish this goal,” said Dr. Richard Gilfillan, chairman of the task force and CEO of Trinity Health, a not-for-profit health system that operates in 21 states. Gilfillan is also former head of the CMS Innovation Center, which was formed under the 2010 federal health law to test new ways to finance and deliver healthcare.

    The Health Care Transformation Task Force also includes Ascension, based in St. Louis, and insurance giants Aetna and Health Care Service Corp. Employer Caesars Entertainment Corp. and the Pacific Business Group on Health also are involved.

    Their announcement follows similar pronouncements in the last year by individual private and public payers, including by Medicare this week.

    The members have surveyed the percentage of existing business under similar contracts, but Gilfillan declined to provide details. On average, he said, 30% is under accountable care, bundled payments or other similar contracts. But there is a wide spectrum, he said, and Trinity Health is below the average. “We have a long way to go and it's a real stretch,” he said.

    Gilfillan said the task force members are committed to revamping how hospitals and doctors are paid even if they're not entirely sure how to do it. “We go out and we set ambitious goals that are consistent with our commitment to the great healthcare providers and we don't know everything we need to know about how to get there,” he said.

    Dignity Health, another large not-for-profit system, has roughly 15% of its business under accountable care or alternative contracts. “It's a huge, audacious goal, but one that we think needs to be achieved,” Dignity Vice President Shelly Schlenker said.

    Feds' plan unveiled

    On Monday, federal health officials unveiled a plan to shift half of their spending not devoted to managed care—roughly $362 billion last year—into accountable care, bundled payments and other contracts with the potential for rewards or penalties based on quality performance and better cost control. “We believe these goals can drive transformative change, help us manage and track progress, and create accountability for measurable improvement,” said HHS Secretary Sylvia Mathews Burwell.

    Executives at UnitedHealth Group, Aetna and Anthem, formerly WellPoint, have also pledged to increase the use of quality and cost-control incentives.

    The declarations, however, leave many questions unanswered, raising doubts about whether meeting the targets will accomplish the desired improvements in quality and efficiency. Medicare's newly announced push to rapidly adopt accountable care and other new payment models was met with concerns from health policy experts that Medicare incentives are tied to weak measures of quality.

    “If all you're going to do is you're going to put providers at risk for cost, but you don't have a robust system for measuring quality, then you're not leaving patients better off,” said Dr. Ashish Jha, a Harvard University health policy professor.

    Few blueprints to follow

    Meanwhile, there are few results from public-sector or private-market efforts to adopt accountable care and bundled payments. Blue Cross and Blue Shield of Massachusetts has seen higher quality care at lower costs among hospitals and medical groups under global budget contracts with quality targets in place since 2009. But accountable care under Medicare's Shared Savings Program, which has rapidly expanded since its launch in 2012, has seen its first 220 contracts produce uneven savings with some encouraging but inconsistent improvements in quality.

    The group will develop policy proposals and private-sector initiatives. Initial efforts will focus on accountable care, bundled payments and managing the cost and quality of care for high-cost patients, including those who have multiple chronic conditions and those near the end of their lives.

    The participants say they'll enter contracts that “successfully incentivize and hold providers accountable for the total cost, patient experience and quality of care for a population of patients, either across an entire population over the course of a year or during a defined episode that spans multiple sites of care.”

    Half of Blue Cross and Blue Shield of Massachusetts' commercial business is under alternative contracts that use 64 quality measures to adjust financial incentives for providers under global, population-based budgets, said Dana Safran, a Massachusetts Blues senior vice president who works with the insurer's incentive programs.

    The contracts allow providers with the lowest quality scores to keep 20% of savings they achieve, while high-quality providers can get up to 80%. “I've never in my career seen improvements as broad and deep as the improvements these organizations are achieving,” Safran said of the providers in the contracts. “Absolutely, the incentives on the quality side are enough to be driving change.”

    Risk-based contracts are rare

    Across the industry, contracts that put hospital and clinic revenue at risk for performance on quality and costs are marginal. Among hospitals and health systems rated by Moody's Investors Service, risk-based contracts accounted for 2.4% of revenue in 2013, according to the rating agency's medians. Hospital giant HCA has less than 5% of its revenue under risk contracts, according to Justin Lake, a healthcare analyst at J.P. Morgan Securities.

    For insurer Aetna, 28% of payments to doctors and hospitals are tied to some kind of value-based contracts, and it has a target of 50% by 2018.

    Meanwhile, 10% of Health Care Service Corp.'s business is in risk-based contracts. “As a doctor, I am very excited about the direction this is going,” said Dr. Stephen Ondra, chief medical officer of Health Care Service Corp. “For much of my career, payers and providers had an adversarial relationship that often created win-lose choices.”

    HHS on Monday also announced the creation of the Health Care Payment Learning & Action Network, a network of private- and public-sector healthcare players that will share information about payment initiatives and spur more widespread use of accountable care and other new payment models.

