Are You Ready for Value-Based Compensation?

physician_piggy_bank_croppedOur previous article titled “Cognitive Load, Good Communication Skills, and Your Wallet,” discussed the link between strong physician-patient communication and better compensation as it relates to value-based medicine.

In 2018 the federal government switches from fee-for-service to value-based payments. Some organizations have already embraced this change and tied their physician compensation to quality of care metrics like this multi-specialty group recently cited in Crain’s New York Business.

“Doing less on more patients while growing our patient base is a key strategic goal,” said Dr. Jonathan Nassar, chief clinical transformation officer at Crystal Run Healthcare, a multispecialty group practice in Middletown, N.Y.

Crystal Run started moving to value-based payment a few years ago. It makes up for lost income on imaging and procedures by receiving a share of the costs it saves insurance companies. This year, it launched its own health plan as well.

Crystal Run’s physicians have embraced the move to value-based payments. A portion of their compensation is tied to meeting quality milestones. Beginning in the third quarter of 2015, 15% of the physicians’ compensation will be linked to quality metrics. Dr. Hal Teitelbaum, chief executive of Crystal Run, said health systems and doctors must fully embrace value-based payments to implement the model successfully.

“If we look at this as something to do because we’re forced to do it, we’re going to be in trouble,” he said.Read the full article in Crains New York Business

There are a multitude of factors physicians need to be cognizant of regarding the transition to value-based medicine. A recent article on this topic from Frontline Medical Communications covers a report from American Medical Association and the RAND Corporation. As Dr. Mark W. Friedberg, senior natural scientist at RAND states “There is a lot of enthusiasm for change,” but in addition to changing mindsets it is also “a matter of the details.”
“The top concern that practice managers faced was matching the appropriate alternative payment model to their particular patient population, researchers found. Other concerns included how best to use incentives without adversely affecting patient care and how to avoid physician burn-out.

These concerns, Dr. Friedberg said, point to a need for payers to offer guidance about what makes sense when and why. “We got the message that more communication between payers and physician practices tends to be a good thing.”

Many of the coming changes will require updated technology. Finding the money for such an overhaul is a universal preoccupation of many practice managers, and another reason some practices have yet to switch. “Some of the time, practices can get a loan, or have the reserves to do it on their own, but sometimes they don’t and they need to partner with a large organization like a hospital or a large physician group,” Dr. Friedberg said.

Payers are not likely to help foot the bill, according to Susan DeVore, president and chief executive officer of Premier Health, a performance improvement alliance of hospitals and other providers.

“It would be wonderful if the health plans would spend hundreds of millions of dollars for the technology enablement of the physician practices and the health systems,” Ms. DeVore said at the press conference. “The truth is, health systems and physicians are [already] spending the billions to build these technology infrastructures, and they need to do that together.”

She called for more systemwide transparent collaboration in how cost is determined and in how quality and outcomes are measured. “It’s not fair to say we need a coordinated system of care, but then we can’t do it for lots of regulatory reasons,” she said noting that ultimately, she believed such information sharing would be determined by Congress.

Payers, should, however, make sure that physicians and other providers have a seat at the table when performance metrics are determined, Dr. Friedberg said.

“Some of the concerns we heard were that, in addition to the number of measures, was also whether individual measures are clinically valid, and do they really reflect true differences in the quality of the patient care. Is it possible that the measure isn’t really reliable and not adequately risk adjusted, and therefore might not be ready for prime time in a payment contract?”

Although the report did not offer specific time frames practice managers could expect before a new structure would take hold, Ms. DeVore said she was aware of some practices that realized more than a third more profits within 3 years of switching to value-based care models.

Chet Burrell, president and CEO of CareFirst BlueCross BlueShield, said his group’s experience was that overall, physicians were not ready for the change to value-based care. This, despite the insurer’s announcement that $1 in every $5 it spends on reimbursement is now tied to quality care.

For physicians who are ready to make the shift to value-based payment, Mr. Burrell said an average of 5 years was necessary to fully integrate. “Each practice is its own ecosystem. Some physicians catch on very quickly, but some are hostile.” By WHITNEY MCKNIGHT, Frontline News Digital Network