Effects of Health Care Payment Models on Physician Practice in the United States
By Mark W. Friedberg, Peggy G. Chen, Chapin White, Olivia Jung, Laura Raaen, Samuel Hirshman, Emily Hoch, Clare Stevens, Paul B. Ginsburg, Lawrence P. Casalino, Michael Tutty, Carol Vargo, Lisa Lipinski
RAND Corporation, March 19, 2015
The project reported here, sponsored by the American Medical Association (AMA), aimed to describe the effects that alternative health care payment models (i.e., models other than fee-for-service payment) have on physicians and physician practices in the United States. These payment models included capitation, episode-based and bundled payment, shared savings, pay for performance, and retainer-based practice. Accountable care organizations and medical homes, which are two recently expanding practice and organization models that feature combinations of these alternative payment models, were also included. Project findings are intended to help guide efforts by the AMA and other stakeholders to make improvements to current and future alternative payment programs and help physician practices succeed in these new payment models.
Physician Incentives and Compensation
Practice leaders described transforming certain practice-level financial incentives (especially those concerning cost containment) into internal nonfinancial incentives for individual physicians, choosing instead to appeal to physicians’ sense of professionalism, competitiveness, and desire to improve patient care. Common nonfinancial incentives included performance feedback and selectively retaining or terminating their physicians based on quality or efficiency performance.
Generally speaking, alternative payment models had negligible effects on the aggregate income of individual physicians within our sample.
Physician Work and Professional Satisfaction
Within our sample, alternative payment models had not substantially changed how physicians delivered face-to-face patient care. 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. Physicians recognized the value of documentation tasks that were directly related to improvements in patient care, such as identifying patients with diabetes to facilitate better management of all patients with this condition, but they disliked the extra burden generated when documentation requirements were perceived as irrelevant to patient care.
Most physicians in practice leadership positions were optimistic and enthusiastic about alternative payment models, while most physicians not in leadership roles expressed at least some level of apprehension, particularly with regard to the documentation requirements of new payment models. Overall, even these physicians seemed to believe that major changes in payment methods would continue and acknowledged that some changes were useful. Nevertheless, their attitude was frequently one of resignation, rather than enthusiasm, because their day-to-day work life was more difficult and included burdens they did not believe would improve patient care.
Factors Limiting the Effectiveness of New Payment Models as Implemented
Physicians and practice leaders described encountering three general types of operational problems in new payment programs that limited their effectiveness and sapped physicians’ enthusiasm for them.
First, physicians and practice leaders participating in a variety of alternative payment models described encountering errors in data integrity and timeliness, performance measure specification, and patient attribution (the process by which patients are assigned to a specific physician or practice). These payment models shared characteristics that might have made errors more likely: They were administratively more complex than FFS payment; some required payers to develop new measurement systems; and some were deployed for the first time quite quickly, without a “dress rehearsal” in which errors could be corrected before payments were on the line.
Second, physicians had a variety of concerns about the implementation of performance and risk-adjustment measures underlying PFP, shared savings, and capitation programs. Broadly speaking, these concerns stemmed from a sense that the multiplicity of measures within and across programs could distract physician practices from making the changes to patient care that were actually the ultimate goal of many payment programs.
Third, the influence of uncontrollable, game-changing events in shared savings and capitation programs (e.g., the introduction of very high-cost specialty drugs) sapped physician practices’ enthusiasm for these payment models. Finally, some physicians reported that they could not understand exactly what behaviors were being encouraged or discouraged by certain performance-based payment programs—even after seeking clarification from payers.
Increased Stress and Time Pressure
New nonclinical work for physicians was almost universally disliked, especially when there was no clear link to better patient care. For example, frustration was common when physicians believed they were being asked to spend more time on documentation solely to get credit for care they had provided already. Overall, increased stress on physicians might directly harm the quality of patient care and might also serve as a marker that physicians are concerned about the quality of care they are able to provide.
Full report (142 pages):
By Don McCanne, M.D.
HR 1470, which Congress is scheduled to approve in only two days (March 26), would replace the flawed Sustainable Growth Rate (SGR) method of determining Medicare payments with a new Merit-based Incentive Payment System (MIPS). MIPS introduces considerable administrative complexity which would be a great burden to physicians, but the legislation allows physicians to opt out of MIPS by joining Alternative Payment Models (APMs) such as Accountable Care Organizations (ACOs) or Patient Centered Medical Homes (PCMHs). This RAND study of APMs reveals that physician members of APMs are at very high risk of BURNOUT.
Some believe that the onerous structure of MIPS was designed specifically to drive physicians into APMs, especially ACOs. But is moving from burnout to burnout really progress?
From the report: “(physicians’) day-to-day work life was more difficult and included burdens they did not believe would improve patient care.” Further: “Overall, increased stress on physicians might directly harm the quality of patient care and might also serve as a marker that physicians are concerned about the quality of care they are able to provide.”
This legislation will require physicians to submit to MIPS requirements or join an APM, in either case incurring a high risk of burnout. But health care should really be about the patient. Well, this does affect patients, but in a bad way. Stressed-out physicians unintentionally provide lower quality care. This is the exact opposite of the intent of this legislation, assuming that higher value is intended to represent higher quality.
Supporters say that getting rid of SGR is not only worth the legislative compromise, but that the new MIPS provides the additional benefit of improving quality, not to mention some CHIP funding being thrown in as well. As we have seen, quality will likely be worse instead because of the inevitable burnout. But now the supporters are responding with the usual: “perfect being the enemy of the good,” “art of legislative compromise,” “bipartisan support,” “making sausage,” and “must move on to other priorities.”
It’s tempting to tell them what to do with their sausage, but, above all, we should speak out loudly on behalf of our patients. This legislation will make health care worse. With only two days left and the steamroller in full momentum, can we do anything to prevent this injustice about to be inflicted on patients and their health care professionals?