Study Indicates Limited Use of Value-Based Health Care Purchasing by Employers

Many large employers are not using their purchasing power with health plans and providers to improve the quality of health care for their employees, suggests the abstract of a study of 609 employers that was published in the Nov. 21 Journal of the American Medical Association.

"Although a significant number of surveyed employers reported examining health plan quality data, many attach a low level of importance to it, and they infrequently report using it for performance rewards or to influence employees," the authors write in "Employers' Use of Value-based Purchasing Strategies."

"Moreover, our data suggest provider quality information is even less commonly examined or used by employers to reward provider performance or influence employee choice of providers," they write.

The study does note that larger employers in the sample reported more activity than smaller employers. "This result supports the theory that the fixed costs associated with, for example, developing a health plan report card are a barrier to wider adoption of these methods. That is, the perceived benefits of measuring quality and using that information for contracting, employee education and benefit design might be simply too small for employers of modest size to justify the cost," the study notes. "If this hypothesis is true, then coalition efforts may have a critical role to play." About one-fifth of the employers reported belonging to a purchasing coalition, and 40 percent reported participating in national or regional coalition efforts to improve quality.

Even though larger employers reported more activity, their reported adoption of value-based purchasing strategies still is limited. Why? Skepticism about the benefits of value-based purchasing may be important, the authors note, because only about one-third of employers viewed each value-based purchasing strategy the authors asked about as being very useful.

"This perception may be due to the lack of a 'business case' for the intended outcomes of value-based purchasing in terms of the effects on workforce productivity, benefit cost savings, or the ability to attract and retain employees," the authors write. "Alternatively, some employers may (correctly) perceive that the evidence to support the effectiveness of strategies such as pay for performance and report cards is mixed at best."