Wednesday, July 22, 2015

Are Primary Care Physicians (PCPs) Important to ACO Success? Payment Arrangements Say Otherwise

Long ago, the Population Health Blog learned that when it comes to health insurance, capitation or bundled payments brakes, while fee-for service payments are gas. Too many physician office visits?  Use "capitation" brakes. Want to increase physician visits?  Apply a payment for each encounter with some FFS gas. 

Health care organizations can pass this arrangement onto their physicians. They can pay them with a salary (a form of capitation), or a variable "productivity" compensation (seeing more patients is compensated with a form of FFS) or with a combination of both.
Simple, right?  To figure out this ying-yang of utilization management, just follow the money.

That's why the PHB was interested in this just-published Annals of Family Medicine paper on how primary care physicians are being paid by Accountable Care Organizations (ACOs). If you believe more primary care visits translate to savings in other parts of the ACO, then you'd want to apply gas. If you believe primary care visits are a cost that doesn't necessarily save money, you'd want to apply the brakes.

The authors used data from the 2012-2013 "National Survey of Physician Organizations" to compare primary care physician (PCP) compensation in ACOs with non-ACOs. 1,398 organizations were in the original database; after excluding solo practitioners and specialist physician organizations, 632 were left. 

Three groups were compared:

1) Medicare ACOs (21.1%) with exposure to some financial risk related to total health care utilization;

2) Non-ACOs (2.8%) with contracted financial risk for primary care costs (2.8%);

3) No ACO and no risk (76.1%).

Results?  PCPs in.....
Medicare ACOs got 49% of their income from a flat salary and 46% tied to productivity. 3.4% was tied to quality;
Non-ACOs at primary care risk got 66% of their compensation from salary, 32% tied to productivity and .8% from quality;

No ACO arrangements with no risk had compensation that was similar to the Medicare ACOs.

The PHB's take-aways?

Based on the non-ACOs, health care organizations are prepared to use salary to influence physician behavior.  If you believe PCP visits are a cost and you are at financial risk for utilization, apply more brakes than gas.  The model is still out there.


The leaders running Medicare ACOs don't know what the right balance of FFS and capitation for PCPs, and are mirroring a status quo that is indistinguishable from business as usual.  Despite the fanfare about the critical role of primary care in health reform, the Medicare ACOs have decided otherwise. If they ultimately succeed or fail, it won't be because of any special innovation involving their PCPs' compensation.

Image from Wikipedia

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