Fee-for-Service (FFS) has been on a slow march toward risk-based reimbursement for two decades. But FFS has proven to be remarkably resilient—until now. In the last six months, Medicare has doubled down on creating new provider risk models for ACOs, specialists and primary care physicians. All of them have methods to ensure that providers are held accountable for medical expenditure targets.
Wait. Haven’t we been here before?
What‘s different between now and the 1980s, when HMOs and provider risk first prevailed in the market—and then were purged as both ineffective and unpopular? Is provider risk a cure for high medical costs, or is it unfair to physicians? Will it drive physicians from participation in Medicare and commercial risk—or induce them to adopt it, then dump sicker patients and reduce access for consumers? Let’s examine provider risk, its reasons and how providers are likely to react.