New York Moving to Value-Based Payment

Like the rest of the country, New York is moving—somewhat begrudgingly—toward a future in which hospitals and doctors are paid to keep patients healthy rather than be reimbursed based on the volume of procedures they perform on sick patients. Most providers and health plans agree that this shift from fee-for-service reimbursement to a model based on quality and lower costs is inevitable. There is far less consensus on how to arrive at that point.

At a Crain’s event held Tuesday in Manhattan, senior executives from local health care providers and insurers made the case that collaboration between the two industry segments—which often are at odds during contract negotiations—is critical to making the shift to value-based payments a success.

“UnitedHealthcare can’t do this alone. We all can’t do this alone,” said Dr. Samuel Ho, chief medical officer at the Minneapolis-based insurer, which provides services to 85 million Americans.

Commercial health plans and Medicaid, which collectively insure 16.3 million New Yorkers, tie about one-third of their payments to providers to value, according to a report released last week by the New York State Health Foundation. The federal government, through Medicare, wants to accelerate the process of linking payments to health outcomes. It hopes to use the model to avoid unnecessary hospital readmissions and manage such chronic illnesses as diabetes and high blood pressure. The U.S. Department of Health and Human Services has set a goal to make half of all Medicare payments tied to value by 2018.

Numerous challenges stand in the way. Insurers differ in the ways they define quality, and smaller physician practices have limited resources to invest in the information technology systems necessary to track the data needed to receive incentive payments.

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Jeffrey R. Ungvary President

Jeffrey R. Ungvary