Changing reimbursement models requires changes to physician compensation models – characteristics of value-based compensation Model

Cynthia KilroyMy previous blog, “Changing Reimbursement Models Requires Changes to Physician Compensation Models – Fundamental Pillars to Building a Strong Physician Compensation Model,” outlined that there are five pillars that the model should incorporate.

Value-based transformation requires incentivizing physicians and the care team on a variety of behaviors that go beyond productivity. Outlined below are a set of baseline characteristics organizations should incorporate into a value-based physician compensation model that goes beyond just measuring quality of care and patient outcomes. The baseline characteristics goal is to drive alignment across the organization; it is imperative that these characteristics be clearly communicated and that physicians are provided a feedback mechanism. Refinement or additional principles should be included based on the culture and risk maturity of each organization.

  • Risk adjusted populations – Ensure a level playing field for the physicians’ panel by adjusting for the population risk.
  • Physician participation in leadership – Engagement within the governance and physician community to evangelize and support change within the organization
  • Citizenship – Measure colleague satisfaction from ease of access and consistency of communication
  • Care management and coordination – Ability of the physician to manage to practice-defined, evidence-based protocols to ensure consistency of care delivery and coordination
  • Quality of care and patient satisfaction outcomes – Measure outcomes based on practice-defined quality and patient satisfaction protocols
  • Population level efficiency – Assess the size of the panel and the associated care models/team to support the population needs
  • Financial Management – Ability to manage total cost of care within defined medical costs

As organizations move to value-based incentive models it is not a one-step process. There is a compensation maturity model that balances the clinical transformation (optimal care delivery) with the financial risk transformation (full-clinical risk). For example, organizations early in the clinical and financial risk transformation can move to a fee-for-service with pay for performance model. As organizations are mid-way through the clinical and financial risk transformation they can move to productivity-based pay with performance incentives. As the transformation matures to a full-clinical risk model with optimal care delivery, the incentive models can focus on salary with performance incentives and progress to the final model of salary with population incentives.

In my next blog, I will outline the structured approach to changing physician compensation to support adoption and long-term success.

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.

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