Value-Based Payments: But Is There Any Value for Doctors?

Leigh Page


October 08, 2015

In This Article

Can You Cover Your Costs?

Even as many physicians start to get some income from value-based initiatives, the amounts are still not substantial and may not even pay for the changes practices must make to qualify for the extra payments.

At the average practice, perhaps 1%-3% of payments might be value-based, according to Elizabeth Woodcock, a practice management consultant in Atlanta. That may not be enough to cover the extra work needed to obtain the reward, such as assigning staff to follow up with patients to make sure they meet process measures, as well as gathering and reviewing performance data.

These processes must be set up and running well before you'd get paid extra for having them. "To get the extra payment, you might have to lose money first," Miller says. "You have to make an investment before you get paid for it."

Miller added that P4P programs may also switch measures once you've "topped out"—achieved a high score on a certain measure. "That means you'll have to start all over again trying to meet the new measure," he says. You might not immediately win the bonus, which means the practice would have to cover extra expenses without getting paid for them.

And even if you do meet quality targets, Miller says, the money might not come to you. ACOs, for example, create formulas on how the shared savings could be divvied up that might not recognize your work.

Furthermore, ACOs win savings when the whole group works hard for them. A few doctors could earn substantial savings for the ACO, but the amount might not be enough to meet the savings target for the whole ACO. Indeed, only one quarter of Medicare shared-savings program ACOs won payments last year.

Financially, "ACOs have produced a mixed result," according to Dr Damle. Even when they win shared savings, "it's not clear whether those payments have covered the costs of the ACO," he says. It takes millions of dollars to start an ACO. "If you add in the expenses, the ACO could be losing money."

Another problem, Miller says, is that ACOs as well as some P4P programs reward improvement, such as year-to-year decreases in the rate of avoidable hospital readmissions. "If you're already doing a good job, you wouldn't be able to show significant improvement and wouldn't qualify for an extra payment," he says.

The ultimate goal of the value-based approach is that "eventually, if we do our job right, we're going to run out of savings to find," Dr Damle says. The fear is that as ACOs get better at meeting value-based targets, their shared-savings payment would dwindle, and the operation might no longer be able to pay for itself. However, most hospitals and practices are a long way from reaching this goal. "This may take decades to achieve," he says.


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