Value-Based Care News

Value-based Payment Models Pose Challenge to Physicians

Over the last several decades, the costs associated with medical care continued to skyrocket and stakeholders began incorporating new models of care and payment structures in an effort to curb the rise in healthcare spending.

By Vera Gruessner

- In HealthEdge’s State of the Payer Industry Survey, more than 80 percent of polled health payers are planning to support value-based payment models over the next three years. Additionally, nearly 77 percent of health plans are looking to support Medicare and Medicaid expansion while 68.13 percent plan to participate in health insurance exchanges in the next three years.

Physician Practice Mergers

Today, the healthcare industry is changing drastically due to new legislation, innovative technology, and a consumer-driven environment. Over the last several decades, the costs associated with medical care continued to skyrocket and stakeholders began incorporating new models of care and payment structures in an effort to curb the rise in healthcare spending.

“An overwhelming majority (73 percent) of the health insurance executives surveyed are planning major, technology-driven transformation at their organizations,” Ray Desrochers, Executive Vice President at HealthEdge, said in a public statement. “The transition to a digital business is now required to provide members with the consumer-friendly, retail-like experiences they expect, effectively participate in new healthcare business models and drive new levels of operational efficiency.”

Nearly half of surveyed payers stated being interested in offering value-based benefits while about 55 percent of the insurers are looking to work with Accountable Care Organizations. Additionally, in order to pursue value-based payment models and other means for reducing healthcare costs, payers are showing more focus on upgrading technology.

Nearly 85 percent of those polled favor automating manual business processes while about 40 percent would like to decrease “reliance on both legacy technology and satellite systems.” The ability to automate some parts of claims processing could bring a health insurance company to run more efficiently.

The results show that about 74 percent of polled payers are leveraging or planning to implement modern technology to move toward new methods of healthcare delivery and value-based payment models. The majority of payers – 83.15 percent – feel that improving their beneficiary and healthcare provider services is of the utmost importance to their organization.

When it comes to improving care coordination across the healthcare industry including between payers and providers, there are certain popular strategies that were uncovered in the survey. These include member self-management, integrated mobile capabilities, shared decision-making, and social media engagement.

“Care coordination has also become a major topic of discussion at many leading health insurance organizations,” the survey results stated. “Key areas of focus for the executives that responded to this latest survey included the need to leverage integrated mobile capabilities as part of an overall care management strategy (68.60 percent), social media engagement for health and wellness and health condition management (59.30 percent), enabling member self-management (75.58 percent), leveraging wearable technologies for data collection and to help ensure compliance (19.77 percent) and supporting models that include shared decision-making (56.98 percent).”

Healthcare costs affect more than the payer industry itself, as it has a tremendous impact on physician practices and hospitals around the country. The Practice Profitability Index report from CareCloud and QuantiaMD reveals that physician profitability has been “flattening out” over the last year instead of decreasing as seen in prior years.

Profitability will either stay the same or rise in 2016 among physician practices, according to the report. Additionally, lower reimbursement rates as well as a rise in medical costs are the top risks for profitability among physicians.

The Index report also showed that the ICD-10 transition is the third biggest threat to profitability for medical practices with three out of five doctors expressing that they are not fully prepared for implementing ICD-10 diagnostic codes in their claims processing system.

The majority of physician practices with full ownership are not looking to take part in mergers. However, about 25 percent of surveyed doctors are looking to either sell or merge their facilities due to regulatory burdens, administrative issues, and financial obstacles.

“Trends in practice ownership plans mirror the improving trend around profitability outlooks. Physician practice owners not planning to sell rebounded to 59 percent in 2015, after dropping to 53 percent in 2014 as industry pressures, such as the ACA and ICD-10, took their toll,” the Index Report stated.

“However, while more of their peers are staying put, a considerable share of physician owners continue to be overwhelmed by the pressures of running a practice. Almost one quarter (23 percent) are actively looking to sell or considering it. Another 6 percent have already sold and 12 percent are looking to merge with another group.”

One-third of polled physicians feel that technology could help them make some quality improvements with 40 percent stating that new revenue cycle management systems are vital for operational enhancement.

Along with payers, healthcare providers are also looking to strengthen their workflows through the use of new technologies. New innovations and health IT systems are sought to meet their administrative, financial, and clinical needs.

It seems that a lack of interoperability and integration with multiple medical technologies including EHR systems is leading doctors to abandon old platforms and incorporate more integrated tools. As more payers and federal agencies continue to stress value-based payment models, physician profitability remains challenged due to declining reimbursement and increased costs.

Both the ICD-10 transition and the stipulations within the Affordable Care Act are also making an impact on physician profitability, the report finds. There are several factors that are leading some healthcare practices to consider selling or merging. These factors are administrative pressures, financial challenges, and regulatory difficulties.

These surveys and reports continue to illustrate the healthcare industry’s challenge of integrating value-based payment models and develop innovative methods to curb rising healthcare costs around the nation.

Image Credit: State of the Payor Survey, Healthedge