Risk Management News

Risk-Based Revenue Gains Momentum Among Providers, AMGA Finds

Federal and commercial fee-for-service dollars fell by 20 and 8 percent, respectively, from 2015 to 2018 as providers earned more risk-based revenue, a survey shows.

Risk-based revenue

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By Jacqueline LaPointe

- Risk-based revenue from medical groups and integrated delivery systems (IDNs) accounted for 56 percent of revenues in federal settings and 28 percent of revenues in commercial settings in 2018, according to AMGA's Fourth Annual Risk Survey.

Medical groups and integrated delivery systems (IDNs) are swapping out fee-for-service for value-based payment models, the survey of 75 AMGA members finds. Notably, federal fee-for-service payments fell by 20 percent during the four years between AMGA’s first survey in 2015 and the 2018 survey.

Commercial fee-for-service payments also declined by 8 percent during the period.

“When comparing survey responses from the 2015 and 2018 surveys, it is clear that AMGA members are moving to value,” Jerry Penso, MD, MBA, AMGA president and CEO, states in a press release. “AMGA members believe value-based models support their team-based, coordinated, data-driven model of care, which results in better patient outcomes.”

Medical groups and IDNs are replacing fee-for-service dollars with revenues from accountable care organizations (ACOs), bundled payments, and Medicare Advantage, the AMGA survey shows.

Thirty percent of federal risk-based revenue in 2018 stemmed from Medicare Advantage, while ACOs accounted for 15 percent, Medicaid managed care 10 percent, and bundled payments 1 percent.

Medicare Advantage and ACOs have been particularly helpful with moving federal revenue to risk-based arrangements, the survey finds. Four years ago, just 22 percent of total revenues flowed from Medicare Advantage and federal ACO programs accounted for 11 percent.

The payment models will continue to drive risk-based revenue, respondents add. By 2020, respondents anticipate Medicare Advantage revenue to outpace Medicare fee-for-service revenues by 6 percent and revenue from downside risk ACOs will double that of upside-only ACOs.

In terms of commercial risk-based revenue, 10 percent came from shared savings payments, while 7 percent from full capitation, 6 percent stemmed from shared risk, 4 percent from partial capitation, and 1 percent from bundled payments.

Notably, commercial ACO revenues increased from 12 percent four years ago, with the most growth stemming from upside-only models, the survey states. Capitated payments also helped to boost commercial risk-based revenue, increasing from just 8 percent in 2015.

Assuming financial risk in healthcare has been a challenge. Providers are hesitant to put their revenue on the line when they do not have the data and health IT infrastructure to support complex payment models.

These challenges still exist but providers are starting to overcome them, the 2018 AMGA survey shows.

For the fourth consecutive year, respondents cited a lack of access to administrative claims data as their most significant external barrier to moving to value. Other external challenges included a lack of uniform data submission and reporting standards, multiple quality measurement programs, issues with financial benchmarking and risk adjustment methodologies, especially in federal ACO programs.

Financing and building the infrastructure needed to assume risk was the top internal challenge, followed by change management issues and physician compensation challenges, the survey finds.

Compared to four years ago, medical groups and IDNs seem to be addressing their internal challenges. For example, insufficient IT infrastructure scored a 3.9 out of 5 as an impediment to risk in commercial settings in 2015. Respondents score the challenge as a 3.1 in 2018.

Similarly, insufficient administrative and financial structure earned a 3.5 out of 5 in 2015 but the responses score drops to 2.9 by 2018.

On the other hand, scoring for external impediments to risk have remained relatively stable, the survey shows.

“This year’s survey shows AMGA members are making the costly financial investments necessary to address impediments within their control,” Chet Speed, JD, LLM, AMGA chief policy officer, says in the release. “However, the survey responses also indicate that AMGA members are frustrated over the lack of attention external impediments are receiving from stakeholders and policymakers. These barriers must also be addressed to ensure momentum towards value-based care is not halted.”