The Changing Landscape of Medical Practice Payment Models

March 14, 2017 by Antonio Arias, MBA, CHBME

Topics: Meaningful Use Stage 2, Practice Management, Medical Billing Company

From concierge practices and pay-as-you go clinics to accountable care organizations (ACOs) and patient centered medical homes (PCMHs), there are more ways than ever to operate your medical office from a business perspective.

Are some models better than others? In 2017, it remains hard to predict what the medical practice of the future will look like. While alternative payment models are becoming more commonplace, the U.S. healthcare and medical billing systems largely remain business-as-usual… meaning that fee-for-service still comes first.

Yet as today’s practices prepare for an uncertain future amid oncoming regulatory policy changes from the U.S. presidential administration, they may want to explore alternatives to the traditional status quo. As such, providers and practice managers are smart to assess how other practices in their sphere are managing their finances. (If your practice is looking to attain stronger long-term financial stability, consider how contracting with an experienced medical billing service may benefit your bottom line.)

Where Do Membership Models Stand?

According to the 2016 Practice Models Perspectives Survey (sponsored by Kareo and the American Academy of Private Physicians), many providers continue to see potential and opportunity in switching to alternate payment models: 25% of providers are already using a direct payment, concierge, or other membership model in their practice, and another 35% are considering a change.

Interestingly, however, few organizations have gone “all in” on a membership-based approach. Less than 30% of providers using alternate models have their entire patient population exclusively on that model. Most use a private pay or membership approach in addition to a traditional payment scheme – ostensibly to serve more insured and non-insured patients while still retaining some benefits of reducing fee-for-service.

What About MCOs, PCMHs & ACOs?

In Medicaid, more than 68% of the population is enrolled in comprehensive managed care organizations (MCO). Of the 38 state Medicaid programs that use at-risk capitated contracts with managed care organizations (2016), 16 states (42%) include some requirement for MCOs to reimburse providers using alternate payment methodologies (APMs). Four more states plan to include APMs in their MCO model in the future.

In addition, there are over 12 million Medicaid enrollees in care coordination programs ranging from patient-centered medical homes (PCMHs), health homes, specialty carve-out health plans, and dual demonstration projects.

As for ACOs, there are now over 750 public and private ACOs in all 50 states: 460 Medicare ACOs, 316 commercial ACOs, and 62 Medicaid ACOs. Currently, 67% of Americans live in an area with ACO coverage and 23.5 million Americans (seven percent of the population) receive care through ACOs.


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