    More insurers and providers may be willing to enter risk-based contracts with Medicare's announced commitment, said John Gorman, a Washington-based consultant who works with health plans.

    “I think most insurers are doing the happy dance right now because this really means that contracting for a result or an outcome is really going mainstream if Medicare is doing it,” Gorman said. “And that will only encourage or force reluctant providers to come around.”

    More widespread adoption may also depend on the degree to which employers join the efforts. Self-insured employers account for 60% of membership for national insurers Aetna, Anthem and Cigna Corp.

    “Employers have the most skin in the game” in the commercial market for value-based care, so HHS has a stake in employers' commitment to new payment models, said Mark Lutes, a healthcare lawyer and board chair of Epstein Becker Green. “HHS is trying to incent and suggest here that there are common needs across employers and the government as purchasers,” Lutes said. “They are collectively trying to change the way they buy.”

    The transition has been difficult in some markets, even for health systems and medical groups that have dedicated significant resources toward establishing the infrastructure and expertise to coordinate care and manage risk for a population of patients.

    The accountable care organizations participating in the CMS Innovation Center's Pioneer program since 2012 agreed to shift half their business into similar contracts with commercial payers and Medicaid within two years. Some have not succeeded as the Pioneers enter their fourth year.

    Follow Bob Herman on Twitter: @MHbherman

    Follow Melanie Evans on Twitter: @MHmevans

    Letter
    to the
    Editor

    Send us a letter

    Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.

    Recommended for You
    Medicare ACO participants fell in 2021
    Medicare ACO participants fell in 2021
    Louisiana gets reports vaccine providers are discriminating
    Louisiana gets reports vaccine providers are discriminating
    Sponsored Content
    Get Free Newsletters

    Sign up for free enewsletters and alerts to receive breaking news and in-depth coverage of healthcare events and trends, as they happen, right to your inbox.

    Subscribe Today

    The weekly magazine, websites, research and databases provide a powerful and all-encompassing industry presence. We help you make informed business decisions and lead your organizations to success.

    Subscribe
    Connect with Us
    • LinkedIn
    • Twitter
    • Facebook
    • RSS
    • Instagram

    Stay Connected

    Join the conversation with Modern Healthcare through our social media pages

    MDHC_Logotype_white
    Contact Us

    (877) 812-1581

    Email us

     

    Resources
    • Contact Us
    • Advertise with Us
    • Ad Choices Ad Choices
    • Sitemap
    Editorial Dept
    • Submission Guidelines
    • Code of Ethics
    • Awards
    • About Us
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Modern Healthcare
    Copyright © 1996-2021. Crain Communications, Inc. All Rights Reserved.
    • News
      • This Week's News
      • COVID-19
      • Providers
      • Insurance
      • Government
      • Finance
      • Technology
      • Safety & Quality
      • People
      • Regional News
        • Midwest
        • Northeast
        • South
        • West
      • Digital Edition
    • Insights
      • ACA 10 Years After
      • Best Practices
      • InDepth Special Reports
      • Innovations
    • Transformation
      • Patients
      • Operations
      • Care Delivery
      • Payment
    • Data/Lists
      • Rankings/Lists
      • Interactive Databases
      • Data Points
    • Op-Ed
      • Bold Moves
      • Breaking Bias
      • Commentaries
      • Letters
      • Vital Signs Blog
      • From the Editor
    • Awards
      • Award Programs
        • 100 Most Influential People
        • 50 Most Influential Clinical Executives
        • Best Places to Work in Healthcare
        • Health Care Hall of Fame
        • Healthcare Marketing Impact Awards
        • Top 25 Emerging Leaders
        • Top 25 Innovators
        • Top 25 Minority Leaders
        • Top 25 Women Leaders
      • Nominate
      • Previous Award Programs
        • Excellence in Nursing Awards
        • Design Awards
        • Top 25 COOs in Healthcare
      • Other Award Programs
        • 100 Top Hospitals
        • ACHE Awards
    • Events
      • Conferences
        • Leadership Symposium
        • Healthcare Transformation Summit
        • Women Leaders in Healthcare Conference
        • Workplace of the Future Conference
        • Strategic Marketing Conference
        • Social Determinants of Health Symposium
      • Galas
        • Best Places to Work Awards Gala
        • Health Care Hall of Fame Gala
        • Top 25 Minority Leaders Gala (2022)
        • Top 25 Women Leaders Gala
      • Webinars
      • COVID-19 Event Tracker
    • Listen
      • Podcast - Next Up
      • Podcast - Beyond the Byline
      • Sponsored Podcast - Healthcare Insider
      • Video Series - The Check Up
      • Sponsored Video Series - One on One
    • MORE +
      • Advertise
      • Media Kit
      • Newsletters
      • Jobs
      • People on the Move
      • Reprints & Licensing