Physician pay is still largely driven by volume, but practices need to begin shifting some gears now to stay ahead of looming value-based pay curves.
At first blush, it’s perhaps easy to understand why value-based pay hasn’t gotten more attention. Overall, quality measures account for a relatively small percentage of current total physician compensation, according to industry surveys.
Quality indicators such as patient satisfaction scores, readmission rates, electronic health record (EHR) use and adherence to treatment protocols in determining physician bonuses actually declined as a bonus metric by 16 percentage points between 2012 and 2015, according to surveys by Merritt Hawkins. A separate survey by Sullivan, Cotter and Associates, Inc., found just 6% of total pay was tied to quality measures.
“If you’re affecting less than 10% of compensation, you may be seeing lower re-admission rates, but you’re doing that through management structure and culture, not compensation,” says Travis Singleton, senior vice president at Dallas-based Merritt Hawkins. He says the notion of value-based pay is more “aspirational” than reality at this point.
That 6% will grow to 10% within the next few years as an industry average, however, and to 20% or more in leading healthcare organizations, says Kevin Wilson, Sullivan Cotter’s physician services practice leader, who is based in Atlanta. And that’s just the beginning, he says.
Fueling the increase: The Merit-based Incentive Pay System (MIPS) and Alternative Payment Models (APM) called for under the Medicare Access & CHIP Reauthorization Act of 2015 (MACRA). The legislation forestalled the possibility of a major reimbursement cut in exchange for changes in how Medicare will pay physicians in the future. The new plan incorporates quality and outcome benchmarks into reimbursement formulas rather than paying strictly for coded procedures on a fee-for-service basis.
Experts say the most successful practices will be the ones thinking of the changes as part of a holistic performance improvement strategy, rather than just an exercise in completing forms.
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