10 ways physicians can prepare for value-based pay

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.

1/ Head’s up

Carrie Nelson, MD, a family practitioner in Carol Stream, Illinois, says the first step is acknowledging that pay-for-value is even on the horizon.

When she addressed a group of providers recently,  only a handful said they had looked at the MACRA legislation, says Nelson, who is also senior medical director for Advocate Physician Partners, a network of about 5,000 employed and affiliated providers. “People have their heads down about this and aren’t recognizing that the world is changing and they have to start getting ready now,” she says. “When you’re on a fee-for-service treadmill, it seems like that’s the only thing that matters.”

Beyond Medicare compliance, practices are embracing the models as a framework for general practice management, says Anne Phelps, U.S. health care regulatory leader at Deloitte & Touche, LLP, in Washington, D.C.

“MACRA may speed the harmonization across the payer mix,” she says. “If practices can harmonize, there’s some attractiveness to that in being measured across the board under one system,” she says, citing Medicare Advantage plans and commercial payers as potential users of performance metrics.

She believes MACRA represents a significant change for physician reimbursement, and will prove far more important than any changes that stemmed from the Affordable Care Act. 

“This is the single biggest change in a very long time with respect to pay,” Phelps says. “With the ACA we started down the path toward incentive pay but it was voluntary, regional and a carrot-only approach. This really reaches the individual practitioner and is national in scope. It pushes delivery models to assume more risk” for negative outcomes, she says. 

2/ Deputize staff

Schedule some regular team meetings with staff and providers to brainstorm better ways to handle patient flow, Nelson recommends. One example: talk about strategies for getting more people with asthma on an action plan to manage the disease. 

Expand the notion of who the care team is and consider adding community resources that help patients stay healthy, from social workers to nutrition coaches, she says.

“How many physicians themselves are obese? It’s a problem and we need to get better about engaging patients on this,” Nelson says.

3/ Work with payers

Insurers have a diverse array of pilot cost-saving programs around the country, and joining one of these can illuminate some opportunities for higher reimbursements in the future, says Brian Bourbeau, MBA, director of organizational effectiveness for Oncology Hematology Care Inc. (OHC) in Cincinnati. 

OHC participates in seven alternative pay models, including pilot programs with Medicare, he says. One program involved OHC changing the way it staffed triage units, resulting in fewer emergency department admissions and bringing financial incentive rewards to the practice.

4/ Get involved

Physicians need to be more involved in compensation discussions as practices move through the changes, Singleton says.

“If people are thinking this will be a simple, digestible change, let me assure you, it is not. We’re about to undergo a huge struggle with providers trying to figure out how they are going to get paid. If they’re over 55, many of them may end up saying ‘forget it,’ and retire.” 

Others will move to direct pay, locum tenens or other arrangements to avoid the new measures, he says. Physicians wanting to stay in practice need to begin now to run the numbers on MIPS and APMs to determine whether bundled payments, for example, make sense for their practice, he says.

5/ Embrace data

As details emerge about which practice models will qualify for APM bundled payments, physicians will need to harness much better data about their practice metrics to determine whether that model makes sense, says Paul Casale, MD, a cardiologist in Lancaster, Pennsylvania, and chair of a MACRA task force for the American College of Cardiology. “Having a deep understanding about the cost of care” is vital, he says. “This data is often still challenging to find and understand.”

Advocate Physician Partners is implementing a medical home and other initiatives intended to help physicians use data in a more meaningful way, says Nelson. “At one point we thought if we just provided the right [financial] incentives, physicians could figure out how to achieve them,” she says. But the technology challenges proved significantly greater than originally anticipated, requiring organizations to create support systems for implementation, she says.

6/ Align pay with goals

As practices contemplate new performance measures, those should be reflected in pay schemes, suggests Kennneth Hertz,
FACMPE, principal of the Medical Group Management Association’s (MGMA’s) Health Care Consulting Group.

“Practices are looking to modify their compensation plans so that they’re aligned with the practice’s vision and goals, as well as the behavior that the payers are trying to move us to in the healthcare system,” he says. 

