The structure of some shared risk arrangements offered by the federal government left providers unable to profit as much as they'd expected, according to one adviser.

Dec. 18—Physician practices continue to see a slowdown in the pace of transition from traditional fee-for-service payment models to value-based models, according to an American Medical Group Association (AMGA) member survey.

Uncertainty over Trump administration policies, a lack of investment in infrastructure needed at practices, and a lack of insurer partners contributed to the slowdown, some groups said.

The risk survey, AMGA's third annual on the progress of medical groups and large systems moving to risk-based models, showed a two-year slowdown that's particularly noticeable in the commercial setting. The trade association, which represents multi-specialty medical groups and integrated systems of care, detailed the findings—based on answers from 80 respondents—in a white paper released Dec. 13. 

In the 2016 survey, respondents expected commercial fee-for-service (FFS) revenues would comprise 61.3 percent of total revenues by 2018. In the latest survey, they expect FFS still will account for 70 percent—14 percentage points more—of total revenues, according to the report.

Also in 2016, practice respondents expected shared-risk revenues to account for 11 percent of total 2018 revenue, but 2017 respondents projected such value-based pay to account for  6 percentage points less of total revenue.

The amount of projected revenue from shared savings products in 2018 declined from 18 percent to 15 percent.

"With the first survey in 2015, there were some pretty strong predictions on where everyone would be as far as taking risk as a percentage of revenues, and in 2016 and 2017, those predictions really didn't bear out," said Chet Speed, vice president of public policy for AMGA and coauthor of the survey-based report "Maybe they were overly optimistic."

Practice Obstacles

Groups desiring to move to value-based payment models—spurred by federal legislation and employer and payer demands—have been hampered externally by insurers unwilling to offer risk products or share data, according to the survey.

"That's the highest impediment to taking risks for the past three years," Speed said. "You need this claims data to understand where the patients are getting their care outside of our groups' walls.

Fifty-nine percent of respondents said they had little or no access to commercial risk products in their local markets; an improvement from 70 percent in 2015.

Internally, a major challenge has been financing the infrastructure needed to manage the health care of populations and keep patients out of hospitals, Speed said. The systems—IT and staffing—needed to do that are expensive; up to hundreds of millions of dollars, Speed said.

Policy Uncertainty

An uneasiness with regard to direction from Washington, D.C., also is causing some groups to reconsider the benefits of going forward.

"The change in leadership at HHS [U.S. Department of Health and Human Services] really sent some different signals to the marketplace," said Mark Froimson, MD, president of the American Association of Hip and Knee Surgeons and principal at Riverside Health Advisors in Cleveland, Ohio. "We most recently saw that several new payment models were curtailed—specifically the comprehensive care for joint replacement. And some of the new mandatory bundled payment arrangements were cancelled."

"So there's uncertainty in the marketplace from providers as to what to expect from Medicare, especially the Center for Medicare & Medicaid Innovation, as to what the landscape of shared risk models might look like moving forward." Froimson said.

The structure of some shared risk arrangements offered by the federal government left providers unable to profit as much as they'd expected, he said.

"They entered arrangements, anticipating shared savings, but weren't able to recoup their investments on analytics and care coordination,” Froimson said. "A number of the early models were just not stacked in the providers' favor; and providers that were facing challenges were getting some cold feet with regard to that."

So much uncertainty reduces the incentive to change, said John Hsu, MD, director of the Program for Clinical Economics and Policy Analysis at the Mongan Institute for Health Policy.

"For a hospital or large physician group of even an individual physician, some of these payment models would require you to alter the way you deliver care, or alter the partners that you have in delivering care," he said. "To do that, and to not know what's going to happen in two years—whether those payments could either go away or they could change dramatically—it's a very risky proposition."

Still, Hsu said, practices wanting to move from fee for service need to invest in getting information to help manage their patients.

"At least put in the systems they need or develop the relationships they need to address those future changes. They'll be much better off," he said.  "Things they are able to address: who are the patients we're caring for, and how are we getting those patients, and how are they doing, and what happens after they leave our offices, and what are their patterns of care with subsequent providers or practices such as rehab—those become really important."

Through a series of email and phone interviews, survey respondents also expressed concern about entering risk and value arrangements alone, Speed said.

Congress needs to create incentives to nudge insurers, drug makers, and other industries toward value, he said.

"If you're running a multi-million dollar business, you don't want to be alone when you move into something like risk. You're looking for partner. You want the insurance industry to be partners with you. You want [pharmaceutical manufacturers] to be looking at value, as well," he said. "The majority of policies out of Washington that have to do with value or risk are directed at providers and no one else."

Froimson, though, cautioned against reading too much into the survey.

"While I think it’s directionally correct, I don’t know that it's quantitatively correct only because it represents a sampling of members of AMGA, who represent only a slice of what we're seeing out in the broader marketplace," Froimson said.

And, he said, the focus omits an important part of healthcare payment reform: patient input.

"We're creating a system without getting the voice of the patients and understanding actually what do patients actually want and what types of care would they like to pay for," he said.

Cheryl Jackson is a freelance writer in Chicago. Follow her on Twitter at @cherylvjackson.

Publication Date: Tuesday, December 19, 2017