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Private Practice Payment Models

Learning Objectives:
1. Describe payment models and how they relate to private practice
2. Explain the proposed changes to the payment system
3. Recognize the real-world impact of these payment reforms on physician practices
0.25 Credit CME

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Audio Transcript

AMA STEPS Forward® Series Announcement: [00:00] Hello, and welcome to the AMA STEPS Forward® podcast series. We'll hear from health care leaders nationwide about real-world solutions to the challenges that practices are confronting today, solutions that help put the joy back into medicine. AMA STEPS Forward® program is open-access and free to all at STEPSForward.org

Taylor Johnson: [00:22] Hello, and welcome back to the AMA STEPS Forward® Private Practice: Attending to Business podcast, a 10-episode series exploring the business side of private practice. In this series, we talk about how to navigate business operations and practice efficiency solutions to create and support a thriving and sustainable medical practice business. I'm your host, Taylor Johnson, Manager of Physician Practice Development at the American Medical Association. And I'm joined by my colleague and co-host, Meghan Kwiatkoski, Program Manager of Private Practice Sustainability, also at the AMA. Collectively, we have two decades of experience in private physician practice, and we continue to support physician practices in our current work at the AMA. Before we start, I want to emphasize that this episode is for general informational purposes and should not be relied on as medical, legal, or other professional advice. listeners are always encouraged to consult a professional advisor for any such advice.

Meghan Kwiatkowski: [01:20] So the health care landscape is changing rapidly, which I think our listeners know. And it is driven by the growth of payment models other than fee for service, regulatory changes, technology, and consumer demands, among other factors. So let's talk about payment models and how they relate to private practice. I think that practices may be overwhelmed by the information available and may not even be sure where to start.

Johnson: [01:48] I think that's right. And I think it's not an uncommon feeling as the current system in general is unsustainable. I know, Meghan, you and I put together a resource on payment models specific to private practices that was released a few months ago. And I think that's a great place to start. So when practices are looking at different payment models available in the market, there are four key steps to take to understand the current payment landscape. The first is to define the terminology used in the payment models. Then you want to identify common contractual provisions within the payment agreements. Next would be to ask key questions about the payment model design and accountability. And then finally, you want to formulate strategies for alternative payment model engagement and evaluation. So we will also link that resource in the podcast description for you. And while there are numerous options for physicians to review when it comes to payment models, the most common models fall into three main categories, which are core payment models, supplementary payment models, and organizational models. The core payment models, or sometimes referred to as underlying payment models, can exist alone without other payment types. Supplementary payment models can coexist with one or more core payment models but cannot exist on their own. And then the last type, which is organizational models for physician practices, combine payment models to create their own sort of hybrid model, if you will. So Meghan, let's talk a little bit about each of these categories. Can you expand on the different payment models that would be included in each of those?

Kwiatkowski: [03:43] Yeah, absolutely. So core payment model examples are the traditional fee-for- service model, which most everybody is familiar with. The core payment also includes the capitation model, and then bundled or episode-based payment models, examples of supplementary payment models, our pay-for-performance payment models, which is a mouthful, I know. And then shared savings programs and retainer-based payment programs. And then the last category is organizational, as you mentioned, and these are things like patient-centered medical homes or PCMH, or accountable care organizations. And as we mentioned before, the outlines of these different types of examples of models are available in our guide, and it will be linked in the podcast description if you'd like some more information on specific model types. There's a lot of detail obviously, that we couldn't really cover in this podcast, so we would encourage our listeners to go check that out.

Johnson: [04:47] Along those lines, Meg, I know the AMA collaborated with the RAND Corporation to conduct a study that investigated the real-world impact of payment reform on physician practices. Can you tell us a little bit about those findings and how those are guiding the AMA's efforts to improve alternative physician payment models?

Kwiatkowski: [05:10] Yeah, and I'm really happy you brought that up, Taylor, because the study actually had two parts that had an initial phase that really was the genesis of this work in 2014. And then a follow-up phase in 2018. These studies contained quantitative interviews with physicians to understand the impact that alternative payment models were having on their practice. The biggest trend that was found from those studies is that there was a shift from traditional fee-for-service to payment and delivery models that require physicians to reevaluate how quality measures and payments are linked outcomes. So the AMA was able to create several tools based off of that research that help physicians adapt new care delivery models that improve quality and reduce patient costs. Some of those resources include, and again, there's a number of them, so I'm going to just list out a few: direct-to- employer arrangements, what physicians should know when they are considering unwinding an existing relationship, accountable care organizations and how to perform due diligence and evaluate contractual agreements, as well as venture capital and private equity investments, and value-based care models, Deep Dive for FAQs for hospital-affiliated physicians, as well as resources that touch on Medicare Advantage value-based contracts and Medicaid value-based care models, which is a lot I know. But we have done quite a bit of work in this space.

