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Value-based designs encourage use of higher-quality, lower-cost services
More U.S. employers are adopting value-based reimbursement and payment arrangements with their health insurers and medical service providers in an effort to achieve better health outcomes for employees at a lower cost.
Late last year, the 21st Annual Best Practices in Health Care Employer Survey by consultancy Willis Towers Watson also found that an increasing number of large employers are embracing plan design features that encourage employees to use higher-quality, more-efficient and lower-cost services, known as
value-based plan designs.
'Pay for Performance' Health Care
"As employers grapple with how to lower the cost of health care without lowering quality, they are increasingly looking to pay medical service providers for health outcomes instead of the services they provide," said Trevis Parson, chief actuary, health and benefits, in the consultancy's Philadelphia office.
This involves shifting from a pay-for-service to a pay-for-performance health care delivery model.
"Today, these strategies are more common in geographies where employers have large concentrations of employees or where cost-efficient providers are available and willing to engage in emerging reimbursement models," Parson said. "But this is just the start of a much larger transition—a move from a health care delivery system based on fees for services to a more patient-centric system based on fees for value or outcomes."
The survey results represented 600 large U.S. employers' 2016 health programs and, in some cases, their 2017 and 2018 plans. The respondents employ 12.2 million full-time employees.
ACA Repeal and Value-Based Designs
"Both the public and private sectors need to step up the move to value-based payments in order to reach a tipping point that will transform health care delivery and remove the perverse financial incentives that drive up the cost of care without improving quality," said Brian Marcotte, president and CEO of the National Business Group on Health in Washington, D.C., which represents employers that sponsor employee health plans.
Repealing the Affordable Care Act (ACA) would "once again change how consumers access health care without reforming how health care is delivered," he noted, and so, in itself, "will not address the escalating cost of coverage or the long-term affordability of health care for Americans."
He encouraged employers to raise questions about whether alternative payment models to the current fee-for-service system will be a priority in proposed ACA replacement legislation.
Efforts to encourage value-based payments among Medicare service providers might also give a boost to reforming payment designs in the group plan market. The Medicare Merit-based Incentive Payment System (MIPS) took effect on Jan 1.
Other Value-Based Strategies
The Willis Towers Watson survey findings showed that a growing number of employers also plan to adopt the following value-based plan strategies in the coming years:
[SHRM members-only toolkit:
Managing Health Care Costs]
Other plan design features expected to be adopted more widely, the survey showed, include:
The challenge facing employers is "not only getting employees to use value-based services but also to find health care plans and providers that can deliver them," said Sarah Oliver, Willis Towers Watson's Chicago-based health care delivery leader. "To make progress, employers can use a combination of communication, decision-support tools and incentives to make sure employees understand [value-based services] and encourage their use."
SHRM Online Articles:
Employers May Adopt ‘Narrow Networks’ of Health Care Providers, SHRM Online Benefits, January 2017
'Concierge Care' Provides a Patient-First Health Benefits Approach,
SHRM Online Benefits, October 2016
Related SHRM Resource:
Health Care Delivery Models, SHRM Education Program
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