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Do performance metrics affect ACO compensation?

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It’s full steam ahead in the Department of Health and Human Services’ effort to increase participation in accountable care organizations (ACOs) and use financial incentives and quality metrics to determine how providers are paid.

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The Centers for Medicare & Medicaid Services (CMS) expects to have 50 percent of Medicare spending in value-based payment models by 2018.

Among the changes in the Medicare Shared Savings Program (MSSP) final rule issued in June was an increased emphasis on primary care services when assigning beneficiaries to ACOs, by including primary care services furnished by nurse practitioners, physician assistants and clinical nurse specialists working with or under the supervision of physicians. This rule will apply beginning with 2016.

Effect on primary care compensation

Given the ACO model’s emphasis on primary care services to appropriately use specialist and acute care, how should practices participating in ACOs pay primary care physicians to create incentives for meeting quality measures while constraining costs? That was a question posed in a study reported in the July/August 2015 edition of Annals of Family Medicine.

The study led by Andrew M. Ryan, Ph.D., Department of Health Management and Policy of University of Michigan’s School of Public Health, compared primary care compensation arrangements among ACO participating and nonparticipating practices.

Researchers found that physicians received substantially the same mix of salary (49%) and productivity (46.1%) whether they were in a non-ACO practice that does not have risk for primary care costs or an ACO-participating practice. While physicians in the latter did receive a higher percentage of their compensation for quality, it amounted to only 3.4 percent of total compensation.

Interestingly, the study revealed that most of the compensation mix (66.6%) for physicians in practices not participating in an ACO but having substantial primary care cost risk (e.g., HMO) is tied to salary, less to productivity (32.2%) and little (0.8%) to quality.

Researchers concluded that “Incentives for ACOs may not be sufficiently strong to encourage practices to change physician compensation policies for better patient experience, improved population health, and lower per capita costs.”

Performance metrics and quality care

A Commonwealth Fund/Kaiser Family Foundation survey early this year found that primary care physicians, nurse practitioners and physician assistants working in ACOs were negative about the use of quality metrics to assess their performance, even those providers who receive incentive payments based on quality.

Fifty percent of physicians and 38 percent of nurse practitioners and physician assistants “feel that the increased use of quality metrics to assess provider performance is having a negative impact on quality of care,” the survey found. In addition, 52 percent of physicians and 41 percent of nurse practitioners and physician assistants think financial penalties for unnecessary hospital admissions or readmissions are having a negative effect.

The question remains whether ACOs will begin to change their compensation models for employed physicians and what effect that may have on an entity’s ability to improve quality and lower costs. – Irene E. Lombardo