Employers Are Missing the Boat on Alternative Provider Models


Many employers don’t understand alternative provider delivery models and payment reform. As a result, they may miss a significant opportunity to improve health and financial results for their workforce and business, according to a study by Aon and Catalyst for Payment Reform. Despite their lack of understanding of the models, 60% are providing or are considering providing a financial incentive for employees and dependents to use these new models through plan design changes, narrow network options, HRA/HSA contributions, or cash.

The study reveals the following:

  • 75% don’t understand payment transformation models.
  • 51% don’t understand the cost and quality data provided by their carriers related to new models like Accountable Care Organizations (ACOs).
  • 71% are unaware or need to learn more about the attribution process and how they are directly contributing to the payment of these new provider delivery models.

“Employers have the potential to be one of the strongest voices in driving systematic change, but if they don’t understand it, they won’t make it a priority or demand validation for the improvement that is needed,” said Mike Taylor, senior vice president of Delivery System Transformation at Aon Hewitt. According to a separate Aon Hewitt 2014 Health Care survey of more than 1,200 employers, 65% of said that provider payment models that promote cost-effective, high quality health care outcomes will be a part of their strategy. Of those, 12% say it will be one of their three highest priorities. Taylor said, “Employers are increasingly making innovative provider network structures an important part of their strategy, which will help to improve health care purchasing and shift the payment focus towards value based reimbursement and support providers who produce higher quality outcomes.”

While few employers have adopted provider network structures, that number is expected to increase in three-to-five years:

  • 24% of plan sponsors steer participants to high quality hospitals or physicians for specific procedures or conditions through plan design or lower cost. Another 56% are considering doing so in the next three-to-five years.
  • 18% use integrated delivery models, such as patient-centered medical homes, to improve primary care effectiveness, and another 56% plan to do so in the next three to five years.
  • 11% contract with hospitals or other health providers directly in specific locations, and another 28% plan to so.
  • 10% have adopted reference-based pricing, and another 58% plan to do so.

Last Updated 10/20/2021

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