Employers Adopt Pay-For-Peformance Strategies

Fifty-three percent of large- and mid-size employers, surveyed by Aon Hewitt, are moving toward pay-for-performance payment models to promote cost effective, high quality health care. Jim Winkler of Aon Hewitt said that employers are beginning to work directly with health plans to reduce unnecessary expenses and create more efficiency in the way they purchase health care.

Thirty-one percent of employers adjust the compensation of health care vendors based on performance targets, and another 44% are considering doing so in the next three-to-five years. Just 14% of employers use integrated delivery models, including patient-centered medical homes. But another 61% plan to do so in the next few years.

Pay-for-performance is moving beyond measuring how fast customer service reps answer the phone toward a focus on fees and increases in medical spending. A growing number of employers are interested in shifting to reference-based pricing and value-based pricing over the next three-to-five years. Reference-based pricing limits benefits for specified procedures to a specific dollar amount. Value based pricing rewards performance based on patient outcomes.

Just 8% of companies limit plan reimbursements to a set dollar amount for certain medical services when there is wide cost variation. However, 62% are considering adopting reference-based pricing, which has been commonplace for prescription drug coverage.

Fifty-nine percent of employers plan to steer participants to high-quality hospitals or physicians through plan design or lower cost. Thirty-eight percent plan to participate in cooperative purchasing efforts with other employers or groups (coalition-based pricing). For more information, visit www.aonhewitt.com.

Last Updated 10/21/2020

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