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Will COVID-19 Jump Start the Lagging Transition to Risk Based Payment Models?

By Dr. Betty Rabinowitz, MD FACP

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Blog Home    Will COVID-19 Jump Start the Lagging Transition to Risk Based Payment Models?
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The Centers for Medicare & Medicaid Services (CMS) announced last year that they want to have 100 percent of providers taking on some downside financial risk by 2025. This will result in $1 trillion of healthcare risk shifting from the government to hospitals, health systems, and physician practices across the United States. The magnitude of this shift becomes apparent when one considers that the United States spends about $3.5 trillion annually on healthcare. 

According to a report published by Coverys, a Boston-based provider of medical professional liability insurance, value-based care (VBC) currently accounts for less than 20 percent of Medicare spending, but they assess that voluntary adoption by providers of population-based models with significant downside risk is steadily increasing. 

An August 2020 survey of 500 healthcare leaders by Numerof and Associates revealed a similar view of the degree to which risk-based advanced payment models were being adopted across the country. The survey found virtually no change in the amount of healthcare revenue tied to risk-based contracts from 2018 to 2019.Two-thirds of executives in the survey said 20 percent or less of revenue was in a risk-based agreement in 2019. In addition, nearly one quarter of respondents (24 percent) who stated they were in risk-based contracts in fact had no downside risk, only the possibility of a “bonus” if targets were exceeded. Only two percent of executives reported having over 81 percent of revenue at risk. 

The survey assessed how prepared leaders thought their groups were to take on risk.  Interestingly, when compared to their previous predictions, their actual current readiness fell extremely short of their predictions of where they would be today when asked two years prior.  When respondents rated their organization’s ability to manage quality at the individual physician level, 65 percent said their organization was better than average, a significant improvement since 2016. When it came to managing cost at the individual physician level, only 35 percent said their organization was better than average, a result that has not significantly improved since the initial survey was conducted in 2015.

These studies and surveys were clearly completed prior to the COVID-19 pandemic. The precipitous drop in in-person visits during the first three months of the pandemic exposed a significant vulnerability for practices who were entirely reliant on fee-for-service revenue. On the other hand, practices who had entered into risk-bearing capitated payment arrangements were assured capitation payments that mitigated the impact of the visit volume decreases.  Interestingly, in our conversations with groups across the country, this fact has not gone unnoticed and many executives have commented that they were more motivated than before to sustain these arrangements or increase their participation in these programs. Since utilization overall was down drastically in the first months of the pandemic, it is likely that this will be a financially beneficial year for groups who were at risk. Time will tell whether rebound in utilization once the pandemic subsides will erase any of these unanticipated gains. It also remains to be seen whether costs associated with treatment of patients with COVID-19 will further erode these gains. However, at this point in time, it does seem as if the COVID-19 pandemic has infused some renewed energy into the value-based care transformation underway since 2010.  

For more information related to value-based care, visit our Resources page here


Dr. Betty Rabinowitz, MD FACP

Chief Medical Officer

Dr. Betty Rabinowitz was appointed as our chief medical officer on April 19, 2018. She brings to this position more than 25 years of extensive clinical experience and expansive knowledge of population health and value-based practice transformation. In her role, Betty is tasked with helping NextGen Healthcare promote and improve our solutions in support of our clients’ provider performance, clinical outcomes, patient satisfaction, and financial efficiency…

Dr. Betty Rabinowitz was appointed as our chief medical officer on April 19, 2018. She brings to this position more than 25 years of extensive clinical experience and expansive knowledge of population health and value-based practice transformation. In her role, Betty is tasked with helping NextGen Healthcare promote and improve our solutions in support of our clients’ provider performance, clinical outcomes, patient satisfaction, and financial efficiency.

Betty joined the NextGen Healthcare family in August 2017 as one of the founders and the former chief executive officer of EagleDream Health, the cloud-based analytics and population health management solutions we now know as NextGen® Population Health, which drives meaningful insights across clinical, financial, and administrative data to optimize ambulatory practice performance.

Born in Johannesburg, South Africa, Dr. Rabinowitz graduated from Ben-Gurion University Medical School in Israel, where she also completed a residency in Internal Medicine. She came to the United States in 1990 for a fellowship in Medicine and Psychiatry at the University of Rochester School of Medicine, where she became a professor of clinical medicine. In addition, Dr. Rabinowitz served as the medical director of the University of Rochester’s Center for Primary Care, overseeing clinical operations and population health management for the university’s large employed primary care network. In 2020, she was named on the list of the Top 25 Woman in Healthcare Software by the Healthcare Technology Report.

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