Report: Fee for service still dominant method of healthcare payments

Commercial health plans have “dramatically shifted” in how they pay hospitals and physicians, with 40 percent of all payments reflecting value over volume, but 60 percent of payments remain tied to the traditional fee-for-service model, according to the nonprofit Catalyst for Payment Reform.

The San Francisco-based organization issued the findings as part of its annual scorecard on payment reform efforts. Although a majority of health plans are still seemingly stuck to the fee-for-service model, the 40 percent who have shifted away from the old model is a 29 percent increase over the previous year, when just 11 percent of payments were based on values and outcomes over sheer volume.

The National Scorecard on Payment Reform uses data submitted by commercial health plans on a voluntary, self-reported basis to eValue8, the National Business Coalition on Health’s annual request for information to health plans. The plans responding to the Scorecard questions represent 65 percent of the commercially-insured lives in the U.S., according to the nonprofit, which it says offers a good snapshot of trend in how healthcare is paid for across the country.

The scorecard also found that 53 percent of payments that are value-oriented put providers at risk – so-called “skin in the game” – if care outcomes didn’t improve or spent over budget. Much of those value-based payments offer financial incentives but no financial risk.