Obstacles persist as physician practices adopt alternative payment models: 7 key takeaways

The adoption of alternative healthcare payment models — such as capitation, episode-based and bundled payment, shared savings, pay-for-performance and retainer-based practice — has so far been successful for many physician practices, accountable care organizations and medical homes, though not without some substantial challenges, according to a recent Rand report.

Key takeaways from the report, sponsored by the American Medical Association, are shown below.

  • In general, respondents perceived that alternative payment models have encouraged the development of team-based approaches to care management.
  • Physician practices as well as market observers reported global capitation and related shared savings models were changing relationships between primary care and specializing physicians.
  • Physician practices are making significant investments in their data management capabilities to track performance and identify areas for improvement in their alternative payment models.
  • Pay-for-performance combined with other incentive programs has created a heavy administrative burden for some physician practices.
  • Leaders of physician practices described transforming some practice-level financial incentives into non-financial incentives for individual physicians, creating inconsistencies between the two kinds of incentives.
  • Alternative payment models had insignificant effects on the aggregate income of individual physicians, and some physicians reported wanting their incomes to be more closely tied to quality and efficiency of care.
  • While alternative payment models did not have significant impacts on how physicians delivered face-to-face care, additional non-clinical work created significant dissatisfaction.
  • The majority of physicians in leadership roles were optimistic and enthusiastic about alternative payment models, while most physicians not in leadership positions described their outlook as more apprehensive.

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