Study finds no significant link between care costs and early penetration of value-based payment models

One way to reduce the nation's total cost of care is with stronger incentives for adopting value-based payment models, according to a research study conducted by the Healthcare Financial Management Association, Leavitt Partners and McManis Consulting.

The study, which was supported by the Commonwealth Fund, examined commercial data from 2012-14 and Medicare data from 2007-15 to look at the market-level effects of value-based payment models. It included quantitative and qualitative analysis of potential contributing factors to total cost of care in U.S. healthcare markets. The quantitative analysis focused on cost and other data for more than 900 markets. The qualitative analysis focused on site visits in the following geographically and demographically diverse markets: Baton Rouge, La.; Billings, Mont.; Grand Rapids, Mich.; Huntsville, Ala.; Los Angeles; Minneapolis/St. Paul, Minn.; Oklahoma City; Portland, Maine; and Portland, Ore.

Here are six study findings:

1. Researchers did not find any statistically significant correlation between population-based value-based payment models and total cost of care for Medicare or commercial payers in the more than 900 markets. They said this finding is due to various contributing factors, such as the fact that the widespread presence of value-based payment models is limited in many markets and there aren't strong financial incentives for managing the total cost of care, according to HFMA. The association said researchers also cited "healthcare organizations' preference for an incremental approach to risk" and "employers' reluctance to change benefit design" as contributing factors.

2. Higher Medicare costs were more likely to be seen in markets that were less consolidated.

3. Lower Medicare costs tended to be found in markets with well-organized provider networks.

4. The study states consolidation in these lower-cost markets left "between two and four health systems with good geographic coverage competing within the market."

5. Physicians in lower-cost markets also tended to be employed by health systems or be closely aligned with a system. Additionally, these markets tended to have at least one integrated delivery system as a significant competitor in the market.

6. The study also identified 23 other market factors that had a statistically significant effect on variations in baseline costs across markets. Researchers said those factors combined predicted 82 percent of the variation in these costs, with significant factors in predicting baseline costs being the prevalence of chronic diseases, hospital quality, the percentage of costs related to inpatient care, physical environment factors and socioeconomic conditions, among others.

Access the full report, including researchers' recommendations on what they believe could moderate growth in care costs, here.


More articles on healthcare finance:

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