Complexity of new payment models thwarts progress in physician practices: 4 findings

Physicians want to improve the quality and efficiency of care they provide, but many practices say the pace of change and the complexity of new payment models are holding them back, according to a joint study from the American Medical Association and the nonprofit RAND Corporation.

Here are four key findings:

1. Practices have been unable to move beyond initial challenges. AMA and RAND found physician practices are still struggling with many of the same challenges related to alternative payment models as they were in 2014. These challenges include data management, integrity and timeliness; data analytics; performance measure validity; and conflicting interactions between payment models and payers. Strategies to address these challenges also remain unchanged, despite practices taking on new models. For example, AMA and RAND found internal financial incentives for physicians haven't changed much since 2014. Most physicians receive "modest bonuses" for quality performance, but bonuses based on cost of care are "almost nonexistent," according to the report.

2. The industry is struggling to keep up with the pace of change. Across the practices interviewed, many felt the pace of change in payment models accelerated between 2014 and 2018. As a result, many practices turned inward and focused on internal goals or slowed their pace of adoption. Respondents noted that practice management consultants were similarly unable to keep up, making good advice hard to come by.

3. Programs are too complex. Although respondents voiced support for new payment models, they agreed APMs are becoming increasingly complex due to a growing list of performance measures, uncertainty around benchmarks and conflicting models. The Quality Payment Program was also a major offender for adding complexity. Practices noted two negative side effects of the complexity. First, they noted the investment of resources required to understand the new models put outsized stress on small and independent practices, many of which gave up. Second, larger practices or those with more resources often found a way to game the system and get rewarded for things they were already doing, rather than for improvements.

4. Practices are more risk averse than four years ago. Interestingly, as downside financial risk becomes a familiar concept for physician practices, they are shying away from it more, according to the report. This was particularly true for practices that lost money in APMs or those inexperienced with taking on downside risk. As a result, some practices have renegotiated their contracts to shift risk back onto payers or other entities, and small practices have gravitated toward APMs that provide subsidies to build the infrastructure required for new payment models.

This study was conducted as a follow-up to a similar 2014 study. Researchers from RAND and AMA surveyed physicians from 31 practices across six distinct U.S. markets, re-interviewing sources where possible. They also spoke with leaders from hospitals and health systems, health plans, state medical societies and chapters of the Medical Group Management Association. The study was conducted between January and June 2018.

Download the full report here.

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