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  • November 8, 2018
  • Article
  • NEJM Catalyst

Transitioning Payment Models: Fee-for-Service to Value-Based Care

By: Thomas W. Feeley and Namita Seth Mohta
  • Format:Electronic
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Abstract

In a survey of the NEJM Catalyst Insights Council in July 2018, 42% of respondents say they think value-based reimbursement models will be the primary revenue model for U.S. health care. Indeed, this transition is already happening. Respondents report that a quarter of reimbursement at their organizations is based on value, on average. While three-quarters of their revenue remains fee-for-service, we see a remarkable change to a reimbursement system that was static for decades. In particular, survey respondents’ organizations are pursuing two value-based strategies: accountable care organizations, which often use capitated payments, and bundled payments. Nearly half (46%) of respondents say value-based contracts significantly improve the quality of care, and another 42% say value-based contracts significantly lower the cost of care. The survey identifies the leading barriers to implementing value-based reimbursement models. Infrastructure requirements, including information technology (indicated by 42% of respondents), and changing regulation/policy (34%) are the top two. There is strong consensus on the broad metrics that are most important for measuring value-based care. Outcome measures top the list, with 60% of respondents saying they are extremely important. This survey suggests that many in health care see value-based reimbursement as a real solution to the nation’s current health care crisis.

Keywords

Payment Methods; Value-based Healthcare Reimbursements; Health Care and Treatment; Value; Transformation

Citation

Feeley, Thomas W., and Namita Seth Mohta. "Transitioning Payment Models: Fee-for-Service to Value-Based Care." NEJM Catalyst (November 8, 2018).
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More from the Authors
  • Determining Variable Costs in the Acute Urolithiasis Cycle of Care Through Time-driven Activity-based Costing By: Tyler R. McClintock, David F. Friedlander, Aiden Y. Feng, Mahek A. Shah, Daniel J. Pallin, Steven L. Chang, Angela M. Bader, Thomas W. Feeley, Robert S. Kaplan and George E. Haleblian
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  • Value-Based Healthcare in Urology: A Collaborative Review By: Chanan Reitblat, Paul A. Bain, Michael E. Porter, David N. Bernstein, Thomas W. Feeley, Markus Graefen, Santosh Iyer, Matthew J. Resnick, C.J. Stimson, Quoc-Dien Trinh and Boris Gershman
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