C-suite expects value-based care participation to heat up

Value-based care by revenue, model

Already, more than half of hospitals and health systems currently generate between 5% and 20% of revenue through value-based care models that tie reimbursement to outcomes. But it is rare for organizations to have more than 20% of revenue tied to these models, the report stated.

Just about 9% of survey respondents said their organization has over 20% of revenue in value-based care models, with a mere 1% full entrenched in outcomes-based reimbursement.

The remaining respondents were split between 3% and 5% of revenue in value-based care models (20%) and 0% to 1% of revenue (18%).

Just how much money organizations are putting into value-based care is still spread out, signaling a major opportunity to jump into models that shift away from fee-for-service.

The most popular value-based care models, according to the survey, are ACOs and bundled payment models. Although at least half of the respondents are in pay-for-performance programs, value-based purchasing programs and the Merit-Based Incentive Payment System.

Notably, significantly more hospitals and health systems are participating in ACOs and bundled payment models now than they were two years ago.

Here to stay

More hospitals and health systems are embracing value-based care compared to survey results from 2023, when only 57% of respondents planned to increase their participation in value-based care models.

Qualitative surveys of the respondents underscored the transition, with many C-suite executives highlighting their commitment to value-based care. Some also agreed that value-based care is the future of healthcare reimbursement and care delivery, although progress has been slow and not all models have yielded the right results for ROI.

Continued pressure from payers will drive more reimbursement to value-based care models, the report indicated. Public and private payers continue to tighten the purse strings, with little to no increase in their rates. Some payers have even slashed payments.

The administrative burden of getting paid has also increased, as more providers report higher claim denial rates and greater prior authorization requirements.

CMS has also signaled its dedication to moving Medicare providers to value-based care models, particularly those with downside risk. For example, the federal agency is launching a mandatory bundled payment model for hospitals in certain areas in January. It also recently released two new alternative payment models to support chronic disease management and technology use.

Value-based care may still top hospital and health system challenges. The models require clinical, operational and technical investments for success. However, C-suite leaders are pushing harder than ever to shift away from fee-for-service as macrotrends point to value-based care.

Jacqueline LaPointe is a graduate of Brandeis University and King's College London. She has been writing about healthcare finance and revenue cycle management since 2016.