U-M Report: Accountable Care Organizations Need New Approach for Physician Reimbursement

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Accountable Care Organizations made up of doctors and hospitals that come together to cut health care costs while providing better patient outcomes, may not offer physicians enough incentive to alter the way they deliver care, says a new University of Michigan study.

“Basically what we found is that physicians who were part of (Accountable Care Organizations) were paid very similarly to those in private payment systems,” says Andrew Ryan, an associate professor at the University of Michigan School of Public Health. “Our take here is that (Accountable Care Organizations) may not be providing strong enough incentives for practices to go through the upheaval of changing physician compensation schemes and making other painful changes to their practices.”

Ryan says the study found that although Accountable Care Organization physicians were compensated slightly more for quality, there was no difference in salary for providers who participated in the program and those who did not. Primary Care physicians in Accountable Care Organization practices received 49 percent of their compensation from salary, 46 percent from productivity, about 3 percent from quality, and nearly 2 percent from other factors, on average. This pattern of compensation was similar to practices that were not in Accountable Care Organizations.

Ryan says setting up an Accountable Care Organization can be a costly endeavor because it’s time consuming to adopt a different compensation and record system, train everyone in a practice to use it, and possibly assume extra risk that the patient’s care could exceed the payment provided.

In Michigan, there are 15 Accountable Care Organizations.

The University of Michigan-led research study is reported in the Annals of Family Medicine.

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