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Report: Payment Reform Leaves Docs Uneasy

A new report from insurer UnitedHealth Group shows that doctors have mixed views on the new pay-for-performance model promoted in the 2010 health care law as a means of controlling health care costs and improving quality.

The law has provisions that transition from a traditional fee-for-service system, where doctors, hospitals and other providers are paid based on how many patients they served and the specific treatments or episodes of care for those patients, to new payments models that change incentives in a variety of areas. This new payment reform includes rewards for high quality care, bundled payments to cover a spectrum of providers and treatments for a patient, giving providers a set fee for managing patients care and also giving them a share of any savings.

The report estimates savings from payment reform to be anywhere from $200 billion to $600 billion over 10 years. But the report, released Wednesday at the Forbes health care summit in New York, finds misgivings among providers.

A survey of doctors by Harris Interactive finds that 59 percent of physicians believe that the fee-for-service system encourages them to provide “an appropriate level of care.” Only 15 percent disagreed. Although 37 percent of doctors thought such a system encourages the use of more care or expensive care, 38 percent also said that a fee-for-service system encourages coordination of care. Not surprisingly, the 400 U.S.-based primary care physicians and 600 U.S.-based specialists surveyed, did not favor the idea of a global capitation payment—or a fixed payment per month for all medical services. Nearly 60 percent of the doctors surveyed said that capitation put too much risk on the provider.

Furthermore, “physicians’ views did not differ substantially based on the size of their practice, even though doctors in larger practices would be less exposed to insurance risk under capitation.” Doctors also estimated that their practices get up to 68 percent of their revenue from fee-for-service payments.

Harold D. Miller, the executive director of the Center for Healthcare Quality and Payment Reform, says that policymakers can’t expect physicians to take accountability for things they can’t control or influence. “Alternative payment systems need to have appropriate risk adjustments, risk limits, and risk exclusions,” he says. “Most of the broad-based payment reforms in the Affordable Care Act, including ACOs, are just small [pay-for-performance] incentives added on  top of the existing fee-for-service system. You don’t fix the barriers and disincentives of fee-for-service by adding a new layer of [pay-for-performance] on top of it; you have to completely replace fee-for-service.”