How has health care reform impacted how providers organize and pay for health care?

According to a study published in the American Journal of Managed Care, large multi-specialty medical groups with more risk-based payment contracts across all payers are likely to invest in infrastructure and create the incentives necessary for improved quality, safety and the reduction of unwarranted hospitalizations. This study — authored by Robert E. Mechanic, MBA and Darren Zinner, PhD — is the second in a series of longitudinal analyses evaluating contracting and payment arrangements for the full range of provider revenue streams from public and private payors.

The article, “Risk Contracting and Operational Capabilities in Large Medical Groups During National Healthcare Reform,” was based on an analysis of the contracting and reimbursement arrangements at the 33 large multi-specialty medical groups and health systems that are members of the Council of Accountable Physician Practices, (CAPP) and the Group Practice Improvement Network (GPIN).

“The study confirms what we already know. Large multi-specialty medical groups that are paid based on clinical outcomes, not volume, and that are supported by advanced information technology systems, have more resources for initiatives that focus on health care quality, efficiency, and patient-centeredness. Accelerating the transition away from fee-for-service to pay-for-value will result in better health and more satisfying care experiences for our patients. Our study finds that while we have made progress in this direction, there is much more to be done,” said Robert Pearl, M.D., Chair of CAPP, and CEO of The Permanente Medical Group and the Mid-Atlantic Permanente Medical Group.

The study findings revealed that medical groups with substantial revenue from risk contracts reported:

• More advanced implementation of programs to prevent disease, reduce the need for hospitalization and provide safer, more coordinated care for high-risk patients
• Less emphasis on productivity in determining physicians’ salaries, and more emphasis on superior quality and an outstanding patient experience

In 2013, 68% of the groups’ total patient revenue was from fee-for-service payments and 32% was from risk agreements. Almost a third of the medical groups added risk contracts worth about 15% of total revenue between 2011 and 2013, during the implementation of the Medicare Shared Savings and Pioneer Accountable Care Organization programs.