Blog | Payment Models

Should Physician-Led Models Get Value-Based Payment Privileges?

Blog | Payment Models

Should Physician-Led Models Get Value-Based Payment Privileges?

Joe Damore and Shawn Griffin describe the potential issues of granting special privileges to physician-led alternative payment models.

A new alliance supporting physician-led advanced alternative payment models (APMs) called the Partnership to Empower Physician-Led Care was recently launched by five physician groups. The group argues that physician-led models are best positioned to deploy and experiment with the latest innovations in population health. They also contend that current payment models disadvantage independent practices, forcing them to join with large health systems. Therefore, they have been advocating for new policies that ease compliance requirements for physician-led APMs while maintaining more stringent requirements for risk-bearing hospital-led APMs.

Physician-led APMs clearly play a vital role in population health management and the new competitive environment. But requiring APMs organized by hospitals to compete on an un-level regulatory and/or risk playing field with APMs organized by physician groups could be problematic. Granting privileges and advantages to physician-only APMs could lead to unintended consequences and unnecessary disruption in the healthcare marketplace contrary to the goals of the value-based payment movement.

Impact of Hospital-Led ACOs

APMs are bending the cost curve and improving healthcare quality and satisfaction. For example, participants in the Medicare Shared Savings Program (MSSP) have generated more than $2 billion in savings to Medicare over projected benchmarks. Hospital-led accountable care organizations (ACOs) in Premier’s Population Health Management Collaborative (PHMC) generate an even higher ratio of savings per Medicare ACO. PHMC ACOs account for nearly 20 percent of Medicare ACO program savings since 2012, even though they constitute only 6 percent of all Medicare ACOs. 

Nonetheless, there remain real barriers to achieving success in value-based payment, especially as providers assume more financial risk. New rules governing APMs, such as increasing the incentives to participate, advancing multipayer models and reducing regulatory requirements, are sorely needed. However, these rules must be applied equitably for all stakeholders.

The Risk of Disrupting Incentives

Hospitals and health systems have been leaders in building and implementing innovative ways to improve health and promote value-added care, including enhancing quality and reducing the total cost of care. Differentiating between physician-only APMs and hospital-led APMs and affording greater flexibility to the former could lower the incentive for hospitals and health systems to participate in programs like MSSP due to limited options and unfair conditions. This reduced participation would have a negative impact on managing care across the continuum and disrupt the marketplace because hospitals are the largest single cost centers in health care today, and their participation in ACOs therefore is critical to achieving the cost savings that are a chief aim of value-based care. 

There are a few examples of well-meaning policies that have been advanced to address one perceived problem only to have them negatively impact other parts of the healthcare system. Consider the federal Physician Self-Referral (Stark) Law that was developed to prevent physicians from referring to care sites in which they had a financial interest. The impact, however, has been significant for hospitals. It has undermined hospital efforts to reward physicians who deliver high-quality, cost-effective care and undermined new, coordinated care delivery models, while also driving up legal costs and causing treatment delays. 

Allowing APMs to earn more just because they meet some general criteria that permit them to be designated as “physician-led” would likely lead to unintended consequences that are counter to the aims of the Partnership to Empower Physician-Led Care. Organizations that don’t meet those criteria, for example, would have an incentive simply to update their tax identification number or employ more physicians rather than partner with physician practices through clinically integrated networks (CINs) so they could be listed as having a physician group and, therefore, a physician-led model. This preferential treatment likely would send hospitals on a physician buying spree to overcome the disadvantages created by the policy. We cannot ignore the fact that many of the nation’s highest-performing ACOs have the lowest proportion of employed physicians and instead rely upon a CIN with independent physicians. Purchasing physician practices is not necessary for an organization to move forward with successful integrated models of care. 

An Imprecise Designation

Another concern is inconsistency in how the Centers for Medicare & Medicaid Services (CMS) defines physician-led models. A recent Premier analysis revealed that approximately 20 percent of hospital-led ACOs are erroneously designated by CMS as physician-led ACOs, which has created inaccuracies in CMS data and conclusions.

Value-based APMs are supposed to promote a holistic, integrated, and patient-centered healthcare system, where quality, total cost of care, and patient satisfaction improve continually and competition is based on outcomes delivered to a community. Policymakers should keep these goals in mind as they contemplate changes to APM rules aimed at attracting participants to these models. They should understand how critically important an equitable and level playing field is to industrywide success in value-based care and payment. Giving physicians an advantage over other providers could lead to further consolidation of market power rather than alignment that leads to the breakdown of the artificial silos that cause duplicative, fragmented, and more expensive patient care. 

For every action to advantage one provider group over another, there will be an equal and opposite reaction, with unintended consequences—which, in this case, would likely be increased employment of physicians and efforts by hospitals to thwart competitors with an unjustified advantage.


Joe Damore, FACHE, is vice president of population health management, Premier Inc., Charlotte, N.C.

Shawn Griffin, MD, is vice president of clinical performance improvement and applied analytics, Premier Inc., Charlotte N.C.

About the Authors

Joe Damore,
Shawn Griffin

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