Effects of Health Care Payment Models on Physician Practice in the United States

Effects of Health Care Payment Models on Physician Practice in the United States

Mark W. Friedberg
Peggy G. Chen
Chapin White
Olivia Jung
Laura Raaen
Samuel Hirshman
Emily Hoch
Clare Stevens
Paul B. Ginsburg
Lawrence P. Casalino
Michael Tutty
Carol Vargo
Lisa Lipinski
Copyright Date: 2015
Published by: RAND Corporation
Pages: 142
  • Cite this Item
  • Book Info
    Effects of Health Care Payment Models on Physician Practice in the United States
    Book Description:

    The project reported here aimed to describe the effects that alternative health care payment models have on physicians and physician practices in the United States. Project findings should help guide efforts to improve current and future alternative payment programs and help physician practices succeed in these new payment models. The report provides both findings and recommendations.

    eISBN: 978-0-8330-9023-2
    Subjects: Health Sciences

Table of Contents

  1. Front Matter
    (pp. i-ii)
  2. Preface
    (pp. iii-iv)
  3. Table of Contents
    (pp. v-viii)
  4. Figure and Tables
    (pp. ix-x)
  5. Summary
    (pp. xi-xviii)
  6. Acknowledgments
    (pp. xix-xx)
  7. Abbreviations
    (pp. xxi-xxii)
  8. CHAPTER ONE Introduction
    (pp. 1-2)

    The project reported here, sponsored by the American Medical Association (AMA), aimed to describe the effects of alternative health care payment models (i.e., models other than fee-for-service [FFS] payment) on physicians and physician practices in the United States. These payment models included capitation, episode-based and bundled payment, shared savings, pay for performance (PFP), and retainer-based practice. Accountable care organizations (ACOs) and medical homes, which are two recently expanding practice and organizational models that feature combinations of these alternative payment models, were also included. Project findings are intended to help guide efforts by the AMA and other stakeholders to make improvements...

  9. PART ONE Model, Background, and Methods

    • CHAPTER TWO Conceptual Model
      (pp. 5-8)

      Our conceptual model, which was informed by our review of the literature (in Chapter Three) and the data analyses described in Chapter Four, seeks to describe and categorize potential relationships between the design of a given payment model, how this payment model could interact with physician practice characteristics and other payment models applied to the practice, and outcomes of these interactions—which include effects on practices, physicians, and patients. This conceptual model was meant to both guide data collection and be informed and improved by study findings.

      As displayed in the conceptual model (Figure 2.1), a payment model is defined...

    • CHAPTER THREE Background: Scan of the Literature on Effects of Payment Models on Physician Practice
      (pp. 9-30)

      A variety of forces, including increasing health care costs and the passage of the Patient Protection and Affordable Care Act (ACA), have led providers and payers (both private and public sector) to experiment increasingly with payment models other than simple FFS. These expanding models include global payments, shared savings (e.g., ACOs), physician–hospital gainsharing, episode-based payments, PFP, and subscription or retainer arrangements and are frequently coupled with new practice organizational forms, such as medical homes and ACOs (Schneider, Hussey, and Schnyer, 2011). However, the ways in which practices respond and adapt to these payment models, creating their ultimate effects on...

    • CHAPTER FOUR Methods
      (pp. 31-38)

      To describe the effects that payment models have on physician practices, this project employed qualitative methods, incorporating multiple case studies, with each of 34 physician practices constituting a case (Yin, 2014). Because the project sought to incorporate contextual information on market-level characteristics that might affect how practices respond to alternative payment models (e.g., the mix of competitors, health plans, and payment programs operating in the geographic area served by each practice), these 34 cases were nested within six geographically defined health care markets in the United States. We included a relatively large total number of cases because we sought to...

  10. PART TWO Results

    • CHAPTER FIVE Changes in Organizational Structure
      (pp. 41-46)

      Multiple practice leaders and market-context interviewees reported that their own practices or others in their markets were changing their organizational models—predominantly by affiliating or merging with other physician practices or aligning with or becoming owned by hospitals—in response to new payment models.

      From the physician practice perspective, the most prominent payment model–related reasons for these mergers were to enhance practices’ ability to make the capital investments required to succeed in certain alternative payment models (especially investments in computers and data infrastructure), to negotiate contracts with health plans (including which performance measures and targets would be included), and...