Then, it’s important to model how the new pay plan would affect providers’ take-home pay, he says. 

“Be able to show them how salaries would have looked if the new measures had been in place last year,” he says. “But it’s also important to stress that what is developed is not forever because payment models and expectations are evolving fast and the practice needs to be nimble.”

7/ Think like a team...

Practices of all sizes will need to communicate frankly about pay plans, Hertz says. From forming support teams to implementing new electronic health record  systems to hammering out how potential incentive bonuses will be parceled out, responding to change as a team is vital, he says. 

“If your salary plan is individualistic-an ‘eat-what-you-kill’ approach-there really isn’t anything saying you are working together,” he says. “The reality is that going it alone won’t be sustainable in the future and it’s incumbent upon physicians to get everybody aligned.”

8/ ...But line up individual ducks too

Inevitably, injecting more variables into pay will mean some years of salary volatility ahead. Get ready now by saving more money, says Carolyn McClanahan, MD, CFP, a former physician who now is a financial adviser in Jacksonville, Florida.

“I have a client now, an oncologist, who was very worried about [the Affordable Care Act] several years ago. She cut back tremendously, paid off her house and socked away a lot of her income.” 

So far her business has been fine, but with the new pay-for-performance measures coming soon, she is bracing for change ahead, including the possibility of lower revenues, McClanahan says.

9/ Know when to say no

Not every physician sees the new value-based rules as inevitable. Some are so opposed to tying compensation to measures such as patient satisfaction scores that they will simply not do business with certain payers, predicts Ronald Feldman, MD, a gastroenterologist in Escondido, California. He believes current patient survey data is woefully sparse and many of the quality measures for certain specialties aren’t relevant.

“The national societies played a role in developing these metrics but they are driven by academics, not practitioners.” he says. “In my mind we should be refusing because it’s killing us and impeding our ability to take care of patients. I won’t be working many more years so it may not affect me, but I can tell you every one of these schemes has the potential to cut into physicians’ income. It’s very hard to practice medicine when you can’t control the prices you charge and can’t relate them to the cost of doing business.”

These are difficult issues that need to get sorted out in the coming years, says Victor Arnold, MPA, managing director for Huron Consulting Group. 

“I think this is where physicians have to sit with partners and administrators and say we have to respect a balance here,” he says, referring to fears that physicians might feel pressured to boost satisfaction scores by downplaying health and lifestyle warnings, for example.

Good bedside manner is important and should be rewarded in compensation, he says, but integrity is still vital.

“You don’t want to put physicians in the position of being a pleaser,” Nelson says. By employing a broad variety of metrics beyond just satisfaction scores, she believes value-based pay can work.

Singleton agrees. “We first thought that if a provider had good satisfaction scores there would be better outcomes,” he says. But several studies actually have shown the opposite.

“That’s why people are tinkering with this,” he says. It’s critical to have physicians be part of making the compensation plan so we have people making decisions who understand the clinical nature and the risk, to not just be a cog but to help design the engine.”

Beyond the satisfaction score debate, there are still plenty of measures that providers can adopt to impact quality – and in turn, pay.

“Being a quality provider is about being available, having flexible hours, leveraging the right staff and having good call coverage,” says Arnold. “All of those dots of running a tight, efficient practice are more important than ever. In reality if you’re running a solid practice and keeping the interests of patients in mind you’re doing the right thing.”

10/ Brush up on soft metrics

If physicians intend to play in the new pay-for-performance world, spending some time on those people skills will pay dividends, notes Michael Cassatly, DMD, an oral surgeon and founder of MedAchieve, Inc., a Jupiter, Florida, practice consulting firm. He makes frequent use of personality tests for physician clients that are designed to illuminate strengths and weaknesses in management and communication styles. Often the results aren’t surprising to the providers, but they serve as a way to begin conversations about how better to relate to staff and patients.

 “It’s tough in the beginning to get physicians on board with this, but most of them eventually open up,” he says. “If you have two physicians with the same patient complication, the one that had developed the patient’s trust most often won’t be sued” or receive low patient satisfaction scores, he says. “It comes down to establishing that patient/physician relationship.”