From Volume to Value: Helping Physicians Understand New Compensation Strategies

Designing and implementing a physician compensation program can be uniquely challenging, given the complexity of today’s health care organization and the increased variety of physician roles. Most of these challenges, however, can be minimized by adhering to the basics of good design and creating a communication plan that generates understanding and buy-in.

Having traditionally been compensated based on the number of patients they saw, physicians increasingly are being rewarded for outcomes—a shift that has triggered consternation and more than a little chaos in a profession that has long viewed how it is rewarded as a sacrosanct element of its culture, tradition and status.

This transition from fee-for-service to a fee-for-value approach based on outcomes such as quality, safety and patient satisfaction often causes confusion, distrust and frequent opposition that is driven in part by the complex nature of physician compensation.

Not all physicians, for example, practice medicine in the same context. Some are employed in large practices that are part of health care systems. Others are affiliates. Still others may be employed by academic health centers, where some physicians are clinically focused and others faculty members.

Many of these physicians also have multiple paymasters. In academic health settings, for example, physicians may receive faculty compensation, clinical compensation and compensation through grants and contracts. Primary care physicians employed by health systems may receive compensation based on panel size and performance or outcome metrics, while those practicing a hospital-based specialty (e.g., emergency medicine) may be compensated based on shift work and performance expectations.

Other factors that add to the confusion and distrust when implementing pay-for-value programs include metrics that are not meaningful to physicians or have not been well thought out, lack sufficient validity/reliability or are difficult to measure or link to physician performance.

Take, for example, readmission rates. Physicians may argue that such metrics should not be used to measure their performance, as patients are often discharged due to payer pressure to minimize inpatient care and reduce costs, which has little to do with physician care.

Similar arguments are made about patient satisfaction. The time needed for patients, physicians point out, varies depending on age, gender and presenting conditions. When a day is filled by patients needing extra time, wait times lengthen, often resulting in lower patient satisfaction.

An equally prominent issue is the availability and reliability of accurate and timely data to help physicians adjust their performance. While such information is critical, physicians often report a lag time of 6 to 18 months in receiving it.

Not surprising, many physicians today remain skeptical and cynical of these novel approaches to compensation, questioning whether these approaches are really about providing great professional services, or simply designed to limit or reduce their earnings.

To eliminate this distrust and create the necessary buy-in for these new compensation strategies to be effective, physician leaders and compensation professionals must address these complexities and concerns in a forthright manner.

For starters they should

Be inclusive and transparent about their approach and methodology, keeping it as simple as possible to understand and track.

Select metrics that are meaningful and can be accurately measured and attributed.

Design processes to support the dissemination of data.

Provide reliable and timely performance data and eliminate nonactionable data.

Map provider incentives to medical group’s value-based care payer contracts, including the Medicare Shared Savings Program (MSSP) ¹ and the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), ² For more information on MSSP or MACRA see the Centers for Medicare and Medicaid Services government website listed in Notes 1 and 2.

Create a well-designed transition period to align the new metrics with the data reporting system. For example, consider running the new compensation program in parallel with the former for 6 months to address system “bugs,” develop buy-in, adapt new expectations and allow for the education of physicians and other key stakeholders.

Be proactive and refine work processes to maximize physician efficiency, capture of data and optimize regularly.

In addition to a strong design and implementation plan, organizations should develop and execute a well thought out communications strategy. Such a plan should

Provide truthful, transparent and frequent communication tailored to the specific audience.

Speak the language of the recipients.

Collect continual feedback and concerns from those impacted.

Include conversations with spouses and others affected by the changes, including medical group leadership and site administrators.

Include monthly earnings statements to create awareness and understanding and prevent surprises.

Utilize advisory committees who participated in the design to also serve as program ambassadors to help facilitate peer understanding.

Emphasize that this is only one element of a total compensation package that includes a variety of benefits.

As with any major change, the implementation of a new compensation strategy is bound to generate some initial concern, confusion and opposition. By creating a well-designed plan, however, along with a carefully thought-out implementation strategy, such issues can be easily addressed and minimized.