Physicians Are Optimistic About New Payment Models

Physicians are cautiously optimistic about new payment and delivery models, such as pay-for-performance, patient-centered medical homes, and accountable care organizations, which tie reimbursement to quality and performance outcomes. Physicians say that these models may deliver better patient care and more efficient medical practices. Fifty-five percent of physicians participate in an alternate payment model, and more than one-third of them have been doing so for over three years. Eighty percent are open to an alternative payment system. Only 41% of physicians say that the fee-for-service model is optimal for delivering positive patient outcomes. That figure drops to 28% among doctors under 35.

More Networks Exclude Pricey Hospitals

Employers are increasingly willing to choose networks that exclude prestigious high-priced research institutions, according to a report by HealthLeaders-InterStudy. The state’s health insurance exchange, Covered California, will only intensify the trend toward narrow networks since most health plans have excluded these research institutions from their exchange networks.

Los Angeles is already is preparing for models that benefit large delivery networks. The City of Los Angeles’ decision to choose an Anthem Blue Cross HMO illustrates this trend. The arrangement excludes physicians from Cedars-Sinai Medical Center and UCLA Health System in order to eliminate referrals to those more expensive hospitals.

Jenny Kerr, market analyst at HealthLeaders-InterStudy said, “We expect pressure on the high-priced, academic hospitals in the market to reconsider pricing. Employers are sending a message that they are no longer willing to pay for hospitals that charge higher rates for routine services to cover costs of their teaching and research missions.”

The growth in accountable care organizations (ACOs) is another key driver in this trend. Los Angeles has 23 ACOs, which is the most in the state and the second most in the nation. Kerr said, “The rapid creation of ACOs, which are primarily physician-led in this market, means that physicians will be incentivized to prescribe the most effective medication rather than the least expensive to ensure quality outcomes.” For more information, visit

Health Care Economies: San Francisco and Fresno

California’s large and diverse population is spread across a vast area, occupying health care regions that vary greatly in affordability, access, and quality of care. In a continuing effort to capture these differences, the California HealthCare Foundation (CHCF) published reports on the San Francisco Bay Area and Fresno regions as part of six market analyses that examine how health care is delivered and financed across the state.

CHFC reports that Bay Area providers and health plans are aligning aggressively. Health plans and providers formed narrow-network accountable care organizations (ACOs) in 2011. Safety-net providers are coordinating care through the medical home model while a surge of physicians and hospitals have collaborated to expand geographic reach.

HMOs have a weak presence in Fresno, with PPOs as the dominant model. Most Fresno hospitals survived the poor economy, but face mounting financial pressures from rising Medi-Cal enrollment and high rates of the uninsured, which have strained provider capacity. Fresno hospitals face strong competition for physicians with federally qualified health centers and hospital-operated rural health clinics, which remain rooted in independent practices and show little interest in alignment.

CHCF recently released regional analyses on Riverside/San Bernardino and Sacramento. In the coming months, the organization will report on Los Angeles and San Diego. For more information, visit

Last Updated 05/25/2022

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