Service Utilization in Full-Risk Contracts May Inform Physician Fee Schedule Reform

Key Takeaways:

• Most services had lower utilization in the full-risk cohort than in the nonrisk cohort, although utilization patterns varied across individual services.
• A simulated Medicare fee schedule based on risk benchmarks resulted in a possible 6% payment increase for general practice physicians.
• These findings illustrate the potential of full-risk contracts in identifying service utilization patterns and informing physician fee schedule reforms.

Interest in physician fee schedule reforms has been growing among policymakers, but there is a lack of guidance over how to improve service prices in a way that promotes high-value care. One strategy is to assess service utilization patterns in full-risk contracts to help identify services that may be overvalued or undervalued in the current cost-based system.

Study Methods and Outcomes

Researchers used 2015 to 2019 Medicare Advantage claims and administrative data from Humana to compare service-level utilization patterns between full-risk and nonrisk contracts.

The full-risk cohort included 585 487 beneficiaries with primary care providers in voluntary full-risk contracts, such as global capitation. The 1 153 455 beneficiaries in the nonrisk cohort had primary care providers under a traditional fee-for-service (FFS) payment structure.

Service Utilization Patterns

The study analyzed patterns for 1271 medical services. Of these, 940 (74%) had lower adjusted utilization in the full-risk cohort and 331 (26%) had higher adjusted utilization compared to the nonrisk cohort.

Seven hundred services (55%) had an adjusted utilization at least 10% less in the full-risk cohort, and 199 services (16%) had an adjusted utilization at least 10% greater.

Services with higher utilization included low-level office visits, laboratory services, and radiation oncology. Services with lower utilization included high-level office visits; physical, occupational, and speech therapy; and emergency care.

Medicare Fee Schedule

Researchers simulated a modified Medicare fee schedule designed to shift service utilization toward the risk-based benchmarks identified in the study. The simulation estimated a 6% payment increase to general practice physicians.

Obstetrics-gynecology, other nonsurgical specialties, and laboratory pathology were projected to have the highest payment increases. In contrast, emergency medicine, nonphysician specialties, and hospital medicine yielded the largest payment decreases.

Implications for Managed Care

Although most services had lower service utilization in the full-risk cohort, utilization varied substantially across individual services, indicating that full-risk contracts are not associated with uniform reductions.

These findings may help inform physician fee schedule reforms by identifying service-specific utilization patterns that could serve as benchmarks for adjusting FFS prices.

The authors concluded, “Reforming the physician fee schedule represents an opportunity to leverage a rarely used tool for managed care and cost control in health care.”

Reference

Schwartz AL, Bulat T, Ben-Michael E, et al. Service-level utilization in risk-based contracts and a benchmarking approach for fee-schedule reforms. JAMA Health Forum. 2026;7(10):e263533. doi:10.1001/jamahealthforum.2026.3533