Health Catalyst: Hospitals Progressing Sluggishly toward HHS’ Value-Based Reimbursement Goals | Healthcare Informatics Magazine | Health IT | Information Technology Skip to content Skip to navigation

Health Catalyst: Hospitals Progressing Sluggishly toward HHS’ Value-Based Reimbursement Goals

June 9, 2016
by Rajiv Leventhal
| Reprints

Fewer than a quarter of U.S. hospitals are on track to hit the Obama Administration’s 2018 goal of providing at least half their patient care through value-based arrangements, according to new research from Salt Lake City, Utah-based analytics vendor Health Catalyst.

In January 2015, the U.S. Department of Health and Human Services (HHS) announced a plan to tie 30 percent of traditional fee-for-service, Medicare payments to quality or value through alternative payment models such as accountable care organizations (ACOs) and bundled payments by 2016, and tying 50 percent of payments to these models by the end of 2018. HHS also set a goal of tying 85 percent of all traditional Medicare payments to quality or value by 2016 and 90 percent by 2018 through programs such as the Hospital Value Based Purchasing and the Hospital Readmissions Reduction Programs.

However, the survey by Health Catalyst revealed that just 3 percent of health systems today meet the target set by CMS. Only 23 percent expect to meet it by 2019, just a year after CMS had hoped that half of all Medicare reimbursements would be value-based. The online survey of healthcare executives represented 190 U.S. hospitals with a total of more than 20,000 licensed beds.

According to the survey, the majority of health systems—a full 62 percent—have either zero or less than 10 percent of their care tied to the type of risk-based contracts identified by CMS as “value-based,” including Medicare ACOs and bundled payments. Not surprisingly, small hospitals with fewer than 200 beds comprised the majority of those reporting no at-risk contracts. A contributing factor may be that smaller hospitals are five times less likely than larger organizations to have access to sufficient capital to make risk-based contracting work, according to the survey.

Despite lagging behind the federal government’s goal, healthcare executives across the board intend to steadily increase value-based care and at-risk contracts. In the next three years, all but 1 percent of respondents expect their organizations to be engaged in at-risk contracts. Sixty-eight percent said they expect risk-based contracts to account for less than half their total care in that time frame. Only 23 percent expect value-based care to account for more than half of their care in the next three years. Eight percent of respondents said they could not predict the answer.

The most important organizational element needed for success with risk-based contracting is analytics, said responding executives at both small and large hospitals. In fact, 52 percent of respondents cited the prime importance of analytics, more than double the second most-selected answer: a culture of quality improvement. Twenty-four percent of respondents cited cultural alignment on quality as having the most impact on value-based care success.

“Transitioning from fee-for-service reimbursement to value-based payments is a goal that many healthcare organizations embrace but are having difficulty implementing as they juggle a number of other high priorities,” Bobbi Brown, Health Catalyst vice president of financial engagement, said in a statement. “This survey reveals that they’re making progress but they could use a little help – some of it financial and some of it technical in the way of better analytics to help identify at-risk populations and better manage their risk. The bottom line seems to be that while progress is slow, healthcare leaders are committed to making value-based care work.”

For the Health Catalyst Survey, over half of the respondents (51 percent) were CEOs or CFOs of large hospital-owned physician groups and hospitals ranging in size from 15 acute care beds to over 1,000 beds. The remaining respondents all held executive roles, including several CMIOs, CMOs and CNOs.

To this end, the 2016 HIMSS Cost Accounting Survey, unveiled at the annual HIMSS conference in Las Vegas earlier this year, also found that very few of surveyed organizations, indeed just 3 percent as well, believe their organization is highly prepared to make the pay-for-value transition.

Nevertheless, also at HIMSS this year, HHS announced that an estimated 30 percent of Medicare payments are now in fact tied to quality or value through alternative payment models, well ahead of the goal set to hit that target by the end of 2016. In a statement posted on its website earlier this year, HHS said that with the January 2016 announcement of 121 new ACOs as well as greater provider participation in other models, HHS has achieved that 30 percent goal well ahead of schedule. Those estimates were evaluated by the independent CMS’ Office of the Actuary and found to be “sound and reasonable,” the HHS press release stated.

CMS estimated progress toward the goal by multiplying the number of Medicare beneficiaries in alternative payment models (net any overlap or attrition) by the expected cost of their care and compared that figure to projected Medicare fee for service spending. As of January 2016, CMS estimates that roughly $117 billion out of a projected $380 billion Medicare fee-for-service payments are tied to alternative payment models, per the agency’s earlier data.

 

Get the latest information on Finance and Revenues and attend other valuable sessions at this two-day Summit providing healthcare leaders with educational content, insightful debate and dialogue on the future of healthcare and technology.

Learn More

Topics

News

NewYork-Presbyterian, Walgreens Partner on Telemedicine Initiative

NewYork-Presbyterian and Walgreens are collaborating to bring expanded access to NewYork-Presbyterian’s healthcare through new telemedicine services, the two organizations announced this week.

ONC Releases Patient Demographic Data Quality Framework

The Office of the National Coordinator for Health IT (ONC) developed a framework to help health systems, large practices, health information exchanges and payers to improve their patient demographic data quality.

AMIA, Pew Urge Congress to Ensure ONC has Funding to Implement Cures Provisions

The Pew Charitable Trusts and the American Medical Informatics Association (AMIA) have sent a letter to congressional appropriators urging them to ensure that ONC has adequate funding to implement certain 21st Century Cures Act provisions.

Former Michigan Governor to Serve as Chair of DRIVE Health

Former Michigan Governor John Engler will serve as chair of the DRIVE Health Initiative, a campaign aimed at accelerating the U.S. health system's transition to value-based care.

NJ Medical Group Launches Statewide HIE, OneHealth New Jersey

The Medical Society of New Jersey (MSNJ) recently launched OneHealth New Jersey, a statewide health information exchange (HIE) that is now live.

Survey: 70% of Providers Using Off-Premises Computing for Some Applications

A survey conducted by KLAS Research found that 70 percent of healthcare organizations have moved at least some applications or IT infrastructure off-premises.