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October 4, 2019
David Burda
Economics Policy System Dynamics

Seeing Through Physician Participation in Value-Based Reimbursement Models

The more things change, the more they stay the same. 

I get the point of the expression. But, I didn’t fully appreciate how it applied to healthcare until I read a new research report from the American Medical Association.   

The deck of AMA Policy Research Perspectives report, “Payment and Delivery in 2018: Participation in Medical Homes and Accountable Care Organizations on the Rise While Fee-for-Service Revenue Remains Stable” says it all. A lot of things are changing on the surface of the healthcare industry, but underneath the breathless promises of disruptive innovation, things are pretty much the same.

Here are the specifics. The AMA report is based on a survey of a representative sample of about 3,500 practicing doctors. The AMA conducts the same survey, albeit with some new and updated questions, every two years. The new report is based on the 2018 survey, and it compares those results with the results of the surveys taken in 2012, 2014 and 2016. 

The new report did find legitimate jump in the percentage of doctors participating in different value-based reimbursement models. For example:

  • 39 percent of doctors participated in a commercial ACO last year. That’s up from 31.7 percent in 2016.
  • 38.2 percent of doctors participated in a Medicare ACO last year. That’s up from 28.6 percent in 2014.
  • 31.9 percent of doctors participated in a patient-centered medical home, or PCMH, last year. That’s up from 23.7 percent in 2014.
  • 26.3 percent of doctors participated in a Medicaid last year. That’s up from 20.9 percent in 2016.

What didn’t jump was the percentage of revenue that the physicians collected from alternative payment methods. (You say alternative payment models; the AMA says alternative payment methods. Either way, it’s APMs.) The APMs included revenue from pay-for-performance, bundled payments, shared savings and capitation arrangements.

In 2018, 70.3 percent of physicians’ revenue came from FFS arrangements. The balance—29.7 percent—came from APM deals.  That’s virtually unchanged and actually a little higher than six years earlier. In 2012, 69 percent came from FFS arrangements and 31 percent came from APM deals. 

“FFS is still the primary component of practice revenue,” the report said.

The reason for that, as the report explained, is that most APMs start with and add to FFS. Think base salary and commission versus base salary or straight commission.

APMs “rely on FFS as a base to build on rather than to replace,” the report said.

Physician practices are a business just like any other business. If you want better outcomes at less cost, then start paying them for better outcomes at less cost. Don’t pay them for piecework and give them a bonus for hitting certain benchmarks.  They’re two different economic incentives.

To learn more on this topic, please read “The Slow Road to Value-Based Careon 4sighthealth.com.

Thanks for reading.

About the Author

David Burda

David Burda began covering healthcare in 1983 and hasn’t stopped since. Dave writes this monthly column “Burda on Healthcare,” contributes weekly blog posts, manages our weekly newsletter 4sight Friday, and hosts our weekly Roundup podcast. Dave believes that healthcare is a business like any other business, and customers — patients — are king. If you do what’s right for patients, good business results will follow.

Dave’s personnel experiences with the healthcare system both as a patient and family caregiver have shaped his point of view. It’s also been shaped by covering the industry for 40 years as a reporter and editor. He worked at Modern Healthcare for 25 years, the last 11 as editor.

Prior to Modern Healthcare, he did stints at the American Medical Record Association (now AHIMA) and the American Hospital Association. After Modern Healthcare, he wrote a monthly column for Twin Cities Business explaining healthcare trends to a business audience, and he developed and executed content marketing plans for leading healthcare corporations as the editorial director for healthcare strategies at MSP Communications.

When he’s not reading and writing about healthcare, Dave spends his time riding the trails of DuPage County, IL, on his bike, tending his vegetable garden and daydreaming about being a lobster fisherman in Maine. He lives in Wheaton, IL, with his lovely wife of 40 years and his three children, none of whom want to be journalists or lobster fishermen.

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