Balancing financial risk key to alternative payment models

By Matt Kuhrt

Efforts to move away from fee-for-service (FFS) payment models have had virtually no impact on the latest industry data available, according to a study from Health Affairs. However, the data only extends through 2013, and therefore predate a new wave of interest in value-based payment models.

Last year's announcement that the Centers for Medicare & Medicaid Services (CMS) intends to tie half of FFS payments to quality initiatives by 2018 generated interest in initiatives focused on value-based care, as FiercePracticeManagement noted as far back as 2014.

In the 2013 data, FFS payments represented 94.7 percent of total physician visits. Not only does this suggest a formidable baseline off which any new payment models would need to move, but that the most dominant previous attempt at an alternative payment method utterly failed to move the needle, according to an article in Medscape Multispecialty. The study looked specifically at payment methods using capitation, in which physicians receive a set monthly fee per patient.

Such models had the effect of "shifting all or most of the risk of caring for patients to providers," according to the study's authors. The financial losses generated under this system made it a tough sell for physician groups, dropping the percentage of patients seen under these payment methods from 6.6 percent in 2007 to 5.3 percent in 2013, according to Medscape.

More recently, CMS reported it was ahead of schedule in tying 30 percent of Medicare payments to alternative payment models by the end of 2016, which jibes with the study authors' conclusion that alternative models tied to care quality may represent a more attractive way of sharing the financial risk of care provision than pure capitation.

To learn more:
- see the Health Affairs study
- read the story in Medscape