Provider Payment Reform: Right Course, Wrong Students?

For the last eight years, the US health care system, led by Medicare, has been going to school, learning how to do comprehensive provider payment reform. The most important courses have focused on how to improve performance for entire populations of people. Efforts to promote accountable care organizations (ACOs) in particular have attempted to use payment changes to establish a seismic shift in the function of the health care provider: from an individual who produces successful patient encounters to a team member who improves outcomes for an entire population of people.

Recent evaluations of these efforts seem to indicate that some providers in these payment reform efforts are learning the course lessons better than others. While some poor performers might be making excuses and asking to be graded on a curve or making sure their poor grades don’t have significant consequences, others have figured out how to succeed without even taking the class. Policymakers should look for opportunities to act on these findings.

In a recent New England Journal of Medicine article, Michael McWilliams and colleagues looked at performance in the Medicare Shared Savings Program (MSSP), the flagship ACO effort, by sponsorship of the participating organization. They concluded that virtually all of the program’s financial savings were earned by physician-sponsored ACOs: “After 3 years of the MSSP, participation in shared-savings contracts by physician groups was associated with savings for Medicare that grew over the study period, whereas hospital-integrated ACOs did not produce savings (on average) during the same period.”

Another study, released in August by the Patient-Centered Primary Care Collaborative and sponsored by the Milbank Memorial Fund, showed similar, if less dramatic, results. Jabbarpour and her coauthors also looked at results by Medicare MSSP ACOs—and determined that those with primary care practices that had officially designated patient-centered medical homes (PCMHs) had lower costs and higher quality than those with no PCMH sites. However, the study did not see a “dose-response relationship”—with more savings accruing to greater PCMH presence.