New report shows healthcare payment reform has a long way to go

January 12th, 2015

In writing about healthcare quality, it can be easy to overestimate the real pace of change. Cool new projects, tools and techniques come out all the time, with quality leaders finding inspiration in a multitude of other industries. It can be easy to forget that most healthcare in America isn’t conducted at the cutting edge of innovation because, for the most part, the financial incentives in place reward volume rather than value.

Well, a new report released today by Catalyst for Payment Reform (CPR) serves as a pretty stark reminder. According to a press release from CPR,

“only about 11 percent of the health care dollars we pay to doctors and hospitals today are value-oriented – tied to how well they deliver care or create incentives for both improving quality and reducing waste. Almost 90 percent of payments reported remain in traditional fee-for-service, paying providers for every test and procedure they perform regardless of necessity or outcome, or in bundled, capitated, or partially-capitated payments without quality incentives.”

I have to say, I find it interesting that they don’t consider capitation, by itself, to be a value-oriented payment approach. It can be argued, after all, that whatever else it does, capitation provides incentives against overutilization of tests and procedures. It’s pretty clear, though, than when CPR talks about “value-oriented” payment, it’s talking largely about pay for performance. According to the report, which CPR calls the National Scorecard on Payment Reform, “Of the 10.9% of payments that are value-oriented, most put providers at financial risk for their performance, though more than 40% offer a potential financial upside only.”

CPR, a nonprofit organization that represents more than 20 large employers, has had a busy couple of weeks. A few days ago, our Joy Dickinson covered their previous report, about the sorry state of healthcare price transparency.

On the topic of payment reform, CPR has a stated goal of boosting value-oriented payments from 10.9% to 20% by 2020. The way the wind is blowing, I have a feeling we’ll get there a lot quicker than that.