PROVIDER ATTITUDES TOWARD VALUE-BASED PAYMENT MODELS

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1 PROVIDER ATTITUDES TOWARD VALUE-BASED PAYMENT MODELS An Availity Research Study April, 2014

2 TABLE OF CONTENTS 1 Introduction 2 Definitions 3 Key Findings 5 Survey Results 6 Revenue sources and experience with value-based payment models 10 Challenges and attitudes regarding valuebased payment models 13 Background and Methodology

3 INTRODUCTION As provider participation in value-based (at-risk) payment models grows, gaps and barriers affecting program scalability become more evident. According to Availity s latest research, most providers participate in at least one value-based payment model, with expectations to grow that number considerably over the next few years. Likewise, The Centers for Medicare and Medicaid counts more than 360 Medicare ACOs in the US and Puerto Rico 1, a number expected to keep growing, and Leavitt Partners was tracking 207 private ACOs 2 at the end of Add in other value-based programs such as patientcentered medical home, pay-for-performance, and payment-for-coordination, and it s easy to understand how quickly the level of provider participation has grown. And lest we forget, at the same time providers are engaging in value-based business models with health plans, their risk for patient reimbursement is dramatically increasing through high deductible plan membership growth, particularly in the exchange business. As these models expand throughout the country, providers are being forced to deal with an increase in operational and administrative complexities. Managing value-based payment models alongside existing feefor-service models, and across numerous health plans, is creating issues that range from accurate revenue forecasting to workflow integration challenges. While providers had been relying largely on their electronic medical records (EMR) vendors for help with value-based payment solutions, a recent report 3 finds providers turning to other vendors, as EMRs fail to meet their Without the proper tools and workflow practices in place, sustainable and efficient growth in value-based payment models may be hindered. needs. Without the proper tools and workflow practices in place, sustainable and efficient growth in value-based payment models may be hindered. As Availity reported in earlier research conducted in 2013, efficient operations that limit, or better yet, eliminate, labor-intensive processes are necessary for value-based payment models to work. With operational uncertainty playing a major role in the industry s confidence regarding value-based payments particularly among providers Availity undertook a follow-up study to gauge current provider attitudes and concerns regarding valuebased payment models. The Provider Attitudes Toward Value-Based Payment Models study assesses provider experiences and attitudes a year later. It offers insight into current and expected adoption levels, administrative challenges, and attitudes regarding outcomes and cost savings. It also identifies the barriers to growth and scalability that need to be addressed for value-based payment models to realize their potential. Those findings are presented here. 1 The Brookings Institution web site, Year One Results from Medicare Shared Savings Program: What it Means Going Forward, February 7, Leavitt Partners, Geographic Distribution of ACO Covered Lives, December Becker s Hospital Review article, Study: Third Party Vendors Outperform EMR Vendors for Meeting Physician-Led ACOs Needs, April 10, Provider Attitudes Toward Value-Based Payment Models

4 DEFINITIONS For the purpose of this study, Availity uses the following definitions: Automation As it pertains to the exchange of information between providers and health plans, automation means the ability to send and receive information electronically via the internet or in a software system. Provider Includes physician practices, hospitals, and health systems. Real-time The act of sending electronic information immediately to a designated receiver (from provider to health plan, or from health plan to provider) there is no delay; the submission takes mere seconds. Once received, the information is processed instantly by the recipient s processing system and a response returned to the sender, as applicable. Value-based payment model Payment arrangements that pay physicians, hospitals, medical groups, and other health care providers based on measures including quality, efficiency, cost, and positive patient experience. Examples referenced in this study include: Accountable Care Organization Patient-Centered Medical Home Payment-for-Coordination Pay-for-Performance Bundled Payment 2 Provider Attitudes Toward Value-Based Payment Models

