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Analysis

Less than 20% of Medicare Spending is Value-Based

By Jack O'Brien  
   August 18, 2020

Coverys stated that provider organizations that participate value-based models can "significantly increase their revenue through performance-related bonus payments."

Less than 20% of Medicare spending is value-based, according to a Coverys study released Tuesday morning.

The Boston-based health insurance company stated in its report that around $1 trillion of healthcare risk must shift from the federal government to hospitals in order to meet the Center for Medicare & Medicaid Services' (CMS) goal for Medicare providers to be in a fully value-based reimbursement model by 2025.

Similarly, CMS is aiming to have half of its Medicaid and commercial health plans in value-based contracts by 2025.

Related: Lack of Resources Stand in Way of Shift to Value-Based Care

Coverys stated that provider organizations that participate value-based models like accountable care organizations (ACO) or bundled payment models can "significantly increase their revenue through performance-related bonus payments."

"The shift from volume to value is still in the early stages, but it is already having a dramatic effect on how care is delivered and paid for, as well as on who assumes the risk," the report stated. "Over the next five years, every provider organization in the country will face new choices and challenges on how best to manage and finance this shift. In order to be successful, providers need to have a deep understanding of the value-based programs they are pursuing, their opportunities for revenue growth, and the risk of loss."

Related: CareMount CFO Says COVID-19 Threw a 'Wrench' in Next-Gen ACO Plans

The study found that Archway Health, a Boston-based payment solutions company, saw its practice partner's revenues triple as part of a lower extremity joint replacement bundled payment model.

Across three models, new revenue per surgeon at Archway's practice partners ranged from just over $80,000 to $525,000.

Related: Key Advice for Hospital CFOs Facing Next Stages of Pandemic

Coverys' study is the latest insight regarding the relationship between provider organizations and value-based models.

One-quarter of provider organizations have revenue tied to value-based payments, according to a survey commissioned by DataGen and conducted by Sage Growth Partners that was released in March.

Related: 25% of Provider Organization Revenues Tied to Value-Based Payments

Jack O'Brien is the finance editor at HealthLeaders, a Simplify Compliance brand.


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