Why Gastroenterologists Should Use Alternative Payment Methods Over Fee-For-Service Models

July 28, 2016
PENTAX Medical


A blog featured in Becker’s ASC (March 23, 2016) entitled “Considering alternative payment models in GI: 6 takeaways” inspired the PENTAX Medical team to further explore this topic. The following blog is a more in-depth summary of the original article in “Perspectives in Clinical Gastroenterology and Hepatology” summarized by Becker’s ASC. This article highlights the limitations of fee-for-service payments and seeks to educate gastroenterologists about alternative payment models (APMs). The strengths, weaknesses, appropriate uses, and implications of these APMs are discussed.

Fee-for-service (FFS) payments have been known to increase physicians’ volume of services, but often at the expense of quality of care. In a FFS model, clinicians are not incentivized to deliver low-cost, high-impact services; rather, they’re financially penalized for reducing the number of unnecessary services they provide. APMs, such as bundled payments, per-member per-month (PMPM) models, and shared savings payments, seek to offer a solution. Gastroenterologists can maintain a high service volume and simultaneously provide quality care by applying APMs to a wide range of procedures and to chronic condition management.

The use of APMs is critical to reducing rising gastroenterology costs. Endoscopic procedures alone (18.6 million in number) accounted for $32.4 billion in outpatient costs in 2009. Chronic conditions such as inflammatory bowel disease (IBD) and gastroesophageal reflux disease (GERD) affect millions of Americans and are collectively responsible for nearly $14 billion in direct costs annually.

Types of APMs and their Applications:

Bundled payments, PMPM models, and shared savings payments are the three APMs featured in the article. Endoscopies and other “discrete procedures” (predictable services with a clear beginning and end point) lend themselves well to the bundled payment model. In this model, gastroenterologists receive a lump sum for all services performed during one episode of care. Despite being the leading generator of revenue for gastroenterologists, endoscopies are currently not standardized in terms of cost or services provided. A few factors that contribute to the disparities include geographic location, type of healthcare facility, and use of monitored anesthesia care (MAC). Bundled payments allow for cost reduction, decreased variations in practice, and increased adherence to best-practices. This payment model can easily be applied to colorectal cancer (CRC) screening and surveillance colonoscopies.

A PMPM model is most appropriate when used for the treatment of chronic GI conditions, such as IBD. In this model, the gastroenterologist, instead of the primary care physician, leads a multidisciplinary team of providers to deliver coordinated care for a patient. The strength of this “gastroenterology medical home” lies in its patient-centered approach. Patient monitoring, early medical intervention, and the availability of social support services result in a reduction in ER visits and hospital admissions.

Shared savings models can be used in conjunction with the previous two payment methods described. In this model, a population-based level of spending is calculated. If the benchmark is not reached, both the insurer and provider group share in the accrued savings. Blue Cross Blue Shield of Michigan uses a shared savings model by which physicians receive bonuses based on overall savings for the group’s population.The goal of APMs is to improve the quality of medical care, decrease costs, and reduce inefficiency seen in the FFS payment model by increasing clinicians’ autonomy over allocation of resources. Through this proper redirection of resources, gastroenterologists can use these models to increase their payments without increasing overall healthcare costs.

The Department of Health and Human Services intends to tie 50% of traditional Medicare payments to APMs by the end of 2018. Congress passed the Medicare Access and CHIP Reauthorization Act in 2015, which provides incentives for participation in APMs. In line with these movements from volume-based to value-based care, the use of APMs is certain to become more prevalent, and possibly compulsory, in the near future. As such, the PENTAX Medical team firmly believes that gastroenterologists must become familiar with the appropriate use of APMs and commit to implementing them into their daily medical practice.


  • Patel, K. et al. “Shifting Away From Fee-For-Service: Alternative Approaches to Payment in Gastroenterology.” Perspectives in Clinical Gastroenterology and Hepatology. 14 (2016): 497-506.
  • Vaidya, A. “Considering alternative payment models in GI: 6 takeaways.” Becker’s ASC Review. March 23, 2016. www.beckersasc.com. Accessed March 30, 2016.

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