The speed at which healthcare leaders transition their organizations from a volume-based healthcare model to a value-based system differs widely. While some organizations created accountable care organizations and similar models, many others continue to operate based on volume, which remains the primary metric for commercial and federal reimbursement. In fact, a report from the Catalyst for Payment Reform found only 11 percent of all healthcare dollars paid to hospitals and physicians from commercial payors are tied to performance.
Minneapolis-based Fairview Health Services is one of the early movers. In April 2011, the health system dropped relative value units as a payment model for primary care providers and established a compensation framework that ties 40 percent of physicians' payment to quality metrics and 10 percent to patient satisfaction. Productivity still determines a percentage of physicians' compensation, but productivity is defined by acuity-adjusted panel size and clinical activities rather than RVUs. Similarly, Waukesha, Wis.-based ProHealth Care bases 10 percent of employed physicians' compensation to quality metrics. Here, leaders from these two organizations share tips on how to transition from an RVU and productivity-focused payment model to a pay-for-performance system.
1. Share data. To gain buy-in to a new compensation model and incentivize physicians effectively, healthcare leaders need to share data with the physicians and ensure the data is accurate, says Peter Geiss, MD, vice president of the clinic division at ProHealth Care.
2. Tie compensation to desired behaviors. Fairview first piloted a new care delivery model focused on population health, and later designed a new compensation plan to align with the delivery model. "It didn't make sense to ask care teams to reorient their work around quality, experience and total cost of care, yet only reimburse based on RVU production," says Brent Asplin, MD, president of Fairview Medical Group and chief clinical officer of Fairview Health Services.
3. Choose metrics wisely. "Make sure the metrics you choose incentivize the behavior you want to incentivize," says Dr. Geiss. For example,ProHealth Care initially used physicians' percentile patient satisfaction scores to determine part of their compensation. However, the range of percentiles was too narrow to accurately disburse payments, causing ProHealth Care to look at the mean patient satisfaction score instead.
4. Provide the tools. A compensation model that incentivizes high quality, high patient satisfaction and low cost may not change physicians' behavior if they do not have the tools to improve these measures. Providing the resources for physicians to meet goals of a value-based system will ensure the compensation model effectively incentivizes the desired behavior. Clinical decision support embedded in electronic health records, for instance, can send physicians alerts to help drive a focus on population health management.
5. Modify model over time. Healthcare leaders need to recognize that a new compensation model will not be perfect on day one; they need to constantly analyze data and improve the model over time, says Dr. Asplin. For example, Fairview added a provision to its compensation model that adjusts Fairview physicians' compensation based on how their overall payment and productivity compares with the market median. This provision ties physician compensation to the health system's current revenue stream, as the system is still reimbursed based largely on productivity. Fairview will also modify the model in October by adding total cost of care as a determinant of 5 percent of physicians' compensation; the percentage of payment based on quality will be reduced to 35 percent.
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| Dr. Brent Asplin |
1. Share data. To gain buy-in to a new compensation model and incentivize physicians effectively, healthcare leaders need to share data with the physicians and ensure the data is accurate, says Peter Geiss, MD, vice president of the clinic division at ProHealth Care.
2. Tie compensation to desired behaviors. Fairview first piloted a new care delivery model focused on population health, and later designed a new compensation plan to align with the delivery model. "It didn't make sense to ask care teams to reorient their work around quality, experience and total cost of care, yet only reimburse based on RVU production," says Brent Asplin, MD, president of Fairview Medical Group and chief clinical officer of Fairview Health Services.
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| Dr. Peter Geiss |
4. Provide the tools. A compensation model that incentivizes high quality, high patient satisfaction and low cost may not change physicians' behavior if they do not have the tools to improve these measures. Providing the resources for physicians to meet goals of a value-based system will ensure the compensation model effectively incentivizes the desired behavior. Clinical decision support embedded in electronic health records, for instance, can send physicians alerts to help drive a focus on population health management.
5. Modify model over time. Healthcare leaders need to recognize that a new compensation model will not be perfect on day one; they need to constantly analyze data and improve the model over time, says Dr. Asplin. For example, Fairview added a provision to its compensation model that adjusts Fairview physicians' compensation based on how their overall payment and productivity compares with the market median. This provision ties physician compensation to the health system's current revenue stream, as the system is still reimbursed based largely on productivity. Fairview will also modify the model in October by adding total cost of care as a determinant of 5 percent of physicians' compensation; the percentage of payment based on quality will be reduced to 35 percent.
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