Fee-for-service remains dominant payment method for physician visits, study says

Photo by Quazie

Despite efforts to shift provider payment away from fee-for-service and toward more risk-based alternatives, fee-for-service remains dominant -- and is growing, according to a study published in Health Affairs.

In fact, authors Samuel Zuvekas and Joel Cohen said that nearly 95 percent of all physician office visits in 2013 were reimbursed in that fashion.

"New payment models, such as accountable care organizations, may involve a capitation payment to the overall organization, but practices are still paid on a fee-for-service basis."

In the 1980s and 1990s, pure capitation -- in which a physician or other provider receives a fixed monthly payment per patient, regardless of the services provided -- was widely touted as a mechanism for reigning in costs, the authors said. But concerns were raised about physician incentives for providing high-quality care, and willingness to accept financial risk.

A 2010 Health Affairs study discovered that only 6.6 percent of all physician office visits were covered under pure capitation arrangements in 2007. Updated findings indicate that only 5.3 percent of such visits were under capitation by 2013, with the remaining 94.7 percent reimbursed under fee-for-service.

[Also: Ony 3% or providers feel ready for pay-for-value, HIMSS survey finds]

The overall percentage of physician office visits covered under capitation arrangements dropped steeply in the early 2000s, research found, and experienced a long, slow decline from 2007 to 2013. Capitation declined substantially for people enrolled in private or Medicaid health maintenance organizations; more recently, capitation stabilized in HMOs --  at around one in five visits for private HMOs in 2013, and at fewer than one in 10 visits for Medicaid HMOs in the same year. So while HMO plans themselves are capitated, they primarily reimburse physicians on a fee-for-service basis.

Efforts to move provider payment away from the fee-for-service paradigm have built on relevant Affordable Care Act provisions, and responded to other pressures to restrain costs, the authors asserted. They cite as an example the National Commission on Physician Payment Reform, convened by the Society of General Internal Medicine in 2013, which recommended that payers "largely eliminate stand-alone fee-for-service payment to medical practices."

More recently, Department of Health and Human Services Secretary Sylvia Burwell announced a target of having "30 percent of Medicare payments tied to quality or value through alternative payment models by the end of 2016, and 50 percent of payments by the end of 2018."

[Also: Staten Island aligning IT for value-based model for Medicaid]

Zuvekas and Cohen argue that new models attempting to shift the payment focus from quantity to quality may be more successful than traditional capitation.

"For example," they write, "the Medicare Pioneer ACO demonstrations are designed to test a shared-savings payment policy for organizations that are willing to accept some of the financial risk for providing care. An initial evaluation of the program suggested that it saved $384 million during its first two years."

They say that, to be successful, payment reform has to confront a basic reality: that individual physicians and practices are unwilling to accept all of the risk for providing care. That means payment reform would need to operate within a fee-for-service framework at the level of the individual physician or practice.

"In particular, providers' willingness to participate in new payment mechanisms will likely be closely tied to the extent that they are required to assume risk," the authors wrote. "Finding the right balance in risk sharing … so that providers are willing to participate on a widespread basis while providing meaningful incentives to deliver efficient care is important to the success of any new approach."

Twitter: @JELagasse