Alternate Payment Models

Test drive models to ensure success

The way healthcare providers get paid is changing. A combination of value-based reimbursement and direct payment models is slowly replacing fee-for-service models. To thrive in this dynamic market, physicians must look at the options, evaluate their patient panel and create a practice that can meet changing payer and patient demands.

The first step is being open to change. The majority of physicians say they do not want to close or sell their practices, and recent studies indicate many providers are already open to alternate payment models.

When asked if they would consider switching to a direct pay, concierge, or other membership model in the next three years, nearly 50% of physicians said yes in a survey from the American Academy of Private Physicians and Kareo. In another survey from Fidelity Investments and the National Business Group on Health,55% of physicians said they already participate in alternative payment models, such as accountable care organizations (ACOs) and Patient-Centered Medical Homes (PCMHs), and 80% said they would consider it in the future.

Many independent healthcare providers are ready to try alternate models if they aren’t using them already. The challenge is that while these models are growing, fee-for-service is still the largest payment model in use today. So how can practices make a move away from FFS without hurting their bottom line?

Benefits of Test Driving

One way is to “test drive” these payment models before making a full commitment. There are no hard and fast rules that say you have to move your practice entirely to one payment option. It isn’t all FFS or value-based programs or direct primary care (DPC).

The reality is many practices are testing out different options, and often they are continuing to have multiple payment models, keeping what works and letting go of what doesn’t. The Kareo study showed only 25% or practices using DPC, concierge or another membership model had their entire patient panel in that program. The majority of practices only had 50% or fewer of their patients in a membership model. The rest of the patient panel was still on traditional payment types.

This is exactly what Douglas Hansen, MD, a primary care provider and founder of Altitude Family and Internal Medicine, is doing. He has seen the growing shift to value-based reimbursement and a growing interest from patients in DPC, due to increasing high deductible health plans. As a result, he joined a virtual ACO made up of a large number of independent practices and started offering a DPC option to patients.

To participate in the ACO, his practice tracks several measures, such as:

  • Annual wellness exams
  • Preventive care screenings like mammogram and colonoscopies
  • Clinical measures including blood press, blood sugar and cholesterol
  • Medication costs

These measures are reported back regularly. While this requires time and resources, the practice does receive incentive payments for tracking the measures.

Technology’s Crucial Role

Dr. Hansen recognizes that trying alternate payment models isn’t the only key to growing and staying independent. Technology plays a crucial role as well. It can be difficult, if not impossible, to manage all of the requirements for the various programs out there without the right technology. His practice has an integrated practice management system and EHR and has implemented a patient engagement solution as well. “We have to keep growing if we want to stay independent,” he explains. “I think the right technology plays a big role in that.”

The fact is that some programs require the use of an EHR and other technology because the practice needs to track certain data and outcomes or conduct patient satisfaction surveys. While some providers see technology as a burden, it can be a boon, providing not only the tools needed to get reimbursed but also tools to streamline your practice. In the case of patient engagement, a solution that allows you to conduct post-visit surveys might also offer ways to reduce no-shows, for example, saving the average primary care provider up to $25,000 a year. This is just one of many ways the technology used to support alternate payment models can also help generate revenue.

Looking at the future of independent practices, it appears those who are open to trying new opportunities are the most likely to thrive. For each practice, it will probably be a blend of the right practice or payment models with the right technology that will help them take advantage of those opportunities.

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