Changing reimbursement models requires changes to physician compensation models – 5 fundamental pillars

Cynthia KilroyAs noted in my previous blog, “Changing Reimbursement Models Requires Changes to Physician Compensation Models – The Basics,” as provider organizations move to risk-bearing contracts they need to answer key questions in the areas of goals, governance and physician engagement.

There are five pillars provider organizations need to build a strong value-based physician compensation model – Physician-Led Governance, Good Data, Population Level Measurements, Flow of Funds and Measurements Outcomes Transparency.

The first pillar is a shared governance model with strong physician leadership. Getting governance right is critical to ensure alignment and acceptance by the practicing physicians – ultimately driving cultural change from productivity to outcomes. The physician-lead governing body should include physicians across specialities and locations to capture a cross-section of clinical approaches and mind-sets.

The second pillar is value-based performance measurements must be built on good data. If the data is not flexible, attributable, timely and definable, the measurements will not be accepted by the physician community. The data should include claims information, EHR clinical information and demographic information to allow for measuring across physicians, groups, populations, payers and markets. As part of this process, physicians should be given the opportunity to correct patient-level information if they have identified issues related to coding or charting.

The third pillar is to select the right performance metrics that focus on managing care from a population view rather than a volume view. Population-level metrics include quality (readmission, screening, immunizations), satisfaction (patient and peer) and efficiency (referrals out of network, evidence-based adherence, closing gaps in care). Value-based compensation should align with the key metrics that the organization will be measured on by markets and contracts, but should be limited to no more than 10-15 metrics. The organization should try and define = these metrics consistently across markets potentially using Medicare MSSP and Medicare Advantage as the baseline.

The fourth pillar is to identify the flow of funds early in the process. This includes whether the compensation model will be funded by a withhold model or a shared savings model with allocation for administration, reserves and fee-for-service payment. For shared savings models determine how reserves will be identified for downside savings. There is no “one size fits all;” it is dependent on the type of group, type of contract and history of group payments.

The fifth pillar is creating transparency on many fronts, from how the metrics are calculated, offering multiple channels for delivery, conducting peer comparisons and ultimately establishing unblinded outcomes. Two core areas to support transparency include the ability for physicians to provide feedback on metrics and on specific issues with data; and provide physicians the ability to drill down into patient-level information.

In my next blog I will identify the key characteristics of a value-based compensation model that should be included in building the metrics.

About the author

Cynthia Kilroy

Ms. Kilroy has over twenty years of experience as a healthcare professional focused on helping clients conceive and implement strategic decisions that change the concept of the business they are in to meet emerging challenges and market needs.  Currently, Ms. Kilroy is SVP of Solution Strategy and Business Development for Optum Consumer Solutions Group and is the designated Provider Market Lead.  Cynthia is accountable for business and product strategies to position Optum consumer health, financial management and population care management capabilities to meet the strategic needs of the market.


Leave a Reply