AMGA: 60% of members ready to take on downside risk within 2 years

Providers represented by the American Medical Group Association (AMGA) expect more of their business to come from risk-based products in 2019, with government revenues moving from Medicare fee-for-service (FFS) towards Medicare Advantage and shared risk accounting for a greater share of revenue in commercial settings.

The 74 respondents to the survey—most of them multispecialty groups or integrated health systems with more than 150 full-time-equivalent (FTE) physicians—predicted Medicare FFS payments would decline from 35 percent of the federal revenues in 2017 to 29 percent in 2019. Medicare Advantage’s share would increase from 25 percent to 28 percent and bundled payments would move from 1 percent of revenues to 2 percent. Medicaid FFS, managed care and accountable care organization (ACO) would remain largely unchanged.

While Medicare Advantage plans remain largely fee-for-service based, AMGA said members consider it a “gateway to more sophisticated risk models,” which may help when risk-based Medicare Advantage contracts are included in the Advanced Alternative Payment Model (AAPM) track of the Quality Payment Program.

By 2019, they expect nearly 60 percent of their Medicare revenues to come from risk-based models, with 60 percent of respondents saying they’re ready to take on downside risk within two years, which the AMGA credited to the 5 percent for participating in a qualifying risk model under the AAPM track.

“However, these expected decreases in FFS spending are lower than predicted in both the 2015 and 2016 surveys, indicating that the transition to risk is happening more slowly than predicted,” the report said.

The ongoing trend of healthcare consolidation has been partially blamed on CMS programs pushing the transition to value-based care, but the AMGA survey found larger providers weren’t always more active in risk-based products. For example, Medicare FFS made up only 22 percent of federal revenue for groups with between one and 49 FTE physicians, lower than Medicare Advantage (34 percent) or ACOs (24 percent). In fact, groups with 1,000 or more FTE physicians relied more heavily on Medicare FFS revenue, which made up 33 percent of their federal business in 2017.

On the commercial side, the transition to value is much slower. 59 percent of respondents said they have little to no access to commercial risk products from payers, though this would still represent an increase from 2015, when 70 percent of providers said there was little access to risk products from commercial payers.

“This lack of payer involvement makes sense from their perspective,” the AMGA report said. “Many payers are publicly traded companies and as such, owe a fiduciary duty to maximize shareholder value. Moreover, if providers are willing to invest time and money into care management improvements that, for example, reduce hospital admissions or lengths of stay, these savings accrue to the payer. Consequently, there is little incentive for payers to pursue an aggressive risk strategy, especially in markets where providers are already doing so.”

Providers do expect a shift from away from fee-for-service, predicting its share of their commercial revenues will decrease from 71 percent in 2017 to 63 percent in 2019. Shared risk products are expected to expected to increase by 66 percent by 2019, making up a 10 percent of commercial revenues. 10 percent of revenues is expected to come from full or partial capitation payments. Commercial bundled payments’ share is expected to increase from less than 1 percent to 2 percent by 2019.

For both federal and commercial settings, providers cited external obstacles, like lack of access to claims data, as the biggest impediment to taking on risk.

HHS and CMS have been willing partners on encouraging the transition, the report said, while it chastised the agencies for changing rules on providers in the middle of a performance period which “greatly limit the opportunities for success in federal risk-based models.” The key to speeding up the transition to value, AMGA said, would be to take some of the focus off providers.

“Policymakers must understand that virtually all value-based policies have been directed, or in other words, mandated, at the provider level,” the report concluded. “Congress and HHS must develop policies that incentivize other industry players to enter the risk market. The provider community would welcome the company.”