Vital Signs Blog

Blog: New York private insurance still mostly pays fee-for-service

Hospitals and physicians in New York continue to earn nearly all of their private insurance revenue from fee-for-service, even though roughly one-third of payments are tied to performance.

About 95% of payments made by New York's commercial health insurers (PDF) are fee-for-service, according to a survey conducted by the state's Department of Financial Services and reported by the group Catalyst for Payment Reform. A closer look shows roughly 34% of payments are tied to performance on quality, though a minority—15%—use both potential penalties and bonuses as incentives. The remaining 85% offer bonuses with no penalty risk.

Pay-for-performance bonuses were the most common incentives, followed by shared savings, such as accountable care, which reward hospitals and doctors for reducing the cost of care by allowing them to keep a share of the resulting savings, as long as they meet quality targets. About 1% of the New York commercial insurance market uses full capitation.

Primary-care doctor and hospitals are the most likely to have contracts with incentives for quality, with 46% and 47%, respectively, of payments under such contracts. The share of specialists payments tied to quality incentives totaled 15%.

New York Medicaid (PDF) has shifted more of its spending out of fee-for-service, with nearly three-quarters, or about 73%, of payments under the traditional payment model. Medicaid was also more likely to require contracts with both penalties and bonuses for performance, with 46% of their payments under such models. Shared savings amounted to 13% of New York Medicaid payments and shared risk accounted for another 12%.


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