Challenges for Small Rural Practices in Value-based Care

The Government Accountability Office (GAO) recently issued a report outlining five key areas in which smaller, rural physician practices tend to struggle as they shift from fee-for-service reimbursement to value-based care. Given the unique nature of rural medicine, and the fact that value-based payment will continue to grow, it is important to understand these challenges as we move forward in creating a better health care delivery system.

According to the National Rural Health Association, the rural population in the United States makes up just 20 percent of the overall population, but tends to be older, poorer, sicker, and have less access to both adequate health insurance and medical care than the rest of the country.[1] It is no wonder, then, why small, rural physician practices face an overwhelming obstacle to not only care for their patients, but to do so under risk-bearing arrangements. The five key areas listed in the GAO report are summarized below and offer insight into why value-based care is so challenging in the rural setting.

  1. Financial resources and risk management – practices may lack financial resources necessary to make initial investments to transform care delivery, and recouping those investments may take years.
  2. Health IT and data – practices need to hire and train staff who can develop experience using EHR systems and analyzing data.
  3. Population health management care delivery – patient populations in diverse geographic locations can affect practices’ ability to manage their care, especially rural physician practices whose patients may have to travel long distances.
  4. Quality and efficiency performance measurement reporting – small and rural practices with small patient populations may have quality and efficiency measurement more susceptible to being skewed by patients that require more complex and expensive care.
  5. Effects of alternative payment model participation and managing compliance with requirements – practices with fewer staff have difficulty balancing and finding the time needed for direct patient care, care management activities, and the additional administrative duties needed for participation in alternative payment models.[2]

Why do these challenges matter? Numerous studies point to an impending primary care physician shortage, which is especially problematic in rural areas that are already medically underserved. Other studies describe overwhelming physician burnout and plans for early retirement, which some have attributed to the Affordable Care Act (ACA) and the waves of reform, including value-based payment models, that accompanied it.[3] These issues, when combined with the findings from the GAO study, paint a frightening picture for the future of rural medicine. If left unaddressed, the challenges that rural physicians face under value-based care will almost certainly drive further decline in physicians who choose practice in those areas, which will ultimately make success in value-based care even more difficult for the physicians who remain.

Multiple efforts are already underway to break this cycle. In the recently released MACRA final rule, CMS created a “pick your pace” option to provide small, rural practices with the flexibility to slowly transition into the multiple requirements established in the law. Additionally, the final rule includes a provision that allows the creation of “virtual groups,” where physicians from smaller practices can join together and report quality measures as a single group regardless of their physical practice location.

These options represent a small step in the right direction, but much more work remains to ensure that physicians who provide invaluable services to vulnerable populations in rural areas have the support they need to thrive under value-based payment. The federal government, state agencies, commercial insurers, vendors, and other organizations that enable value-based care must find ways to work together to address the challenges presented in the GAO study before the physician burden in rural areas becomes too great to solve.

As a health intelligence business, Leavitt Partners (LP) is focused on providing clarity around laws and regulations that are rapidly changing the health care delivery system. LP has analyzed the MACRA final rule and continues to monitor and analyze emerging payment models and their impact on the practice of medicine.