Changing how doctors get paid

Hospitals and physician groups across the country are beefing up merit pay for quality and patient satisfaction in their physician compensation plans. But Geisinger Health System is doing something radically different.

The 12-hospital system based in Danville, Pa., did away with physician bonuses altogether this summer and put all of its 1,600 employed doctors on a straight salary.

Geisinger also made the decision to pay each physician at or above the national average whether in primary care or a specialty. “We don't have below-average doctors so we don't pay anyone below average,” Geisinger CEO Dr. David Feinberg said.

That Geisinger would abandon a compensation model that previously paid physicians 80% straight salary and a potential 20% performance bonus runs counter to what's happening with many health systems and physician groups.

Most systems see the emergence of value-based reimbursement, encapsulated in legislation like the Medicare Access and CHIP Reauthorization Act, as requiring the rewarding or penalizing of physicians for performance on quality and patient satisfaction scores.

They are shifting their compensation plans to put more emphasis on attaining those types of benchmarks rather than the old ways of predominantly rewarding throughput.

For example, Crystal Run Healthcare, a 300-physician group based in the lower Hudson Valley community of Middletown, N.Y., today pegs up to 15% of total physician compensation to quality, cost and satisfaction measures, said Dr. Scott Hines, Crystal Run's chief quality officer and medical director.

That percentage is set to rise to 30% over the next three years because “more and more contracts are being tied to clinical quality and lower costs,” Hines said. He's seeing the same trend with both government and private payers.

The compensation model at the 1,200-physician Henry Ford Medical Group in Detroit is a little different but similarly aimed at elevating quality and patient satisfaction, said group CEO Dr. William Conway.

The group's primary-care physicians next year will get a greater portion of their compensation based on how many consumers choose them as their doctor than today's model, which is predominantly based on the volume of relative value units they perform. RVUs represent a Medicare formula for reimbursing physician services that blends the time it takes to perform a service with the skill level behind that care. A committee that includes the American Medical Association offers recommendations to the CMS which establishes the relative weights of physician RVUs.

While RVUs determine 66% of pay at Henry Ford today, it becomes a 50/50 split next year between RVUs and patient sign-ups, Conway said. That model also provides an incentive for physicians to perform well on quality and patient satisfaction since consumers will see physicians' work rated online and can base their selections accordingly, Conway said.

The shift is a response to changes in government reimbursement, not the markets. “It's about the Medicare payment rate,” Conway said.

Medicare has been coaxing hospital systems and physician groups to organize themselves around taking on more risk for the cost and quality of the care they provide. It's part of a long process under the Affordable Care Act and MACRA of moving away from fee-for-service to value-based reimbursement.

That philosophy has given rise to advanced alternative payment models. These are Medicare programs that give physicians extra incentives to manage the risk of certain populations or accept bundled payments for targeted procedures rather than paying in the traditional way.

Examples include the Comprehensive End-Stage Renal Disease Care Model and the Medicare Shared Savings Program. To participate, hospital systems and physician groups have developed provider networks, in some cases accountable care organizations, to make sure their patients have access to coordinated services across geography and specialties.

Those organizations are all a little different and offer their physicians different compensation incentives to participate. “If you've seen one, you've seen one,” Conway said.

Alternative payment models, or APMs, have been exploding in popularity, according to the CMS. From their inception as part of the ACA the four APMs offered by CMS in 2017 now have 359,000 participating clinicians, providing care to 12.3 million Medicare and Medicaid beneficiaries, according to the CMS.

The Next Generation ACO, a model that provides participating doctors even more risk and reward than under the Medicare Shared Savings Program, added 28 groups in 2017 and now has 45, the CMS said.

Looming ahead is the new change agent for physician reimbursement models: MACRA. Though its implementation was recently delayed almost two years until 2018, MACRA establishes two new payment tracks for physicians treating patients holding government-sponsored insurance.

Clinicians in advanced alternative payment models can earn annual bonuses of 5%. But the majority of physicians will participate in the Merit-based Incentive Payment System under MACRA. On that track, physicians can earn plus or minus 4% of reimbursement in 2019, 5% in 2020, 7% in 2021 and 9% in 2022.

While physicians at Geisinger participate in a variety of APMs, the integrated delivery network has gone to straight salary for its employed physicians—rather than an 80/20 mix of salary and merit bonuses. Its physicians don't need incentives to do the right thing for patients, said Dr. Jaewon Ryu, Geisinger's chief medical officer.

If they provide quality care in the right setting, Geisinger will do well financially on the 551,000 enrollees in its health plans for whom it takes full risk, Ryu said. And it will qualify to collect the at-risk portion of value-based payment models whether government-sponsored or commercial.

UnityPoint Clinic, with 500 physicians in clinics across Iowa and Illinois, wants 33% of physician compensation by 2020 to be based on the value metrics of patient care, said Keith Seashore, UnityPoint Clinic's chief financial officer.

Those incentives now constitute 14% of compensation, with 86% of salary measured largely as a function of productivity, he said. UnityPoint Clinic is piloting a compensation model at five locations that will take the entire organization to its 33% goals, Seashore said. In those locations, about 20 physicians and 10 advanced practitioners have 33% of their compensation based on productivity, 33% on straight salary and 33% on the quality, cost and satisfaction variables, he said.

The physicians driving the pilot believe that mix will align better with the additional risk UnityPoint wants under MACRA and the APMs, Seashore said.

He added that the changes will be rolled out slowly so that the clinic's physicians feel comfortable that the data collected for determining compensation are fair and accurate.

CareMore, a Cerritos, Calif.-based clinic operator and health plan for frail seniors, incentivizes its physicians to keep patients out of the hospital, said President Dr. Sachin Jain.

Jain, a former adviser to the Obama administration, said CareMore employs 80 “extensivists,” whose job is to track frail patients so they get the medications and care they need at home and in settings outside the hospital.

The physicians, who earn on average about $200,000 annually, can earn an additional 5% to 65% in incentives by managing their patients so that hospitalization is a last resort, Jain said. That might mean making sure a patient has proper food, that they are not being dehydrated by lack of air-conditioning and other items that might fall outside the typical things that doctors are responsible for.

Preventing hospitalization, Jain said, “is one of the purest metrics of clinical success.”