Researchers Ask: Is ACO Payment Worth the Time, Effort?

August 12, 2015 03:51 pm Sheri Porter
[Physician sitting at desk working on calculator]

Accountable care organizations (ACOs) burst onto the health care scene in the past decade, full of promise as a way to help hospitals, physicians and other health care professionals reduce health care costs and improve patient outcomes. And ever since then, researchers have been watching to see if the model delivers on that promise.

Quality patient care is, of course, of utmost importance to family physicians, but so is payment -- and that has left many physicians wondering if joining an ACO is worth the time and effort.

According to just-released research, the answer may be, "Not yet." Or, as corresponding author Andrew Ryan, Ph.D., associate professor of public health at the University of Michigan School of Public Health in Ann Arbor, said in an interview with AAFP News:

"If physicians in ACOs aren't being paid differently, are they really going to practice differently?"

Study Methods

The study( was published in the July/August issue of Annals of Family Medicine and titled "Salary and Quality Compensation for Physician Practices Participating in Accountable Care Organizations."

Story Highlights
  • New research published in Annals of Family Medicine takes a hard look at whether accountable care organization (ACO) payment incentives are strong enough to encourage physician participation.
  • Authors found that physicians in ACOs and in non-ACO practices -- both with no substantial risks for costs associated with primary care -- received nearly 50 percent of compensation from salary and slightly less than that for productivity.
  • Physicians in non-ACO practices that carried substantial risk received two-thirds of their compensation from salary and about one-third from productivity, leading researchers to conclude that ACOs need to recalibrate their incentives and pass more money along to physicians.

Researchers took a hard look at how physicians in primary care practices were paid for care delivered to Medicare patients, with a particular eye toward payment provided through ACOs.

Researchers studied data from 632 primary care practices obtained through the National Survey of Physician Organizations. They measured how physicians were paid in ACO-participating practices, as well as in practices not affiliated with an ACO. A portion of those non-ACO practices carried substantial risk for primary care costs; other practices had little risk.

Ryan explained that concept of "risk."

"If there's purely capitated payments for a panel of patients -- say, a practice was just paid a $40 per member per month fee -- that's the notion of full risk," he said. "It wouldn't matter how many visits a very sick patient made, how many tests were ordered or how many procedures were done."

The practice would be paid the same amount for that patient as for every other patient, and so the practice assumes extra risk because that patient's care could exceed the payment provided.

On the other hand, consider a practice that's paid strictly through fee-for-service. "Patients come in and physicians bill for evaluation and management codes, and they bill for different procedures that are done in primary care," said Ryan. "But whatever they do, they bill their insurance company and they get paid for those services, so that practice would have little risk," he said.

Simply stated, researchers found that

  • physicians in ACOs and non-ACO practices with no substantial risk for costs received almost 50 percent of their compensation from salary, slightly less from productivity, and about 5 percent from quality and other factors; and
  • physicians not in ACOs but with substantial risk for primary care costs received two-thirds of their compensation from salary, nearly one-third from productivity, and a little more than 1 percent from quality and other factors.

Ryan further explained the findings pertaining to the non-ACO group with greater risk. "Practices really paid their physicians dramatically differently; they paid a much higher mix of compensation based on salary," he said. "It makes sense that those practices would be more likely to pay those physicians based on salary, because doing so reduces the physician incentive to provide extra services; no matter how much they do, they'll be paid the same."

Authors concluded that ACOs perhaps were not providing incentives substantial enough to persuade practices to undertake the challenges necessary to change physician compensation schemes and make other major practice changes.

Impact on Family Physicians

Experiments with various versions of public payer ACO models( -- designed by CMS' Center for Medicare and Medicaid Innovation and funded through the Patient Protection and Affordable Care Act -- have flourished.

But if physicians don't see enhanced payment as a result of ACO participation, what's the incentive to join one?

Ryan noted that the U.S. health care system is quickly moving toward value-based payment. "But it's not yet clear how that's going to affect physician compensation," he said.

"This study gives us a snapshot of the early days of the ACO movement and suggests that these new incentives in ACOs haven't really made a big impact on how primary care physicians are being paid," said Ryan. Furthermore, "From a family practice perspective, the findings could suggest that we might not expect dramatic changes in the compensation patterns in the short term," he added.

However, Ryan predicted incentives would become more substantial with the passage of time and continuing pressure from CMS on physicians to participate in ACOs.

"Right now, it's totally reasonable for practices to say, 'I can just stay out of this -- I don't need to do it,'" said Ryan. "But I think it's going to be harder for practices to just stay out of this world and ignore these ACO contracts and just practice the way they want to."

On the other hand, said Ryan, "More and more practices are thinking, 'This is the wave of the future and I'm going to need to understand how these (ACOs) work.'" Some physicians and practices may want to get into the game while the stakes are still low so they can find their way before it's too late, he added.

"Our study highlighted that this is an important issue to watch and see if the incentives of ACOs need to be recalibrated or made stronger in order for them to really start passing those incentives on to physicians," said Ryan.

Related AAFP News Coverage
CMS Tweaks to ACO Investment Model Benefit Rural Physicians

More From AAFP
Summary of the Final Medicare ACO Regulation