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    The Medical Group Management Association’s most recent MGMA Stat poll asked healthcare leaders if their organization participates in any value-based payer contracts. More than half (56%) of healthcare leaders say their organizations participate in value-based contracts. Among this majority, two-thirds (66%) report that value-based contracts make up 20% or less of their overall contracts. This poll was conducted on Oct. 30, 2018, with 1,195 applicable responses.

    Among respondents whose organizations do not participate in value-based contracts, some were skeptical of the effectiveness or accuracy of value-based measures or were unsure how to start. Additional reasons included lack of bandwidth to properly implement or the fact that they were not offered value-based contracts due to location, specialty or size.
    According to 76% of respondents in a 2018 MGMA Regulatory Burden Survey, government payers’ move toward value-based payment has not improved the quality of care for their patients. Moreover, 90% indicate that the move toward value-based payment has increased the regulatory burden on their practices. This survey captured responses from over 400 group practices with the largest representation in independent medical practices and in groups with 6 to 20 physicians.

    Fee-for-service contracts are migrating to value-based arrangements across the United States as a means to align incentives to better manage costs. According to the National Academy of Medicine, Americans spend $210 billion annually on unnecessary or needlessly expensive healthcare.

    According to Change Healthcare’s most recent 2018 Payer Study, value-based care has resulted in an average medical cost savings of 5.6% for payers and volume-based reimbursement is continuing to decline. The Health Care Payment Learning & Action Network reports that in 2017 more than half of all healthcare payments were value-based.

    CMS rolled out the Quality Payment Program in 2017 to reward high-quality, low-cost providers with improved reimbursement. According to Blue Cross Blue Shield, about one-third of providers participate in Blue Distinction Total Care Programs and are bending the cost curve by 35% compared to non-Total Care providers. UnitedHealthcare’s 2018 Value-based Care Report revealed that by the end of 2020, UHC value-based payments to care providers will reach $75 billion, up from $64 billion in 2017.

    Value-based models include pay-for-performance contracts, bundle payment arrangements, shared savings/risk arrangements, global payments and a variety of emerging models born from payer/practice collaboration as well as the Center for Medicare & Medicaid Innovation (CMMI). Although models vary in terms of architecture, medical practices employ consistent tactics to engage in value-based contracts.

    MGMA recommends these best practices for value-based contracting:

    • Clearly define practice roles and responsibilities for contracting activities
    • Analyze contract performance thoroughly, establishing proformas for value-based arrangements
    • Establish baseline performance and review data before entering into contractual arrangements
    • Routinely monitor contract performance to proactively identify challenges
    • Focus on creating a collaborative relationship with payer partners – and understand that it will not be perfect for everyone
    • Focus on both short- and long-term goals for the practice and the payer
    • Define routine communication pathways and stick to the plan
    • Celebrate success and continue to look for the next opportunity to build upon successes
    • Consider steps that will assist the practice to successfully participate in value-based arrangements

    Value-based models emerging in markets across the United States are setting the stage for a more integrated approach to provider/payer relationships. They require deeper collaboration between providers and payers, as elevated levels of data sharing and operations management cooperation will be necessary for high-quality and cost-effective outcomes. Medical practices – both independent and affiliated – that understand how their organization can and should position itself for the future will have a significant advantage over the competition.

    MGMA Stat is a national poll that addresses practice management issues, the impact of new legislation and related topics. Participation is open to all healthcare leaders. See results of other polls and information on how to participate in MGMA Stat.

    Additional resources:


    • Best care at lower cost: The path to continuously learning health care in America. The National Academies of Sciences, Engineering and Medicine: Health and Medicine Division. Sept. 6, 2012. Available from:
    • Finding the value in value-based care. Change Healthcare. 2018. Available from:
    • Measuring progress: Adoption of alternate payment models in commercial Medicaid, Medicare advantage, and fee-for-service Medicare programs. Health Care Payment Learning & Action Network. Oct. 22, 2018. Available from:

    Doral Jacobsen, MBA, FACMPE
    MGMA Consulting

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