Health Reform Nonphysician Clinicians Physician Compensation

Transitioning to Alternative Payment Models

CMS has stated that they want 30% of all fee-for-service payments to be transitioned to alternative payment models–such as pay for performance–in the upcoming years.  A future where all providers are paid capitation or based on some measure of value is not here yet.  And in the interim, providers are dealing with a complex system of reimbursement schemes that are in and of themselves very complex.  A RAND study on how alternative payment policies affect physician practices finds that:

a serious tension could also arise when practices participated in a mix of both fee-for-service (FFS) and risk-based contracts. In those situations, some practices reported facing fundamentally conflicting incentives—to increase volume under the FFS contract while reducing costs under the risk-based contract. This conflict was especially acute for hospital owned physician practices, in which reductions in hospital utilization—which are strongly incentivized under risk-based contracts—could undermine the financial well-being of the parent organization.

Even though provider groups may be incentivized different ways, physician groups generally do shield individual physicians from direct financial incentives from payers.

Despite the fact that many practices are paid via capitation or some form of risk sharing, most physicians are paid a salary or compensated based on productive (i.e., RVUs.)

Do physicians like the new systems? The initial findings seems like the answer is ‘no.’

However, the overall quantity and intensity of physician
work had increased because of growing patient volume expectations and ongoing pressure for
physicians to practice at the “top of license” (e.g., by delegating less intense patient encounters
to allied health professionals), which was described as a potential contributor to burnout
because lower-intensity patients could be an important source of respite for busy physicians…Additional nonclinical work, particularly documentation requirements, created significant discontent


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