Report: Value-based payments to eclipse fee-for-service by 2020

In a new study commissioned by McKesson Health Solutions, 58 percent of insurers and 50 percent of hospitals surveyed say they’re moving towards complete adoption of value-based care payments.

This report follows up on a similar 2014 study, which projected value-based reimbursement (VBR) would eclipse fee-for-service payments by 2020. The new report says the industry is on pace to hit that mark, with the percentage of insurers moving toward complete adoption increasing by 10 percent over two years, along with a 4 percent leap among hospitals.

“Payers and providers are clearly beginning to scale VBR,” said Rod O’Reilly, president of McKesson Health Solutions, in a statement. “The swift pace of change, coupled with the daunting complexity of these payment models, is putting extreme pressure on the healthcare system. As we move beyond pilots, the ability for payers and providers to automate the complexity inherent in these models will be a deciding factor to success.”

The 115 payers surveyed estimated that over the next five years, 60 percent of payment will be a mix of quality-focused reimbursement models, like pay-for-performance, global payment or capitation, and bundled payments. Hospitals and payers expect bundled payments to make up 17 percent of all payments in the next five years.

Being prepared for these changes still appears to be a challenge for insurers and hospitals. Less than half of payers and providers say they could accept bundled payment right now, and fewer than 25 percent report having the automation software in place to switch to more complex models.

While adoption of value-based care payments appears to be on schedule, the 355 providers surveyed say they’re not seeing the benefits of the transition yet. Some 40 percent of respondents report they’re meeting goals on improving outcomes for patients, 30 percent say they’re meeting care coordination goals, 26 percent say they’re hitting targets on lowering care costs, and just 22 percent report they’re seeing the expected results on lowering administrative costs.