Value-Based Care is Bending the Cost Curve, Report Finds | Healthcare Informatics Magazine | Health IT | Information Technology Skip to content Skip to navigation

Value-Based Care is Bending the Cost Curve, Report Finds

June 18, 2018
by Rajiv Leventhal
| Reprints
Nearly two-thirds of payments are now based on value, while “pure” fee-for-service is fading, according to new research

Value-based care is bending the healthcare cost curve, reducing unnecessary medical costs by nearly 6 percent on average while also improving care quality and patient engagement, according to new research from Nashville-based Change Healthcare.

The research report, Finding the Value: The State of Value-Based Reimbursement in 2018, was a study of 120 payers conducted by ORC International and commissioned by Change Healthcare. The study included 120 payers across a range of organization sizes, and included managed Medicare, managed Medicaid, and commercially focused.

The report found that despite easing or ending of federal mandates, commercial lines of business are investing in value-based innovation, accelerating the decline of pure fee-for-service faster than previously projected levels. Indeed, today, nearly two-thirds of payments are now based on value. The research's top findings include:

  • Payers report success in reducing unnecessary medical costs as a result of their value-based care strategies. Medical cost savings topped 5.6 percent on average, with almost a quarter of respondents noting savings in excess of 7.5 percent.
  • Almost 80 percent of payers report improvements in care quality, while 64 percent report improvements in provider relationships and 73 percent report patient engagement improved—significant headway toward achieving the elusive "Triple Aim" of healthcare through value-based care initiatives.
  • For the first time, commercial lines, not government lines of business, are leading adoption, advancement, and innovation of value-based care models and strategies.
  • Pure fee-for-service is fading faster than predicted in past studies, now accounting for only 37 percent of reimbursement, and projected to dip below 26 percent by 2021.
  • Innovation agility remains a problem, with only 21 percent of payers capable of rolling out a new episode of care program in three to six months. Over a third of payers need up to a year to launch a new program, 21 percent require up to 18 months, and 13 percent need up to 24 months or more—more than enough time for conditions to change in a fast-moving healthcare market.
  • Payers are struggling to engage providers in episode-of-care programs, with 43 percent to 58 percent reporting it is very or extremely difficult to: generate interest among providers to participate; agree on episode definitions; and gain consensus on budgets, risk/gain sharing, and performance metrics.
  • Over half of payers are not very satisfied with their current value-based analytics, automation, and reporting capabilities—despite the fact that many of these are designed and developed in house.

This study of payers does not necessarily align with prior research on how providers feel about the shift from fee-for-service to value-based care. For instance, one recent survey of nearly 1,000 physicians found resistance in how doctors felt about the transition to value-based care and payment models, with 60 percent noting that it will be more difficult to deliver high-quality care in the next two years. That survey also found that nearly three quarters (73 percent) of physicians prefer to use a fee-for-service model, citing concerns about the complexity and quality of care associated with value-based payment models.

Nonetheless, third in a series, the Change Healthcare research follows the company's 2014 and 2016 studies, which established a baseline for healthcare's transition to value and made it possible for this new research to look at trends and success metrics, and drill down into operational advancements since the first study was published four years ago, according to Change Healthcare researchers.

"Payers are finding the positive impact of value-based care as they scale these models—particularly episodes of care—and that's starting to bend the cost curve in a significant way," Carolyn Wukitch, senior vice president and general manager, network and financial management, Change Healthcare, said in a statement. "However, the demand to innovate at the pace of change is challenging payers. They lack satisfactory analytics and automation to better engage providers, operationalize their models, and assess effectiveness overall. And that's why we continue to invest in the technologies and services that will help our customers have the right tools in place to speed innovation and simplify complexity, which will be the deciding factors for success in this new era."

Get the latest information on Health IT 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



ONC Roundup: Senior Leadership Changes Spark Questions

The Office of the National Coordinator for Health IT (ONC) has continued to experience changes within its upper leadership, leading some folks to again ponder what the health IT agency’s role will be moving forward.

Media Report: Walmart Hires Former Humana Executive to Run Health Unit

Reigniting speculation that Walmart and insurer Humana are exploring ways to forge a closer partnership, Walmart Inc. has hired a Humana veteran to run its health care business, according to a report from Bloomberg.

Value-Based Care Shift Has Halted, Study Finds

A new study of 451 physicians and health plan executives suggests that progress toward value-based care has stalled. In fact, it may have even taken a step backward over the past year, the research revealed.

Study: EHRs Tied with Lower Hospital Mortality, But Only After Systems Have Matured

Over the past decade, there has been significant national investment in electronic health record (EHR) systems at U.S. hospitals, which was expected to result in improved quality and efficiency of care. However, evidence linking EHR adoption to better care is mixed, according to medical researchers.

Nursing Notes Can Help Predict ICU Survival, Study Finds

Researchers at the University of Waterloo in Ontario have found that sentiments in healthcare providers’ nursing notes can be good indicators of whether intensive care unit (ICU) patients will survive.

Health Catalyst Completes Acquisition of HIE Technology Company Medicity

Salt Lake City-based Health Catalyst, a data analytics company, has completed its acquisition of Medicity, a developer of health information exchange (HIE) technology, and the deal adds data exchange capabilities to Health Catalyst’s data, analytics and decision support solutions.