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APMs Have Neutral Financial Effect, Change Care Delivery, Study Finds

July 31, 2015:

A study by the Rand Corporation and sponsored by the American Medical Association found that alternative payment models (APMs) are having a neutral to positive financial effect on physician practices. This is not to say no one has complaints, though, particularly when it comes to aligning incentives among various payment models and ensuring that decisions are based on reliable data.

The study, “Effects of Health Care Payment Models on Physician Practice in the United States,” was released this past spring and involved interviews with 34 practices in six markets, as well as 10 health plans, nine hospitals and hospital systems, seven medical societies, and five Medical Group Management Association (MGMA) chapters.

Of the practices interviewed, none reported financial hardship from the payment models. On the contrary—some practices reported that the money gained from “medical home” and shared savings programs enabled them to hire care managers to better coordinate care, thereby lightening the load on physicians. The patient-centered medical home (PCMH) model of care strives to constantly improve the quality, efficiency, and effectiveness of services while providing care tailored to each patient and coordinated within the practice and community through all phases of the patient’s life.

When practices did benefit financially from alternative payment models, practice leaders tended not to pass the savings down to individual physicians. Practices also tended not to communicate the nitty gritty of the financial incentives involved in the models; instead management sought to align physician behavior with goals by appealing to physicians’ professionalism, desire to improve patient care, and competitiveness, the study found.

APMs changed not only physician behavior, but the way practices as a whole delivered care. The drive to contain costs has spurred innovation in terms of ways patients can access care. A practice may offer a web portal, services via telephone, or in-person care outside the office, for example. Cost containment also has led to physicians handing over the care of less intense cases to allied health professionals. The study notes the upside of lower costs but also the downside of more burnout among physicians treating only high-intensity cases.

An overriding concern of those being paid under APMs was data: whether it was reliable, timely, and consistent. Some practices expressed frustration with the incongruities between electronic health records and submitted claims, and the difficulty in calculating the costs of services and commodities, particularly specialty drugs, so as to better assess costs of care. How patients were attributed to a practice and performance measurement specifications were also concerns among study participants.

Enthusiasm for APMs was dampened somewhat by concern over uncontrollable factors that could hurt financial performance, such as the introduction of an expensive specialty drug. Practices also reported that various payment models seem to have clashing incentives. One might pay more for more services, for instance, while another focuses on keeping overall costs down.


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