Can Payers Reduce Stress of Alternative Payment Models for Physicians?

October 31, 2018 - Alternative payment models (APMs) may be placing significant burdens and stress on physicians, requiring payers to make additional efforts to improve their communication and smooth the process of transitioning to value-based care, according to a new report by RAND Corporation and the AMA.

Following up on a similar study from 2014, RAND researchers examined 31 physician practices in six geographic markets to characterize the effects of alternative payment models on physician groups.

Researchers attempted to re-interview the physicians and practice leaders that participated in the previous study.

RAND and the AMA concluded that since 2014, there’s been a decisive uptick in the pace of change in APMs from both private insurers and government programs. The surge was at least partially fueled by MACRA and the Quality Payment Program (QPP).

Yet provider groups feel ill-equipped to handle the rapidly changing financial and clinical environment.

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As was the case in 2014, many physician practices—especially small and independent organizations —reported inexperience with the data analytics tools that are prerequisite to prospering in the landscape of APMs, according to the report.

The report further found that medical practices were increasingly averse to the financial risks – including penalties for overruns - in the cost of care associated with APMs. In fact, some practices went so far as to redo payer contracts to ease the degree of downside risk, or shift some risk to partners, including hospitals or device manufacturers.

Physicians also expressed disengagement and skepticism when APMs generated new reporting and documentation burdens, as well as when patients did not measurably improve under new care methodologies.

“All the challenges described by respondents in 2014 persisted in the current study,” the researchers stated. “In particular, issues related to data continued to constrain practices’ ability to understand and improve their performance. Operational errors in payment models also continued to be a source of frustration for physician practices, at times with financial consequences.

“In some cases, these negative experiences reduced practices’ future willingness to participate in alternative payment models, even when offered by different payers. Because physician practices typically participated in multiple payment models from a variety of payers, challenges related to interactions between payment models also persisted.”

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But it wasn’t all pitfalls and negativity. Physicians broadly embraced APMs for enabling their practices to make upgrades in patient care more conspicuous, researchers found, as they did in their previous study. Physicians were similarly satisfied with clinical improvements – even those that didn’t yield monetary benefits.

According to the report, one way to help lift physician engagement – not to mention the likelihood such strategies will stir improved patient care - is including practicing physicians and other practice leaders in the design of APMs, the study found.   

All told, when viable, RAND recommended that payers consider the following steps to reduce burdens and improve morale among providers:  

• Simplifying APMs to help practices hone in on improving patient care as the preferred strategy for earning financial rewards
• Slowing the pace of change in payment models to benefit practices, payers, and other stakeholders
• Helping practices invest in data management and analysis and supply timely, understandable performance data to help them succeed in APMs
• Consider offering upside-only APMs -- or helping practices manage downside risk, such as subsidizing up-front investments in new practice capabilities, to boost APM uptake

To encourage greater participation in the Advanced APM pathway, the American Hospital Association has suggested that CMS expand its financial risk definition to include investment risk.Providers tend to invest heavily in the underlying tools, strategies, and technologies for success in APMs, yet can rarely claim any reimbursement for those expenses.For example, an AHA study showed that a small accountable care organization (ACO) invests about $11.6 million on start-up costs, while a medium ACO will spend approximately $26.1 million.

Commercial payers may wish to consider offering some form of financial aid to providers with significant start-up costs in order to encourage a speedy transition to value-based, data-driven care.

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A little extra help may be all that is required for providers to embrace innovative payment models. In 2017, researchers writing for the American Journal of Managed Care said that physicians generally show a desire to boost quality care and reduce costs through alternative delivery methods, but struggled to shoulder the financial responsibilities of factors not directly within their control.

Since the complexity of value-based care and the rapid rate of change has compelled practices to expend significant resources simply to maintain pace with program details, many providers may be looking to their payers for guidance and support, explained Mark Friedberg, MD, the study's lead author and a senior physician policy researcher at RAND.

"While the practices in our sample generally voiced support for the goals of alternative payment models, these implementation challenges could make it difficult to achieve them," Friedberg said.

Simplifying payment models and offering more communication, support, and feedback will be essential for the financial and clinical success of alternative payment structures, added AMA President Dr. Barbara L. McAneny.

“Physicians tell us that it’s more difficult than ever to understand the growing complexity of payment models and they are straining against a conflicting muddle of public and private value-based policies and rules that are continually in flux,” she said.

“The resulting administrative burdens take physicians away from patient care. It is clear the long-term sustainability of payment reform hinges on value-based payment models that must be operationally and financially sound, sustainable over time, aligned across payers, and must work for physician practices and patients. The AMA is committed to spearheading and engaging these efforts.”