    • CHAPTER SIX Changes in Practice Operations
      (pp. 47-52)

      Respondents to our study perceived that alternative payment models have encouraged the development of team approaches to care management, featuring prominent roles for allied health professionals. In primary care practices in particular, physicians and practice leaders described appreciating how payment models, such as medical home and shared savings (based on virtual global capitation), had allowed them to fund care manager positions. These dedicated care managers, who were allied health professionals in all cases in our sample, could concentrate on patient management between office visits, alleviating some of the pressure that physicians would feel if these activities were added to already-packed...

    • CHAPTER SEVEN Increased Importance of Data and Data Analysis
      (pp. 53-62)

      In response to alternative payment models, physician practices reported making significant investments in their data management capabilities. Data required for successful participation in alternative payment models consisted of internal data from the practice, usually from an EHR documenting patient care activities, and external data, generally consisting of claims data and claim-based measures reported back to the practice by health plans.

      In practices with more–highly developed data management capabilities, several leaders and physicians reported lacking the timely, accurate data they needed to respond to alternative payment models effectively. When present, these data deficiencies were a source of considerable frustration. By...

    • CHAPTER EIGHT Interactions Among Payment Programs and Between Payment Programs and Government Regulations
      (pp. 63-70)

      In a pluralistic health care system, typical physician practices have contracts with a variety of different health plans, each of which applies its own payment model. In this context, the effects of each health plan’s payment model might depend not only on the model itself but also on how it interacts with the payment models used by the other payers.

      One clear finding from our interviews was that the multiplicity of PFP and other incentive programs has created a heavy administrative burden on some physician practices. Merely keeping track of payment program details, which vary from payer to payer, required...

    • CHAPTER NINE Physician Incentives and Compensation
      (pp. 71-82)

      In general, we found that the financial incentives applied to physician practices via alternative payment models were not simply “passed through” to individual physicians. Even practices of relatively modest size reported shielding their physicians from direct exposure to the financial incentives created by payers—except in the case of traditional FFS payment. In fact, the greatest financial incentive facing nearly all physicians in the study, even those in practices with substantial exposure to payment models intended to contain the costs of care (capitation, shared savings, and episode-based payment), was to increase productivity as measured by revenues or RVUs. Notably, only...

    • CHAPTER TEN Physician Work and Professional Satisfaction
      (pp. 83-90)

      In our sample, alternative payment models had not changed substantially how physicians delivered face-to-face patient care. However, increases in nonclinical work were a source of discontent. Though some physicians recognized the value of the added documentation requirements in certain instances (e.g., for identifying gaps in care), many physicians in our sample reported expansion of nonclinical work that they perceived to be irrelevant to patient care (e.g., duplicating and reporting data already contained in patients’ medical records to fulfill contractual obligations). In addition, as detailed in Chapter Six, physicians in practices participating in global capitation or shared savings payment models reported...

    • CHAPTER ELEVEN Factors Limiting the Effectiveness of New Payment Models as Implemented
      (pp. 91-96)

      The implementation of new payment programs can uncover unanticipated problems that limit their effectiveness, at least temporarily. The physician practices in our sample described encountering a few key types of operational problems when participating in new payment programs. By taking steps to avoid or prepare for these stumbling points, designers and implementers of future payment programs might be able to enhance their likelihood of achieving program goals.

      First, physicians and practice leaders participating in a variety of alternative payment models (any model other than FFS) described encountering errors in data integrity and timeliness, performance measure specification, and patient attribution. These...

    • CHAPTER TWELVE Conclusions
      (pp. 97-106)

      Nearly all physicians, physician practice leaders, and market observers who participated in this project described multiple simultaneous changes in payment programs and regulations. Most interviewees therefore described how interactions between these simultaneous changes, rather than the introduction of a given specific alternative payment model, affected physicians and physician practices. Some interactions were synergistic, such as when EHRs had the potential to enable physician practices to achieve PFP targets, while others were antagonistic, such as conflicting incentives and measures from different payers.

      Throughout the study, with the exception of independent solo practitioners, we found that physician practices played important roles as...

  11. APPENDIX A Advisory Committee Members
    (pp. 107-108)
  12. Bibliography
    (pp. 109-120)