AHRQ Views

Blog posts from AHRQ leaders

Sharon Arnold, Ph.D.A recent paper published in the journal, Health Affairs, and authored by two AHRQ colleagues, Drs. Sam Zuvekas and Joel Cohen, describes trends in the methods of payment for physician office visits. Based on data from the AHRQ's Medical Expenditure Panel Survey (MEPS), their analysis shows that some form of fee for service is still the leading method of payment in 2013 for individual physicians and that the proportion of visits covered under pure capitation, as the only measured alternative in this study to the fee-for-service model, declined over the 1996-2013 study period.

Much has been written about the importance of finding alternatives to the volume-increasing incentives of traditional fee for service payments and one solution or change will not create an instant results. However, there is a continuum between pure fee for service and pure capitation. In fact, a very small proportion of alternative payment models are pure capitation. New payment models have been designed to provide incentives to increase quality and contain costs along this entire continuum. These new payment models include accountable care organizations (ACOs) with shared savings, global or bundled fees, and other value-based payments. Although some of these models are fully capitated, the majority include shared savings, partially capitated payments, or other value-based incentives for quality and total cost of care.

The Affordable Care Act created new models that shift the focus of payment from quantity to quality, which may be more successful than traditional capitation.

Department of Health and Human Services (HHS) Secretary Sylvia Mathews Burwell addressed the importance of setting value-based payment goals in a January 2015 New England Journal of Medicine article. The Secretary announced in 2015 a target of having 30 percent of Medicare payments tied to quality or value through alternative payment models by the end of 2016, and 50 percent of payments tied to quality or value by the end of 2018. A recent statement and fact sheet announced that the Department met our 30 percent goal a year ahead of schedule. The study period of this project, 2013, predates the Secretary’s announcement by 2 years and so supports the need for greater adoption of alternative payment models. In addition, alternative payment models are generally targeted at the organizational level (e.g., physician group or health system), not at the individual physician level.

While we know from the Zuvekas and Cohen study that some form of fee for service accounted for approximately 95 percent of payment for office visits to physicians in 2013, the study does not tell us how much of the fee-for-service payment is pure fee for service or a form of fee for service with incentives for value. AHRQ will be collecting more information on physician payment arrangements through a special supplement to MEPS in 2016, and we look forward to analyzing payment methods in more detail once those data are available.

Without question, we need bold and creative ideas to help us maximize precious health care resources, reduce the growth rate of health care spending, and most importantly, ensure that patients receive the right care at the right time. AHRQ has been working closely across the Department and with private payers to conduct the needed research to support this effort. For example, AHRQ supported papers published in Health Services Research last year that outline the challenges and opportunities, and identify next steps for this continued research.

We look forward to building on the successes we have had to date in making smarter payments, achieving better care, and healthier people.

Page last reviewed March 2016
Page originally created March 2016
Internet Citation: New Models Shift Focus to Paying for Quality of Care. Content last reviewed March 2016. Agency for Healthcare Research and Quality, Rockville, MD. http://www.ahrq.gov/news/blog/ahrqviews/new-models-shift-focus.html