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How the New Payment Models Are Affecting Physicians

The way physicians are being paid is changing, and quickly. By the end of next year, the Department of Health and Human Services (HHS) has aimed to tie 30% of traditional, or fee-for-service, Medicare payments to alternative payment models, and to link 85% of all traditional Medicare payments to quality or value metrics. It’s not just the government, either; private payers are also adopting more innovative reimbursement models to improve quality and reduce costs.

As these new payment models come into effect, it’s the frontline service providers — physicians — who are feeling the repercussions perhaps most acutely. A new report from RAND Health, the nation’s largest independent health policy research program, and sponsored by the American Medical Association seeks to understand physicians’ experiences with alternative models — capitation, episode-based and bundled payment, shared savings, pay for performance, and retainer-based practice. Do these findings from “Effects of Health Care Payment Models on Physician Practice in the United States” sound familiar?

Physicians have been quick to adapt

In the report, multiple practice leaders reported that, in response to the new payment models, they were changing organizational models. For example, they’re developing team approaches to care management, building relationships between primary care and subspecialist physicians to make care both more holistic and more efficient. And they’re innovating, increasing patient access to care by employing tele-health or community-based care models.

Critical to reaping rewards from the new payment models is thorough patient records, from which information can be shared between providers and from which good data can be extracted. Physician practices reported to RAND Health that they’re making significant investments in their data management capabilities to track and improve performance in alternative payment models. One way to enhance this information transfer and data extraction is to also invest in the use of a less technological resource: having scribes who record the details of every patient encounter, thoroughly and in real time, means you don’t miss anything that might be important. And you can’t get good data — or make the most of alternative models’ potential rewards — if you don’t start from a strong informational foundation.

There’s a lot of business as usual

Alternative payment models have not substantially changed how physicians delivered face-to-face patient care. This is partly because “most medical practices have shielded individual physicians from direct exposure to the new financial incentives created by payers. While practices are paid more for improved performance, practices generally use nonmonetary incentives to encourage physicians to change their decision-making,” says the report. Non-financial methods include providing performance feedback to individual doctors and are intended, in many cases, to appeal to physicians’ sense of professionalism — while also educating physicians about why and how patient care is changing beyond the patient-encounter level.

Although some physicians reported wanting to have their incomes more closely linked to quality and efficiency of care, alternative payment models are so far having negligible effects on the aggregate incomes of individual physicians. At the practice level, the overall financial impact ranged from neutral to positive, and none of those surveyed had experienced financial hardship as a result of participating new payment models.

Inconsistencies reign

As physician practices partner with other providers and improve care links, the ability to realign operations to the goals of the new payment strategies is unnecessarily hampered when necessary data are (all-to-frequently) inaccurate or not available. Frustratingly, while physicians and their practices are investing in information technology, they’re finding that payers are not making the same efforts to support the alternative-payments transition. Furthermore, performance measures are all over the board, varying by payer, and making it difficult to track and report appropriately. In short, physicians are having to find ways to address hundreds of hundreds of performance measures and still keep the task manageable for themselves.

Administrative burdens abound

Which, of course, means that additional, administrative non-clinical work is putting a heavy burden on physicians and their practices. It’s not just the transition itself, but the “multiplicity of pay-for-performance and other incentive programs”, which are creating significant discontent. Employing team-based care that includes clinical (e.g., physician assistants, nurse practitioners) and non-clinical (e.g. scribes, patient educators) members can ease delegation of tasks and result in a more even-keel distribution of workload for physicians.

Support for the road ahead

The report culminated in four critical recommendations for smoothing the continued alternative-payments transition:

  • To optimize the quantity and content of physician work under alternative payment models, ensure that physician practices have support and guidance.
  • To improve the effectiveness of alternative payment models, address physicians’ concerns about the operational details of these payment models.
  • To help them succeed in alternative payment models, ensure that physician practices have data and resources for data management and analysis.
  • To help physician practices respond constructively, harmonize key components of alternative payment models, especially performance measures.

“We found that changing the payment system probably isn’t enough to ensure that patient care will improve,” said Dr. Mark W. Friedberg, the study’s lead author and a senior natural scientist at RAND, in a press release. “For alternative payment methods to work best, medical practices also need support and guidance. It’s the support that accompanies a new payment model, plus how well the model aligns with all of a practice’s other incentives, that could determine whether it succeeds.”

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