About one-third of health care payments made last year were associated with value-based models, suggesting the health care industry is steadily moving away from the traditional fee-for-service model, according to a progress report by the Health Care Payment Learning and Action Network (HCP-LAN).

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Report details

For the report, HCP-LAN examined fee-for-service Medicare data as well as data from 61 health plans and three fee-for-service Medicaid states. HCP-LAN looked at the volume of in-network and out-of-network health care spending tied to alternative payment models (APM).

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The spending was divided into four categories established by HCP-LAN:

• Category 1, which includes traditional fee-for-service and other payments that are not linked to quality;
• Category 2, which includes care coordination fees and pay-for-performance; and
• Categories 3 and 4, which include shared risk, shared savings, bundled payments and population-based payments.

Health care dollars in value-based care 'steadily' increasing

The report found that 34% of health care dollars in 2017, were tied to Categories 3 and 4. 

This represents an increase in value-based care spending since 2016, according the report, when 23% of health care dollars were linked to APMs that consider value and quality.

The remaining health care dollars in 2017 were tied to payments in categories 1 and 2, with 25% of payments falling into category 2 and 41% of payments falling into category 1—meaning there was no tie to quality.

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Can the health care industry continue the steady shift toward value-based payments?

The report findings show "that there is sustained, positive momentum in the effort to shift health care payments from traditional fee-for-service into value-based payments," Mark McClellan, co-chair of the HCP-LAN guiding committee and director of the Robert J. Margolis Center for Health Policy, said.

Separately, Adam Boehler, deputy administrator at CMS and director of CMMI, said the shift toward value-based payments indicates that the health care industry, which usually moves like "molasses," has "transformed a lot."

However, Boehler and McClellan agreed that for the shift to continue providers would have to be willing to enter more complex payment models

McClellan said, "While we celebrate the increase in overall APM adoption, we also know further progress on payment reform will be important to ensure health care dollars flow through models that have more risk" (Gooch, Becker's Hospital CFO Report, 10/22; Minemyer, FierceHealthcare, 10/22; 2018 APM Measurement Effort, 10/22).

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