AMGA finds physician groups increase reliance on risk-based revenues; obstacles persist in move to value

Physician groups are moving, albeit slowly, to value-based payment, but there are still many obstacles standing in their way.

Physician groups derived a larger share of revenue from payment models that require them to take on risk in 2018 than in previous years, according to a survey of the AMGA of its members.

The AMGA’s fourth annual survey that gauges the progress of its members in their transition to value found that multispecialty medical groups and integrated delivery systems increased their use of risk-based revenue in federal and commercial settings from 2015 to 2018. Medicare Advantage was the most dominant payment model representing 30% of revenues.

Some 75 member organizations responded to the survey, and 56% said federal program revenue came from value-based models in 2018, compared to 45% in 2015. They also indicated that external obstacles impeding the move to value remain unchanged and need to be addressed by policymakers to ensure the transition away from fee-for-service payments continues.

“When comparing survey responses from the 2015 and 2018 surveys, it is clear that AMGA members are moving to value,” Jerry Penso, M.D., the group’s president and CEO, said in a statement. “AMGA members believe value-based models support their team-based, coordinated, data-driven model of care, which results in better patient outcomes.”

There was a difference when looking at federal revenue versus commercial revenue where the transition to value was slower. That jives with a previous survey that found while the Centers for Medicare & Medicaid Services has embraced value-based reimbursement, the country’s health insurance companies are still far from widespread adoption.

Federal revenue

From 2015 to 2018, fee-for-service payments from government programs decreased from 55% to 44% of revenue. Over the same time, Medicare Advantage payments increased from 22% to 30% of revenue. Medicaid payments remained flat at 20% of revenue. Revenue from the federal Accountable Care Organization (ACO) program increased 36%, but ACO revenues flattened since 2016. Bundled payments remained constant at 1% of total revenues.

By 2020, respondents predict Medicare Advantage revenues will outpace Medicare fee-for-service revenues by 6% and revenue from downside-risk ACOs will generate twice as much revenue as upside-only ACOs.

The government is working to make the transition to value-based payments happen. The Trump administration announced last month it is experimenting with several new primary care payment models, including one that would shift providers to global payments. Called the Primary Cares initiative, the aim is to push primary care providers to take on more risk, officials said.

Commercial revenue

There was less progress on the commercial side. Physician groups reported that risk-based payments accounted for 28% of their total commercial revenue in 2018, an increase from 22% in 2015.

Between 2015 and 2018, fee-for-service payments in commercial settings decreased from 78% to 72% of revenue. ACO payments increased from 12% of revenue to 16%, with most of the growth coming from upside-risk-only ACOs. Capitated payments increased from 8% to 11% of revenue. Bundled payments were not a significant revenue source from 2015 to 2018.

Survey respondents said they expect that by 2020, 37% of payments from commercial programs will be value-based. They expect shared-risk ACO payments to increase from 6% to 11% of total revenues and shared-savings ACO payments to increase from 10% to 12%. Full- and partial-capitation payments are predicted to remain flat at 7% and 3% of total revenues, respectively.

amga revenue chart
(Courtesy of AMGA)

Obstacles to Value

Respondents said they face both external and internal barriers to taking on more risk, with the largest external obstacle a lack of access to administrative claims data. Others are largely payer driven and include the lack of uniform data submission and reporting standards, multiple quality measurement programs and problematic financial benchmarking and risk-adjustment methodologies, particularly in the federal ACO program.

Internal challenges include building and financing the infrastructure necessary to take risk, change management challenges and physician compensation issues. When comparing survey responses from 2015 and 2018, it appears that medical groups are addressing internal impediments to moving to value-based payment.

“This year’s survey shows AMGA members are making the costly financial investments necessary to address impediments within their control,” said Chet Speed, chief policy officer and the primary author of the report. “However, the survey responses also indicate that AMGA members are frustrated over the lack of attention external impediments are receiving from stakeholders and policymakers. These barriers must also be addressed to ensure momentum towards value-based care is not halted.”