Physician Compensation Models Need Value-Based Reimbursement
By - As the healthcare reimbursement shifts from volume to value progresses, many practices are actively reviewing their current compensation plans in connection to accountable care and similar models. Although physician employment was once convolutely tied to fixed salaries, current physician compensation models require rapid realignment from productivity to value-based reimbursement to ensure forthcoming success.
Health systems need to adapt to remain on target with reimbursement goals.
“As the reimbursement methodology changes, health systems, in order to be successful, will need to adjust their compensation methodologies,” Justin Chamblee, Senior Manager at The Coker Group, said in a statement.
Physician incentive also requires reconsideration.
“Non-productivity incentives play a key role in the current compensation arena and will continue to gain importance in future years,” continued Chamblee in a later statement. “But you cannot incentivize physicians based on outcomes, when all your reimbursement is on fee for service.”
CMS’ smoothly executed transition plan to value-based compensation involves extensive categorization comprehension within a specific continuum category, according to an MGMA report on physician compensation by Bruce A. Johnson, JD, MPA and Deborah Walker Keegan, PhD.
The report defines three types of compensation arrangements and differentiates each physician compensation structure in terms of how a structure influences practice culture, its attention to revenue and expenses, and the effectiveness of value-based payment incorporation.
In an individualistic physician compensation structure, revenue is traced at the physician level to promote personal accountability. A physician generates adequate production to cover individual compensation and a given portion of practice expenses.
Value-based external revenue, such as patient satisfaction and quality measures, external payments for care management, care coordination, and transitional care are directly allocated to an individual physician.
Practices that do not link external reimbursement to value-based measures at this level can retain and allocate funds internally within the practice based on practice-defined, value-based performance goals.
Up to 20 percent of funds from expected or historical compensation can be set aside and awarded on physician value-based metrics.
In a middle ground model, a fragment of revenue and expenses is shared equally to each physician.
Following a value-based compensation plan, revenue allocation may change.
Collective investment in new technology is executed via a mutual whole.
Those implementing middle ground models must consider how to best modify revenue allocation for the transition to value-based care.
A compensation pool distributed among physicians through a base salary is usually paid out of practice revenues. There is no express expense treatment to individual physicians.
Usually a portion of this pool – around ten to twenty percent – is distributed based on value, including quality, patient satisfaction, and cost.
The progression of efforts and actions from volume to value will take ample time and adequate resources to effectively execute, said Jeffrey B. Milburn, MBA, CMPE, MGMA Consultant, in a separate MGMA report. “It won’t happen overnight, and most entities will be dealing concurrently with volume and value metrics for at least three to five years,” he maintained.
“Addressing implementation now will go a long way to ensuring success by determining start-up goals and objectives and vision of where you want to be in three years, Milburn continued. “This includes determining benchmarks and targets, along with rewards.”
Goals of stabilized expenses with improved quality are attainable if there is focused management and active coordination, Milburn added.
