Building Compensation Plans in a Pay-for-Performance Era

By Beaulieu, Debra | Medical Economics, November 25, 2013 | Go to article overview

Building Compensation Plans in a Pay-for-Performance Era


Beaulieu, Debra, Medical Economics


New compensation models will be key as payers look to reward quality vs. volume

It is becoming more common for physician groups to reward certain quality metrics as part of their internal reimbursement structure. The trend is affecting a small but increasing portion of physicians' pay.»

** BY NOW, pay for performance is an established concept in the world of third-party reimbursement Primary care physicians (PCPs) derived 3% of their total compensation last year based on quality measures, while performance-based data was linked to 2% of total compensation for specialists, according to the Medical Group Management Association- American College of Medical Practice Executives' (MGMA-ACMPE) Physician Compensation and Production Survey.

"Quality and patient satisfaction metrics are not yet dominant components of physician compensation plans right now, however, as reimbursement models continue to shift, the small changes we've observed recently will gain momentum',' Susan L. Turney, MD, MGMA-ACMPE president and chief executive officer (CEO), explained in an announcement.

Recruiting firm Merritt Hawkins has seen even stronger evidence of the growing trend, as 39% of its 2013 search assignments that offered physicians a production bonus also included payments based on quality metrics. This figure was up from fewer than 7% in 2011, according to a report released in August.

ALIGN COMPENSATION WITH REIMBURSEMENT

This shift in payment structures is an inevitable result of the healthcare marketplace transitioning away from paying for volume in favor of rewarding quality, says Deborah Walker Keegan, PhD, FACMPE, president of Medical Practice Dimensions, Inc., and principal of Woodcock & Walker Consulting in Asheville/Arden, North Carolina.

Thus, medical groups should look at ways to align their compensation models with the way revenue flows into the practice, which may now include incentives for patient satisfaction, quality of care, and cost containment.

"Talking about productivity alone is inconsistent with the changes in the delivery system," Walker Keegan says. "It's been inconsistent with value-based reimbursement and inconsistent with alignment with the fund-flow model. If you're going to get paid on value, it's time to think about compensation with some of those value components in it because you need to focus attention on physicians and clinicians meeting certain goals related to federal programs and payer changes."

CHOOSE THE RIGHT METRICS

Where many practices struggle, however, is in selecting the right metrics to reward, says Craig Samitt, MD, executive vice president of Healthcare Partners in Torrance, California. Samitt is also a commissioner of the Medicare Payment Advisory Council and former president and chief executive officer of Dean Health System in Wisconsin.

"The measures need to be reliable, reproducible, measurable, and valid-and that can often be the hardest challenge because there aren't many proven quality measures that apply to each and every physician," Samitt says.

Start by looking at where payers are already offering incentives or plan to in the near future. For example, if you have a primary care practice that is part of a larger group, you are already being evaluated on Medicare's value-based modifier, although it hasn't impacted your reimbursement yet, notes Bruce A. Johnson, JD, a Denver, Colorado-based physician compensation expert

In addition, with reimbursements based on patient satisfaction around the comer, it makes sense to start tracking and rewarding your scores internally, Johnson says. Quality measures dealing with chronic conditions, as many current government and privatepayer programs do, are also important for groups to get a handle on.

Some payers may allow practices to pick from a list of metrics, including obesity, diabetes, hypertension, or congestive heart Mure, says Gail Levy of The Levy Advantage consulting firm in Baltimore, Maryland. …

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