Dramatic Increase In Value-Oriented Payments Noted

By Christine Kern, contributing writer

Survey indicates incentive-based contracts are thriving in the commercial insurance market.

Kaiser Health News notes commercial health plans that cover two-thirds of commercially insured Americans used incentives this year to motivate hospitals and doctors to improve quality and manage costs. Kaiser writes this based on a survey by Catalyst for Payment Reform which also revealed that those contracts were responsible for 40 percent of insurers' medical spending.

The survey is the second by Catalyst for Payment Reform, a health policy not-for-profit founded and funded by employers, and the results offer a snapshot of how some of the nation's largest insurers use the promise of financial gain or loss to influence the way providers deliver care and run their businesses.

Four of the five largest U.S. insurers were among 39 health plans that responded to the survey, and together they cover 101 million lives. About 15 percent of the enrollees had providers with incentive-based contracts.

“These results illustrate that health plans are responding to employer demand and their own need to try new payment methods,” explained Suzanne Delbanco, executive director, CPR. “Now we have to start the next chapter: rigorous evaluation. The tough question is whether these efforts are leading to better quality, more affordable care. We need to take a hard look at which models work to know which models to spread.”

Employers welcome the greater use of incentives, and the survey suggests they are proliferating quickly. The 40 percent of health spending tied to incentives this year is a dramatic increase from 10.9 percent in 2013, although the comparison is imperfect because different plans responded to the survey each year.

But with use of new incentives come questions about which incentives are most effective, something that employers confront as insurers market health plans that employ incentives differently. “We are in an amazing era of experimentation,” Delbanco told Modern Healthcare. “We have a lot to learn about what the right balance of incentives are.”