Physicians in ACOs Not Seeing Higher Compensation

The move from volume to value is putting very little extra in the pockets of physicians, according to a recent study in the Annals of Family Medicine.

A team of researchers, led by Andrew Ryan, an associate professor at the University of Michigan’s School of Public Health, examined whether physician practices within accountable care organizations (ACOs) were compensated on a different scale than those that were not. The researchers ultimately found that physicians in both models received a similar mix of salary, meaning the financial boon of value within an ACO is not trickling down to individual physicians.

“Physicians in practices participating in ACOs received a very similar mix of salary-based and productivity-based compensation to those that weren’t part of ACOs,” said Ryan to Physicians Practice. While physicians in ACOs did receive a higher compensation based on quality than others, the researcher said the difference was not enough to have a significant impact.

Ryan and his team used a nationally representative survey of 632 practices for the study. Physicians in practices within ACOs (21.1 percent of the respondents) received 49 percent of their compensation from salary, 46.1 percent from productivity, 3.4 percent from quality, and 1.5 percent from other factors. Physicians that were not in ACOs and did not have substantial risk for primary care costs (76.1 percent of the respondents) had a similar pattern of compensation. The researchers also looked at a small sub-sect (2.1 percent) of practices that weren’t in ACOs but faced substantial risk for primary-care costs, thus having the incentive to keep costs down. They had higher compensation from salary (66.6 percent), but lower in productivity (32.2 percent) and quality (0.8 percent).

Despite the small sample size, Ryan said that the last segment’s higher rate of salary-based pay for physicians shows him that ACOs do not have the same kind of incentives as those risk-based arrangements. Moreover, the fact that ACOs still have a low rate of quality-based compensation - even if it’s higher than the others - is telling, he said.

“Quality-based care gets a lot of attention in the policy world, but fundamentally, quality is just not that important to the way providers are paid,” Ryan said. “It’s just not. As a result, practices try to do the best they can to improve quality but they are not fundamentally focused around creating structures, processes, and incentives to maximize quality.”

ACO Progress To Be Made

While the number of ACOs hit an all-time high in 2015, according to the Salt Lake City-based research firm Leavitt Partners, there have been some publicized dropouts in CMS’ Pioneer ACO program, which is a two-sided risk model. To Ryan, this shows that practices and other healthcare providers are taking upside risk only, when it comes to ACOs.

“At this point, there isn’t a lot to lose by being in a Medicare Shared Savings Program,” Ryan said. “The question is how much effort is it worth try to bring ACOs together, to try and spend that time and energy in ways you haven’t before, if you aren’t getting much financially out of it.”

Ryan’s findings are backed up by other studies, including one from the Santa Monica, Calif.-based research firm, RAND Corporation. In its study of practices within ACOs, RAND found that practice leaders were making investments into data management capabilities and developing team approaches to care in response to the new payment models. However, the researchers found that practices’ alternative payment models were not leading to higher financial incentives for physicians.

Ryan surmised that the recent repeal of the Medicare sustainable growth rate (SGR), Medicare’s formula for physician compensation, could be a game changer. The legislation introduced the Merit-Based Incentive System (MIPS), which will tie physician payment to participation in value-based quality-care initiatives.

“It will be interesting if the SGR fix becomes a tipping point that shifts our system towards population health capabilities that we’ve hoped the system would take on. This could move us in the right direction,” Ryan said.