Johnson: [06:52] Yes. And I think that, you know, the initial phase and that follow-up phase for those payment-model research studies, were really eye opening just to understand what the landscape was currently and where it might be going. And I think right now we're at a transition point, and we're going to see a lot of new payment models emerging over the next several years. I know, this is a high priority for the AMA. And we're doing a lot of work with different industry stakeholders to better inform how these payment models are structured in the future. So Meg, where can physicians go to stay up to date with the new and emerging payment models?

Kwiatkowski: [07:35] At the risk of being repetitive and, as we've said before, there are several resources online that physicians and their practice teams can access. Physicians and their team members can also subscribe to the AMA advocacy update emails, which contain updates on payment and other important advocacy issues that are relevant to private practices. We can link the information for subscribing to that in the podcast description.

Johnson: [08:05] Okay, this episode covered payment models and how they relate to private practice, some changes coming to the health care payment system, and real-world impact of the payment reforms on physician practices. The tools and resources mentioned in today's episode are linked in the podcast description and available on the AMA website. CME is also available for this episode on the AMA's Ed Hub and linked in the podcast description. I'm Taylor Johnson and this has been Private Practice Attending to Business. Thank you for listening.

AMA STEPS Forward® Series Announcement: [08:39] Thank you for listening to this episode from the AMA STEPS Forward® podcast series. AMA STEPS Forward® program is open access and free to all at STEPSForward.org. STEPS Forward® can help put the joy back into medicine by offering real-world solutions to the challenges that your practice is confronting today. We look forward to you joining us next time on the AMA STEPS Forward® podcast series, STEPSForward.org.

Audio Information

Credit Designation Statement: The American Medical Association designates this enduring material activity for a maximum of 0.25 AMA PRA Category 1 Credit(s)™. Physicians should claim only the credit commensurate with the extent of their participation in the activity.

CME Disclosure Statement: Unless noted, all individuals in control of content reported no relevant financial relationships.

If applicable, all relevant financial relationships have been mitigated.

Disclaimer: AMA STEPS Forward® content is provided for informational purposes only, is believed to be current and accurate at the time of posting, and is not intended as, and should not be construed to be, legal, financial, medical, or consulting advice. Physicians and other users should seek competent legal, financial, medical, and consulting advice. AMA STEPS Forward® content provides information on commercial products, processes, and services for informational purposes only. The AMA does not endorse or recommend any commercial products, processes, or services and mention of the same in AMA STEPS Forward® content is not an endorsement or recommendation. The AMA hereby disclaims all express and implied warranties of any kind related to any third-party content or offering. The AMA expressly disclaims all liability for damages of any kind arising out of use, reference to, or reliance on AMA STEPS Forward® content.

AMA CME Accreditation Information

Credit Designation Statement: The American Medical Association designates this Enduring Material activity for a maximum of 0.25  AMA PRA Category 1 Credit(s)™. Physicians should claim only the credit commensurate with the extent of their participation in the activity.

Successful completion of this CME activity, which includes participation in the evaluation component, enables the participant to earn up to:

  • 0.25 Medical Knowledge MOC points in the American Board of Internal Medicine's (ABIM) Maintenance of Certification (MOC) program;;
  • 0.25 Self-Assessment points in the American Board of Otolaryngology – Head and Neck Surgery’s (ABOHNS) Continuing Certification program;
  • 0.25 MOC points in the American Board of Pediatrics’ (ABP) Maintenance of Certification (MOC) program;
  • 0.25 Lifelong Learning points in the American Board of Pathology’s (ABPath) Continuing Certification program; and
  • 0.25 credit toward the CME [and Self-Assessment requirements] of the American Board of Surgery’s Continuous Certification program

It is the CME activity provider's responsibility to submit participant completion information to ACCME for the purpose of granting MOC credit.


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