Risk-Based Payments: Challenges of Transitioning From Fee-for-Service

Multispecialty medical groups and integrated delivery systems expect fee-for-service payments to decline 24% in the next 2 years, according to results of a survey from the American Medical Group Association (AMGA).

The federal government is pushing more toward a value-based payment system with CMS’ announced timeline to tie 90% of Medicare payments to value by 2018 and the Medicare Access and CHIP Reauthorization Act. The AMGA survey sought to determine how healthcare financing is changing, current impediments to accepting risk, and the tools necessary for providers to take on risk.

“Our members understand the importance of transitioning to a value-based payment system, in fact many are already moving in that direction,” Chester A. Speed, JD, LLLM, vice president of public policy at AMGA, said in a statement. “This transition will be challenging and medical groups need policymakers and commercial insurers to partner with them to offer the tools they need to be successful in a new risk environment.”

From 2015 to 2017, respondents said they expect revenue from Medicare Advantage payments to increase 20%, from accountable care organization products to increase 36%, and from Medicaid managed care payments to increase 20%. At the same time, risk-based products in the commercial setting are expected to increase significantly.

However, currently, 22% of respondents said that no payer in their market is offering risk-based payment arrangements. In addition to the limited offering of risk products, respondents identified other impediments. Among commercial insurers there is a lack of access to full administrative claims data and a lack of transparency when it comes to cost and quality data. In the federal setting, there are operational difficulties in the ACO programs, ineffective attribution, and a lack of a standardized data submission and feedback process.

Overall, AMGA found that 58% of respondents say they need at least 3 years before they can accept downside risk.

“If policymakers want to successfully transform the current volume-based payment system to one based on value, they need to understand these impediments to risk-taking and offer the tools providers need to make this transition successful,” the authors of the report concluded. “If these issues are overlooked, the opportunity to reform the system for both the benefit of patients and programmatic efficiency may be lost.”