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Physician Reimbursement Methods in ACOs

By July 22, 2015Commentary

Medicare’s accountable care organization initiative faces a lot of hurdles on its way to putative success, including ludicrous patient attribution methods, excessive administrative cost imposition, provider group dropouts, and just a general lack of guidance on how to best structure an ACO.  Theoretically ACOs will encourage greater care coordination and better primary care, lowering overall spending.  The extent to which the method by which physicians are compensated by an ACO affects these goals was examined in a study published in the Annals of Family Medicine.  (Annals Article)   If an ACO is at risk for all the patient’s health costs and also is compensated in part by how well it performs on various quality measures, the structure of primary care physician compensation can play an important role in maximizing ACO reimbursement.  Paying primary care physicians for “productivity”–how many patients do they see and how many chargeable services do they generate, can obviously be counterproductive in an at-risk ACO, but using salaries or basing a large percentage of compensation on quality can also create untoward incentives.  Using survey data, the researchers sought to ascertain how ACOs were paying their primary care physician members.  On average across all ACO practices, doctors received 49% of their compensation from salary, 46% from productivity, 3.5% from quality measures and 1.5% from other factors.  This compensation pattern was similar to that used in practices which were not in ACOs.  By comparison, primary care physicians who were not in ACOs, but did have substantial risk for primary care costs, received 67% of their compensation in salary.  Since most practices are not solely ACO businesses and have a mix of payer types and risk and non-risk arrangements, designing an appropriate physician compensation structure is complex.  In addition, the actual effects of how a primary care doctor is compensated on that physician’s practice style are not well-understood.  And compensation may not be the best tool to affect appropriate delivery of care for each patient, which is the ultimate goal.  A strong commitment to evidence-based medicine, couple with shared decision-making with patients, buttressed by usable health information technology, may be a better method to ensure appropriate and adequate care.

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