Employers’ Interest in Health Care Payment Reform Grows

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Moving toward provider payment models that promote cost-effective, high-quality care

While U.S. employers find alternative health care delivery models and provider payment reform attractive, most admit they do not understand them or the value they provide. As a result, they may miss an opportunity to improve results in employees’ health and their benefit costs, according to consultancy Aon Hewitt and the nonprofit Catalyst for Payment Reform, an employer coalition advocating for better value in U.S. health care.

Preliminary findings released in December 2014 from a joint survey by the organizations of more than 220 U.S. companies found that:

• 75 percent of employers do not understand payment transformation models.

• 51 percent do not understand the cost and quality data provided by their insurance carriers related to new models like accountable care organizations (ACOs), which provide health providers with incentives to coordinate care.

• 71 percent are either unaware or need to learn more about their role in the attribution process and how it can support new provider delivery models. (To measure performance, ACOs assign—or attribute—their members to a specific provider. This process requires the organization's sponsors to analyze health care claims data and develop patient profiles.)

Despite their lack of understanding of the models, the survey showed 60 percent of companies are providing or are considering providing a financial incentive for employees and dependents to use these new approaches through plan design changes, narrow network options, health reimbursement arrangements or health savings account contributions, or cash.

"Employers have the potential to be one of the strongest voices in driving systematic change, but if they don't understand it, they won't make it a priority or demand validation for the improvement that is needed to accelerate shared risk in the overall health care equation," said Mike Taylor, senior vice president of Delivery System Transformation at Aon Hewitt.

A Strategic Priority

According to a separate Aon Hewitt 2014 Health Care survey of more than 1,200 employers, 65 percent of companies say that moving toward provider payment models that promote cost-effective, high-quality health care outcomes will be a part of their strategy in the years ahead. Of those, 12 percent say it will be one of their three highest priorities.

“The U.S. health care system is undergoing rapid transformation, and both public and private payers desire a system that produces better health outcomes at a more efficient cost,” said Taylor. “Employers are increasingly making innovative provider network structures an important part of their strategy, which will help to improve health care purchasing and shift the payment focus towards value-based reimbursement and support providers who produce higher-quality outcomes.”

The survey found that in the next three to five years:

• 24 percent of health plan sponsors intend to steer participants (through plan design or lower cost) to high-quality hospitals or physicians for specific procedures or conditions, and another 56 percent are considering doing so.

• 18 percent use integrated delivery models, such as patient-centered medical homes, to improve primary care effectiveness, and another 56 percent plan to do so.

• 11 percent directly contract with hospitals or other health providers in specific locations, and another 28 percent plan to so.

• 10 percent have adopted reference-based pricing, and another 58 percent plan to do so.

Stephen Miller, CEBS, is an online editor/manager for SHRM. Follow him on Twitter @SHRMsmiller.

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