5 KEY FINDINGS Provider engagement in value-based payments exceeds growth expectations 4, increasing the already-high pressure on operations and staffs. At least 75% of providers participate in one or more valuebased payment models, in addition to traditional fee-forservice models. More than 60% consider themselves at least somewhat knowledgeable about value-based payments. Only about 25% agree that value-based payment models make it easy to understand, track, and project revenue. More than 80% cite the need for additional staff and time to manage value-based models. Attitudes toward value-based payment models are mixed, reflecting uncertainties and provider concerns. Fewer than 30% believe value-based payments offer a good level of reward for the risk. About half agree that value-based payment models will: Improve population health Improve the patient experience Reduce the cost of health care 75% of providers participate in one or more valuebased payment model 30% of providers believe that value-based payments offer enough reward for the risk 50% agree that value-based payment models will positively affect health outcomes and costs 4 Based on the number of value-based payment models providers reported they expected to support in Q2 2014, Provider Readiness to Operationalize Value-Based Payment Models, Survey Results, Business Priorities & Revenue Outlook, Figure Provider Attitudes Toward Value-Based Payment Models

6 KEY FINDINGS Despite the uncertainties, and while valuebased payments represent only a small percentage of current revenue, providers anticipate strong growth. Provider revenue from value-based payments is less than 20%, but is expected to grow significantly over the next three years. More than 60% believe value-based payments of some type will become the dominant model. To achieve sustainable growth, providers recommend focusing on and resolving data concerns, staff acceptance issues, and operational integration problems. More than 75% of physician practices and 88% of facilities agree that real-time information sharing and access is critical for success. Providers cite care coordination, data accuracy, and staff acceptance as the top barriers to value-based payment success. The top gaps relative to value-based payment models were cited as data accuracy, data management, and implementation assistance. 20% of provider revenue currently comes from value-based models 60% of providers believe that value-based payments will become the dominant model 75% + of physician practices and hospitals agree that real-time information sharing will be critical for success 4 Provider Attitudes Toward Value-Based Payment Models

7 SURVEY RESULTS 01 Revenue sources and experience with valuebased payment models 02 Challenges and attitudes 5 Provider Attitudes Toward Value-Based Payment Models

8 01 REVENUE SOURCES AND EXPERIENCE WITH VALUE-BASED PAYMENT MODELS Provider Revenue Sources On average, providers participating in this study report doing business with about 15 different health plans. Of the professional practices, 54% of their business is from private health plans, while the facilities report the majority of their business (55%) comes from Medicare and/or Medicaid recipients. Figure 1.2 Revenue breakdown Practices derive more of their business from privately insured patients, while facilities serve more patients with Medicare/Medicaid. 10 Responses from both groups indicate a high level of participation in one or more value-based payment arrangements, and more than 60% of respondents say they are at least somewhat knowledgeable about value-based payment models in general. Figure 1.1 Health plans supported The average practice or facility is working with about 15 health plans. Professional 31% Employer group plans 28% Medicare plans 23% Individual plans 12% Medicaid plans 4% Other 2% Don t know Professional Facility 29% 1 9 health plans 43% health plans 29% 20+ health plans 41% 1 9 health plans 36% health plans 23% 20+ health plans Facility 23% Employer group plans 37% Medicare plans 14% Individual plans 18% Medicaid plans 6% Other 1% Don t know 6 Provider Attitudes Toward Value-Based Payment Models

9 01 REVENUE SOURCES AND EXPERIENCE WITH VALUE-BASED PAYMENT MODELS Figure 1.3 Value-based payment participation About 3 in 4 providers currently participate in value-based models or contracts. Figure 1.4 Value-based payment knowledge Most practices consider themselves at least somewhat knowledgeable about value-based payments. Professional 75% Yes 21% No 4% Don t know Facility 81% Yes 18% No 1% Don t know Professional 35% Very knowledgeable 56% Somewhat knowledgeable 9% Not very knowledgeable Facility 31% Very knowledgeable 64% Somewhat knowledgeable 6% Not very knowledgeable 7 Provider Attitudes Toward Value-Based Payment Models

