Hospitals Embracing Value-Based Reimbursement for Own Employees

Survey finds half of hospitals use value-based contracts to control worker health costs.

What’s good for health care payers apparently is good for health care providers.
A new survey finds that hospitals and health systems are turning to value-based reimbursement models to control the rising health care costs of their own employees.
Cammack Health, a business unit of Aon, conducted the employee benefits survey of 196 hospitals that belong to 86 different health systems. The firm released the survey results in its 2017 Benefits Survey of Hospitals report.
Under value-based reimbursement contracts, payers like commercial health insurance companies pay providers like hospitals and doctors based on how well they meet specific cost, quality and safety goals when providing medical services to enrollees in a health plan. Providers whose medical care falls short of the goals are paid less. Such value-based contracts break from traditional reimbursement contracts under which insurers pay providers based on the type or volume of medical services given to enrollees regardless of the cost, quality or safety outcome.
Half of hospitals and health systems are using the same health benefits strategy to improve the care provided to their own employees while controlling their own health care spending, the survey found.
Some 67 percent of the hospital and health system respondents said they participate in a value-based contract with a payer with 50 percent stating that they have modified their own employee health plan as part of a value-based care strategy.
“To remain competitive, they [hospitals] are adopting more innovative strategies that encourage accountability and deliver high-quality health outcomes,” Aon said in a press release announcing the survey results.
Yet, at the same time, hospitals and health systems continue to use the more traditional methods of controlling employee health expenses like limiting benefits and shifting more financial responsibility to workers. For example:

  • Some 15 percent of the hospitals and health system offer employees a high-deductible health plan, which few hospitals and health systems offered just a few years ago.
  • Some 34 percent levy a premium surcharge on employees whose spouses decline coverage from their own employers and instead go on the employees’ health plan.
  • Some 79 percent charge higher co-payment to employees who use urgent care centers not affiliated with the hospital or health system.

According to the report, the median health benefit cost per hospital or health system employee has risen 13.5 percent to $15,247 this year from $13,433 in 2014.