New scorecard finds overwhelming majority of payments are still based on fee-for-service

PRINCETON, NJ – September 25, 2018 – Over half of the health care payments (52%) paid to doctors and hospitals in New Jersey by the private sector contain incentives to improve the cost and quality of care patients receive. However, a closer examination of these value-oriented payments shows most (98%) are still based on a fee-for-service approach. These are among the findings of The New Jersey Commercial Scorecard on Payment Reform released today by Catalyst for Payment Reform (CPR) and the New Jersey Health Care Quality Institute.

“The shift toward value-oriented payments is critical for improving the quality and affordability of care in New Jersey,” said Linda Schwimmer, President and CEO of the New Jersey Health Care Quality Institute. “Yet the Scorecard shows that we are not moving fast enough to change our reliance on the antiquated fee-for-service system. This baseline information is a positive first step toward putting us on the right path and showing us how far we have to go.”

Funded through a joint grant by the Robert Wood Johnson Foundation and the Laura and John Arnold Foundation, the Scorecard is based on an independent review of data from commercial health plans that collectively insured 4.6 million New Jerseyans in 2016, the year on which the Scorecard bases its findings.

Additional Scorecard findings include:

• The majority (82%) of payments paid to primary care providers were tied to value, while only 23% of payments paid to specialists were tied to value
• Less than 6% of value-oriented payments place health care providers at financial risk for their performance (that is, they stand to lose financially if they overspend or do not meet quality targets)
• The most common form of value-oriented payment was shared savings (37.9%), which typically gives an upside-only financial incentive for providers to reduce unnecessary health care spending for a defined population of patients, or for an episode of care, by offering providers a percentage of any realized net savings
• A strategy being used less often, although still common, is pay-for-performance (11.2%), which is typically traditional fee-for-service payment with a bonus for meeting quality or efficiency goals

“The New Jersey Scorecard is groundbreaking as it is the first time we have looked at payment reform adoption alongside state-level indicators that shed light as to whether the changes in how health care is paid for are delivering on their promise of better quality and more affordable health care,” said CPR’s Program Director Andréa Caballero.

In 2015, Catalyst for Payment Reform produced the New York Scorecard on Commercial Payment Reform, measuring value-oriented payment in the commercial sector in New York State. Similarly, CPR provides New Jersey with baseline information about how much payment reform and what types occurred in the commercial sector in 2016. New to the New Jersey assessment, however, this Scorecard also provides data on New Jersey’s performance on metrics that indicate the broader performance of the health care system.

Schwimmer elaborated, “The CPR Scorecard draws attention to that fact that New Jersey performs well when it comes to diabetes care but still has work to do related to the Cesarean section rate among women with low-risk pregnancies and the percentage of young children under three years receiving necessary vaccinations. CPR, advised by a multi-stakeholder advisory committee, selected these indicators and others to assess payment reform’s impact at a macro-level.

About the New Jersey Scorecard on Commercial Payment Reform

The New Jersey Scorecard on Commercial Payment Reform aggregates data from commercial health plans from calendar year 2016. CPR obtained the data through an online survey of health plans, to which three health plans responded, who together cover approximately 72% of the commercially-insured lives in New Jersey. An accompanying methodology report, available for download, provides additional information.

About Catalyst for Payment Reform

Catalyst for Payment Reform is an independent, non-profit organization working on behalf of large employers and other health care purchasers to catalyze employers, public purchasers and others to implement strategies that produce higher-value health care and improve the functioning of the health care marketplace. For more information visit: www.catalyze.org and follow us on Twitter and LinkedIn.

About the New Jersey Quality Institute

The New Jersey Health Care Quality Institute is the only independent, nonpartisan, multi-stakeholder advocate for health care quality in New Jersey. The Quality Institute’s mission is to undertake projects and promote system changes that ensure that quality, safety, accountability and cost-containment are closely linked to the delivery of health care services in New Jersey. Learn more about us at www.njhcqi.org and follow us on Twitter, Facebook and LinkedIn.

Media Contacts:

Quality Institute – Carol Ann Campbell, cacampbell@njhcqi.org, 973.567.1901

CPR – Cary Conway, cary@conwaycommunication.com, 972.649.4707