3 things to know: HHS report measures progress toward value-based care

Healthcare is on its way to achieving value-based care goals, according to a new report from HHS’s Health Care Payment Learning and Action Network (LAN).

The study focused on the progress of alternative payment models (APMs) being used in commercial, Medicare Advantage, Medicaid managed care plans and state Medicaid programs. HHS had announced in March it had hit its first target of having 30 percent of fee-for-service (FFS) Medicare payments tied to APMs and this report sought to measure APM implementation in other markets.

1. Fee-for-service still dominated in 2015

The prior year’s number relied on combining survey data from LAN, America’s Health Insurance Plan (AHIP) and the Blue Cross Blue Shield Association, reporting on dollars paid in either the previous calendar year or most recent 12 months for which the plan had data in order to show the percent of actual payments made through APMs. Unlike the 2016 data, it wasn’t separated by market segment.

The spending was divided into four categories: 62 percent of healthcare dollars went to the first category of FFS payments not linked to quality, 15 percent went to Category 2, which included FFS payment linked to quality, and 23 percent went to a composite of Category 3 (FFS-based shared-savings, FFS-based shared-risk, procedure-based bundled payment and population-based payment not linked to procedure) and Category 4 (population-based payment linked to procedure, condition-specific bundled payment, full or percent of premium population-based payments).

2. Commercial, Medicare Advantage and Medicaid dollars will make progress towards value-based care in 2016

The report also collected its own data asking health plans and states to estimate how much will be based to providers in 2016 based on contracts in place as of Jan. 1, 2017. LAN reported data from about 44 percent of the commercial market, 58 percent of the Medicare Advantage market or 39 percent of the Medicaid market.

Dollars were only organized into Categories 3 and 4. Medicare Advantage had the largest proportion of value-based care payments, with 41 percent of its payments to providers for 2016 estimated to be based on APMs based on FFS architecture or population-based payments. For commercial plans, it was 22 percent and 18 percent for Medicaid.

3. The insurance lobby believes it’s on its way towards HHS’s goal

In a blog post about the report, Aparna Higgins, senior vice president at AHIP's Center for Policy and Research, wrote Medicare Advantage plans using APMs having reported fewer inpatient hospitalizations, lower readmission rates, higher quality and more appropriate use of services, and the same success is now being seen in the commercial market.

“The results show we are getting closer and closer to meeting—and hopefully exceeding—the goal set by HHS to have at least 50 percent of Medicare fee-for-service payments tied to quality or value through APMs by 2018,” Higgins wrote. “Collaboration is key. That’s why over the past decade, health plans have been working with their provider and purchaser partners to shift incentives away from rewarding volume to a system that rewards quality and affordability.”