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Physician practices wading into new payment models face challenges that could hamper their ability to improve the quality and efficiency of care.

Practices are particularly at a disadvantage because many—especially those that are small and independent—lack skills and experience with data management and analysis, which are crucial to perform well in alternative payment methods, says a report on a joint study by the RAND Corporation and the American Medical Association.

Researchers from RAND examined 31 physician practices in six geographic markets to describe the effects of alternative health care payment models on physician practices. Researchers tried to interview the same physicians and practice leaders that participated in a similar study conducted in 2014.

New reimbursement models are far more complex for practices than past approaches; that’s because new initiatives try to set up incentives for delivering efficient, high-quality medicine, typically increasing practice risk by offering either bonuses for meeting quality/efficiency goals or penalties for falling short.

New payment models assume expertise with data that most practices don’t have, the study finds. Helping these practices master the use of health data would improve the potential success of many alternative payment methods, report writers suggest.

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“The complexity and pace of change in how physicians are paid for their services has required practices to spend substantial resources just to keep up with program details,” says Mark W. Friedberg, MD, the study’s lead author and a senior physician policy researcher at RAND. “While the practices in our sample generally voiced support for the goals of alternative payment models, these implementation challenges could make it difficult to achieve them.”

The findings are intended to help guide efforts by the AMA and other healthcare stakeholders to improve alternative payment models and help physician practices successfully adapt to the changes.

“Physicians tell us that it’s more difficult than ever to understand the growing complexity of payment models, and they are straining against a conflicting muddle of public and private value-based policies and rules that are continually in flux,” said AMA President Barbara L. McAneny, MD. “The resulting administrative burdens take physicians away from patient care.”

The nation’s largest professional group for physicians believes the solution is to action to align multiple payers and payment models with consistent measures aimed at improving patient care. “It is clear the long-term sustainability of payment reform hinges on value-based payment models that must be operationally and financially sound, sustainable over time, aligned across payers, and must work for physician practices and patients,” McAneny says.

Allowing practicing physicians and other practice leaders to help design alternative payment methods might help improve physician engagement and improve the likelihood that such strategies will produce improvements in patient care, according to the report.

The report, “Effects of Health Care Payment Models on Physician Practice in the United States: Follow-Up Study,” is available at

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