Overwhelming Majority of Payments to Doctors and Hospitals in New York State Are Still Made Using Fee-for-Service
New Scorecards Show One-Third of Payments in the Empire State Now Tied to Value
April 30, 2015 (New York) – An independent review of health care payments to doctors and hospitals reveals that the vast majority of payments in New York State continue to flow through a fee-for-service mechanism in both the commercial (94%) and Medicaid (73%) sectors. However, a significant proportion of payments are “value-oriented”—that is, designed to boost the quality of care patients receive. Approximately one-third of health care payments to doctors and hospitals in New York State are value-oriented.
Catalyst for Payment Reform (CPR) released the findings today in two Scorecards, commissioned by the New York State Health Foundation.
New York State is currently organizing an ambitious reform effort through its Delivery System Reform Incentive Payment (DSRIP) program and the State Health Innovation Plan (SHIP). DSRIP’s primary purpose is to restructure the health care delivery and payment systems through reinvesting in the Medicaid program. Similarly, a key goal of the SHIP is to ensure that, within five years, 80% of New Yorkers are cared for under value-based payment arrangements, rewarding providers who help patients stay healthy and achieve quality health care outcomes at an efficient cost.
“The shift toward value-oriented payments is critical for improving the quality and affordability of care in New York State,” said James R. Knickman, President and CEO of the New York State Health Foundation. “While we clearly have some work to do to move away from our antiquated fee-for-service system, it’s encouraging that a large proportion of payments are tied to quality and value. New York State is on the right path.”
The Scorecards, based on comprehensive surveys of commercial health plans and Medicaid health plans that collectively insure 16.3 million New Yorkers, found that:
- Among commercial health plans, 34% of payments are tied to value; similarly, among Medicaid plans, 33% of payments are tied to value.
- In the commercial sector, less than 15% of payments place health care providers at financial risk for their performance (that is, they stand to lose financially if they overspend or do not meet quality targets); in Medicaid this grows to 46%.
- In the commercial sector, the most common form of value-oriented payment is pay-for–performance, which is typically traditional fee-for service payment with a bonus for meeting quality or efficiency goals (23%).
- In Medicaid, the most common form of payment reform is a combination of some kind of non-fee-for-service base payment along with a shared savings agreement (13%). These arrangements are most often put into place to support patient-centered medical homes, or accountable care organizations (ACOs) for which providers may receive a care coordination fee or other per-member per-month payment and have an agreement with payers that they will share in any savings they produce.
- In the commercial sector, less than 3% of payment arrangements contain “shared risk,” which means providers are financially responsible for any financial losses and have the opportunity to gain financially if there are any savings. In Medicaid this jumps to nearly 13%, likely because Medicaid health plans that are provider-owned are in a better position to hold providers financially responsible for exceeding cost targets.
In 2013 and 2014, Catalyst for Payment Reform produced National Scorecards on Payment Reform, measuring value-oriented payment in the commercial sector across the United States.
“These New York Scorecards released today are groundbreaking because it is the first time we have looked at payment reform by Medicaid in contrast to the commercial sector,” said CPR’s Executive Director Suzanne Delbanco. “We know health care providers need stronger and more consistent signals from payers. These Scorecards help public and private payers identify where there are opportunities for further alignment in their approach to payment.”
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About the New York State Health Foundation
The New York State Health Foundation (NYSHealth) is a private, statewide foundation dedicated to improving the health of all New Yorkers, especially the most vulnerable. Today, NYSHealth concentrates its work in three strategic priority areas: expanding health care coverage, building healthy communities, and advancing primary care. The Foundation is committed to making grants, informing health care policy and practice, spreading effective programs to improve the health system, serving as a neutral convener of health leaders across the State, and providing technical assistance to its grantees and partners.
About Catalyst for Payment Reform
Catalyst for Payment Reform is an independent, non‐profit corporation working on behalf of large health care purchasers to catalyze improvements to how we pay for health services and to promote better and higher-value care in the U.S.
About the New York Scorecard on Commercial Payment Reform and the New York Scorecard on Medicaid Payment Reform
All data in the New York Scorecard on Commercial Payment Reform and the New York Scorecard on Medicaid Payment Reform come from commercial and Medicaid health plans, respectively. CPR collaborated with the New York State Department of Financial Services (DFS) to collect data from health plans. DFS issued a request for information pursuant to Section 308 of the New York Insurance Law to ensure participation by all health plans within the scope of the project. Ten commercial health plans and fifteen Medicaid plans completed a survey, from which CPR aggregated results. For additional information, please see the relatedMethodology documents.