Fee-for-service still accounts for most practice revenue

man counting money
Most practices still get most of their revenue from fee-for-service payments. (Julia_Sudnitskaya/Getty)

Despite the move to value-based payment, fee-for-service payments continue to be the primary source of physician practices' revenue.

However, physicians are becoming more involved in alternative payment models (APMs), and nearly 60% of physicians reported that their practices received some revenue from at least one APM in 2016, according to a survey by the American Medical Association.

The revenue from those APMs, however, made up only a small portion of a practice’s overall revenue, the AMA said. Pay-for-performance and bundled payment arrangements were the most common ways, with about 35% of practices reporting participation, as reported in an AMA Policy Research Perspective (PDF).

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Data from the AMA’s Physician Practice Benchmark Survey, which asked 3,500 physicians about their practices’ payment methods, indicate the following breakdown:

  • On average, practices received almost 71% of revenue from fee-for-service payments.
  • Nearly 7% of revenue came from pay for performance.
  • Nearly 7% came from capitation.
  • Nearly 9% came from bundled payments.
  • Just 2% came from shared savings.

Physicians in practices that were part of a medical home or an accountable care organization were almost twice as likely to have received pay-for-performance and bundled payments compared with other practices.

Accountable care organizations are now beginning to show success in cost reductions and quality improvements in the U.S. And though significant barriers still stand in the way of the transition to value-based reimbursement, a new study offers encouraging signs that physicians are getting more comfortable with new payment models.

The study, a joint effort between the American Academy of Family Physicians and Humana, found that 37% of those surveyed said payments based on quality measures were distributed to physicians at their practice—a “huge jump” from 2015, when it was just 18%.

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