Value-Based Care Reimbursement 2022
Organizations Anticipate Increased Revenue from VBC

Significant Growth Anticipated for Medicaid and Capitation Contracts

Most respondents report strategic plans to expand their VBC contracts over the next three years. Participation in commercial plans, Medicare Advantage, and Medicare Shared Savings Programs will continue to be high, while Medicaid plans—which have the potential to impact a significant number of lives—will see the biggest growth. The administration of capitation contracts can be challenging for those who don’t have experience with them, but they are growing in appeal, as they allow for more predictable revenue than traditional fee-for-service models do.

“Capitation is the first realistic option that will allow us to move away from a fee-for-service model so that we can use our resources to really help patients. It will also allow us to decrease our costs without trying to charge for services. Capitation is probably our best option for breaking our broken model.” —CIO

“We will stay in all of our contracts so far as I can predict, but the only one we might consider entering into is Medicaid. We have talked about different care models with Medicaid. The issue is simply a matter of numbers.” —CMIO

Percent of Revenue Tied to VBC Varies Widely

VBC is making headway, but the depth of its adoption varies across organizations. Some hospitals are just starting out and have little to no revenue from VBC contracts. On the other hand, ACOs and clinically integrated networks, among others, may receive most or all of their revenue from value-based reimbursement, and they represent all organizations in this sample with over 90% of their revenue tied to VBC. Nationally, the average percentage of revenue tied to VBC contracts is about 10%. Even among this report’s sample, which is composed mostly of more progressive organizations, 50% receive one-fifth or less of their revenue from value-based reimbursement.

Respondents Overwhelmingly Expect to Bring in More Revenue from VBC in the Future

A vast majority of respondents anticipate that a larger percentage of their revenue will be tied to VBC three years from now. Key drivers of that expectation are newly available opportunities for VBC contracts and market pressures from payers and the government as they move the industry in the direction of VBC.

“There will be more revenue tied to value-based contracts in the future because of the expansion to more Medicaid, the potential expansion into another area, and our geographic focus on our value-based footprint. I do see us expanding out potentially in other areas.” —Director of population health

“It is getting more and more difficult to continue to ask for increases in rates. I negotiate rates with all the payers, and we are looking for alternatives in order to get involved with the total healthcare dollar. We are trying to develop efficiencies where there may be revenue opportunities. Those developments are what are pushing VBC revenue. As we think about how we integrate and develop better trust with payers, we are going to have to get more involved with shared savings arrangements.” —Senior VP

Provider Organizations Are Consolidating Their VBC Vendors 

Overall, provider organizations are reducing the number of technology vendors or services firms they use to support VBC.^† Only 20% of respondents use more than two vendors to help them tackle VBC; wanting a one-stop shop for data aggregation, analytics, and reporting, the majority have consolidated to either one or two.

† Technology consolidation is also a broader trend across the healthcare technology landscape. For more information, see a recent Bain & Company report written in collaboration with KLAS.

Epic Customers See Need for Multiple Vendors

Customers of Epic’s widely used Healthy Planet platform tend to be large, complex organizations and are a notable exception to the trend of consolidation seen with other VBC vendors. Citing the need for more robust data aggregation from outside systems and stronger analytics, dashboards, and care management tools, almost all Epic respondents use another solution to complement their use of Healthy Planet.

Epic, Arcadia, and Innovaccer Seen as Most Able to Assist Organizations with Future VBC Needs

Epic’s broad customer base feels that the vendor will be able to assist them with their future VBC needs due to improvements Epic is making to Healthy Planet. Respondents also acknowledge the advantage of Healthy Planet being in the providers’ day-to-day workflow, as it is integrated with the main Epic medical record. Respondents note that Arcadia will be able to provide for future needs because they offer a full suite of products, including robust data aggregation, reporting, and AI coding capabilities. Additionally, respondents highlight Arcadia’s ability to close quality gaps and view both clinical and financial data in one report. Likewise, respondents highlight Innovaccer as a vendor that will be able to assist with VBC in the future because of their impressive dashboards and predictive analytics. Additionally, Innovaccer is reportedly willing to build customized solutions to meet customers’ unique needs.

“Epic’s tool is integrated with our EMR, and we have implemented Epic’s systems across all platforms of care. That is why Epic is important.” —VP of population health

“We really feel like Innovaccer stands out among many of the other vendors we have looked at, so Innovaccer has the solution that can help us move forward in contracts as we learn and better understand the data that is coming in through the tool.” —Director