10 01 REVENUE SOURCES AND EXPERIENCE WITH VALUE-BASED PAYMENT MODELS Common Models and Performance Measures Medicare and employer group plans were named as the most common plan types associated with value-based payment models, with hospitals expecting significant expansion to Medicaid plans over the next few years. Medicare Quality Incentive Programs and pay-for-performance were cited as the most common models in place with both physician practices and hospitals today. Hospitals anticipate growth in bundled payment offerings over the next three years. Figure 1.6 Most common value-based payment models Medicare Quality Incentive Programs and pay-forperformance are the most common value-based payment models currently in use. Specialists are more likely to currently participate in the Medicare Quality Incentive Program and in bundled payment plans, while primary care physicians are more likely to participate in pay-for-performance payment model plans, patient-centered medical homes, and payment for coordination plans. Quality of care, patient satisfaction, and prevention measures top the most common list of metrics in place for value-based models. And, while current revenue from these models is only about 20%, providers expect that to reach up to 60% by Medicare Quality Incentive Program Pay-for- Performance Figure 1.5 Most common plan types leveraging value-based payments Current use of value-based payment models is highest for Medicare and group plans. Accountable Care Organization Bundled Payments % 84 Patient- Centered Medical Home % 60% 50% 40% 30% 20% 10% Medicare Plans Employer Group Plans Individual Plans Medicaid Plans Don t Know Other Payment for Coordination Other Type Don t Know 0 2/3 2/ % 16 Professional, now Facility, now Professional, projected 3 years Facility, projected 3 years 20% 30% 40% 50% 60% 70% 80% Professional, now Facility, now Professional, projected 3 years Facility, projected 3 years 8 Provider Attitudes Toward Value-Based Payment Models

11 01 REVENUE SOURCES AND EXPERIENCE WITH VALUE-BASED PAYMENT MODELS Figure 1.7 Average revenue from value-based payments Revenue coming from value-based payment models is typically 20% or less, but is expected to grow in the next three years. Among practices, primary care physicians note a significantly higher percentage of their revenue comes from value-based models (28%, versus 20% for specialists.) That gap is expected to grow throughout the next three years (43%, versus 36%.) Figure 1.8 Most common value-based performance measures The most commonly used metrics are quality of care and patient satisfaction measures. Quality of Care Patient Satisfaction Prevention Utilization of Services Disease/ Condition Status Cost Professional, now 33% 0 5% 31% 6 20% 26% 21 60% 10% 61%+ Professional, 3 yrs 7% 0 5% 26% 6 20% 50% 21 60% 17% 61%+ Transition/ Coordination of Patient Care Health Risk Patient Engagement Other Don t Know Professional Facility % 20% 30% 40% 50% 60% 70% 80% Facilities, now 42% 0 5% 37% 6 20% 18% 21 60% 3% 61%+ Facilities, 3 yrs 4% 0 5% 24% 6 20% 53% 21 60% 19% 61%+ 9 Provider Attitudes Toward Value-Based Payment Models

12 02 CHALLENGES AND ATTITUDES REGARDING VALUE-BASED PAYMENT MODELS Top Challenges with Value-Based Payment Models Understanding and addressing the current challenges with valuebased payment models is critical for these products to grow and have a positive effect on health outcomes and cost of care. Coordination of care, data accuracy, and staff acceptance were cited as the biggest barriers to future growth. Data accuracy, data management, and implementation issues were noted as barriers to realizing the full potential these models have to offer. Figure 2.1 The administrative complexity Top challenges to future use Coordination of care, data accuracy, and staff acceptance of administering these plans are among potential challenges that might limit future use of value-based payment models. is likely to be costly. The Uncontrollable parameters, coordination of care unpredictability of the revenue stream is likely going to make Data accuracy and measurability administering some of these Decreased reimbursement, increased risk plans not worth the cost. Standardization of terms and metrics physician practice Staff acceptance, resistance to change Organizational requirements Implementation and staffing for the various Cost Potential decrease in availability or quality of care educational and oversight perspectives of managing valuebased payments is a challenge. Model structure 5 8 hospital Practice not suited 5 7 Data management % 20% 30% Professional Facility 10 Provider Attitudes Toward Value-Based Payment Models

