The time for evolution of physician compensation to a value-based model is upon us. The 2010 passage of the Affordable Care Act prompted a broader national shift toward a value-based reimbursement orientation to realign financial incentives. The healthcare industry has incrementally built the tools to manage the costliest patients and incentivize providers in a way that will lead to healthier communities.

The Problem With Activity-Based Models

Today, physicians are compensated on their personal level of activity, typically based on work relative value units (wRVUS). Activity-based compensation structures have historically resulted in misalignment between the best health outcomes for the patient and the best financial outcome for the provider. The problem is that this model largely relies on the integrity of doctors to keep the patients’ best interests in mind, but as of recently, there are signs that primary care providers are burnt out and few reinforcements are on the way. The combination of a growing physician shortage, expected by the AAMC to reach as many as 20,000 primary care physicians by 2032, and the extra stress of the COVID pandemic pushing more providers out the door requires a new approach that truly rewards for the value they bring and to keep providers practicing primary care.

Compensation that boosts payment for preventive and proactive measures is the pathway that can solve the puzzle of the triple aim. Over the past decade, the market has introduced physician compensation models like retrospective shared savings, screening incentives, and quality bonuses (e.g., care coordination per member per month payment (PMPM), annual bonus for screening a percentage of your panel) to modest levels of success. The effectiveness of these population level incentives is often further diluted when managing across a mixed primary care physician network (e.g., independents and employed). Unfortunately, even broad adoption of these models may be insufficient to achieve the desired change at scale because they still rely on extra work by physicians and tie effort to dollars that may not materialize upon retrospection.

Primary care providers and their teams have been seeking a better model for years and have continued to lobby congress to follow this path. There seem to be dollars available, so what if those dollars were redeployed more thoughtfully?

The Shift Requires a Change in Behavior

A more powerful solution is to pair existing shared financial incentives with a platform that places necessary information in the hands of providers while also incentivizing the behavior changes that will result in a truly successful value-model. What does success look like?

  • Paying clinic teams to improve screening, properly diagnose patients, and reduce negative outcomes
  • Using a structure that is familiar to the clinic teams, such as per unit payments, but directing those payments to desired behaviors minimizes disruption to existing models.
  • Incorporating all members of a clinic operations team (e.g., medical assistants, care coordinators, patient service representatives) in these efforts builds engagement among existing resources and allows physicians and advanced practice practitioners to function at the top of their license.
  • Unsurprisingly, ongoing payment of incentives for activity that occurred within the past few weeks reinforces that behavior better than one payment at the end of the year. Studies have shown that broad engagement in team goals is highly correlated with success and providing rewards in real-time can be much more effective than delayed ones.

A Value-Based Future

Refining how we incentivize providers and staff for progress toward population health goals will be revolutionary for a value-based future. Incentives designed and deployed correctly could fit within a predominantly fee-for-service environment and added to existing compensation structures in a fair market value compliant way, with limited disruption of the current model.

There is no doubt that changing the infrastructure of the healthcare incentive and payment system is daunting, but focusing on granular, incremental steps is a way for everyone to contribute to turning the trajectory of our spiraling health care costs. To learn more about how Stellar is impacting this change please contact us.