Study: Physician pay still largely based on volume

The majority of health systems continue to base physician pay on the volume of care provided despite the efforts of insurers and payers to move toward basing compensation on quality and value of care.

According to a news release from the RAND Corporation, researchers from the think tank found that volume-based compensation was the most common type of base pay for 80 percent of primary care physicians and for more than 90 percent of physician specialties. Meanwhile the financial incentives for quality and cost performance only made up 9 percent of total pay for primary care physicians and only 5 percent for specialists.

“Despite growth in value-based programs and the need to improve value in health care, physician compensation arrangements in health systems do not currently emphasize value,” Rachel O. Reid, the study's lead author and a physician policy researcher at RAND, says in the release. “The payment systems that are most often in place are designed to maximize health system revenue by incentivizing providers within the system to deliver more services.”

The study looked at the physician pay structures at 31 organization affiliated with 22 health systems in four different states. Leaders of the organizations were interviewed by the researchers, compensation documents were reviewed, and the physician practice was interviewed to get a sense of the arrangements for primary care and specialist physicians, the release says.

For 70 percent of the practices, increasing the volume of care provided was the top way for physicians to increase their pay. For these practices, volume-based incentives made up more than two-thirds of compensation. Value-oriented goals like clinical quality, cost, patient experience, and access to care made up only a small fraction of physician pay and likely had only a marginal effect of physician behavior, according to the release.

“For the U.S. health care system to truly realize the potential of value-based payment reform and deliver better value for patients, health systems and provider organizations will likely need to evolve the way that frontline physicians are paid to better align with value,” Reid says in the release.