13 02 CHALLENGES AND ATTITUDES REGARDING VALUE-BASED PAYMENT MODELS Figure 2.2 Top challenges to optimization Data accuracy, data management, and implementation issues are among the biggest challenges for optimizing value-based payment models. Data accuracy and measurability Professional Facility Data management Implementation Standardization of terms and metrics 8 13 Cost Staff acceptance, resistance to change Timeliness of data and use of standard definitions for the metrics used [is important]. A Uncontrollable parameters, coordination of care 6 7 major challenge [involves] the Decreased reimbursement, increased risk 3 7 resources needed by the facility Nothing I don t know % 20% 30% 40% to report, validate, and use the data to improve outcomes and performance. Funding has to be at a level sufficient to justify the Need to make the documentation and information exchange MUCH less onerous and time-consuming. Need data to submit additional costs associated with the value-based programs. hospital automatically and coding for services to be complete to count without causing extra work for provider. physician practice 11 Provider Attitudes Toward Value-Based Payment Models

14 02 CHALLENGES AND ATTITUDES REGARDING VALUE-BASED PAYMENT MODELS Provider Attitudes toward Value-Based Payment Models Market and outcomes From a broad market standpoint, most providers believe large practices, hospitals, and health systems in large markets are best suited for value-based models. They also believe value-based payments will become the dominant model in the future. At the same time, they struggle with whether these models will improve outcomes and actually reduce the cost of health care. 2.3 Market and outcomes Agreement that value-based payment models... Are best suited for large practices/facilities Are best suited for large markets Will become the dominant payment model for health care in the future Improve population health Practice operations and revenue Improve the patient experience In terms of practice operations, more than 80% of all respondents say value-based payment models require more staff and more time to be successful. In addition to requiring different types of information sharing with health plans (different from what is required under fee-for-service models), more than 75% of physician practices and 88% of facilities agree that real-time information sharing and access is critical for success. Improve overall quality of care Practice operations and revenue Agreement that value-based payment models... 20% 40 40% 61 60% 80% 100% Only about 25% of providers believe that value-based payment models make it easy to understand and forecast revenues. Less than one-third agree these models provide a good level of reward for the risk, and even fewer believe they will increase their practice s overall revenue. Require more staff and time management Require different types of information to be exchanged between providers and health plans Require real-time information sharing and access Reduce per capita cost of health care Figures 2.3, 2.4 Make it easy to understand, track and project earnings Provider attitudes toward value-based payment models Relatively few providers feel that value-based payment models offer a good reward for Increase overall revenue the risk or will increase revenues. Provide good reward for the risk % 40% 60% 80% 100% Professional Facility 12 Provider Attitudes Toward Value-Based Payment Models

15 BACKGROUND AND METHODOLOGY The Provider Attitudes Toward Value-Based Payment Models study, sponsored by Availity, was conducted to obtain current feedback on the challenges, experiences, and attitudes of providers related to payment reform initiatives. A web-based survey was conducted by Decision Analyst, a leading research and analytics consulting firm. Statistical significance testing was performed at the 95% confidence level. A representative sample of practice and facilitybased professionals completed the survey: N=324 practice-based professionals, including a mix of PCPs (n=76) and specialists (n=226) with: N=149 at practices with 3-10 physicians N=102 at practices with physicians N=73 at practices with 50+ physicians N=216 facility-based professionals, with a mix of hospital and system sizes: Facility bed size 199 n= n= n=72 System bed size n= n= n=46 13 Provider Attitudes Toward Value-Based Payment Models

16 ABOUT AVAILITY Availity delivers revenue cycle and related business solutions for health care professionals who want to build healthy, thriving organizations. Availity has the powerful tools, actionable insights and expansive network reach that medical businesses need to get an edge in an industry constantly redefined by change. Whether health care professionals use Availity s Advanced Clearinghouse, Revenue Cycle Management or Web Portal services, they ll be able to drive measurable and meaningful organizational improvements, and enjoy the vitality of a healthy business. For more information about Availity, please visit

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