Factors slowing down the spread of value-based pay for clinicians could include a strong economy and strong demand for physicians.

Nov. 2—Eighty-six percent of physicians say they are paid under fee-for-service (FFS) or salary arrangements, according to a recent survey.

The findings of a Deloitte survey of 600 primary care and specialty physicians did not change much from the same survey two years ago and reflect other findings showing nationwide stagnation in linking physician compensation to value.

For instance, a majority of the 17,236 physicians polled earlier this year by the Physicians Foundation reported they either receive no value-based compensation or are not sure whether they do.

Those findings raise questions about the impact of the high-profile initiatives by public and private payers to tie larger shares of provider organizations’ payments to value. If such value-based payments don’t reach front-line providers, analysts say they are unlikely to broadly affect the way care is delivered.

The U.S. Department of Health and Human Service (HHS) has plans to move 50 percent of FFS payments into alternative payment models (APMs) by the end of 2018. Similarly, the Health Care Payment Learning & Action Network (LAN), a public-private partnership that includes 70 commercial insurers, aims to bring at least 30 percent of total healthcare spending under APMs by the end of 2016.

Such initiatives have reported significant progress toward their payment transformation goals, but the physician surveys indicate clinician compensation is being left behind.

Mark McClellan, a former CMS administrator and currently director of Business, Medicine and Health Policy for the Margolis Center for Health Policy at Duke University, acknowledged, “We still have a way to go to make sure payments at the organizational level line up with payments to providers.”

However, interest in finding ways to tie physician compensation to quality metrics is growing “because FFS just isn’t working well to support the kind of care that’s needed by many patients,” McClellan said in an interview.

“That’s happening; it’s just part of a journey to adopt these new payment models on the one hand,” McClellan said. “On the other hand, these are new kinds of programs, so we want to make sure we do them right.”

Mark Smith, MD, clinical professor of Medicine at the University of California at San Francisco and co-chair of LAN’s Guiding Committee, said physicians in accountable care organizations (ACOs) have told him, “Well, now I know that I’m in this ACO and I know my CEO is meeting with their CEO, but my deal hasn’t changed at all.”

“We want to make it very clear to the organizations that are doing these APMs that this is not just about moving the money up here—it’s got to filter down to the people on the front line,” Smith said in an interview.

A strong economy may be one factor slowing the spread of financial incentives to front-line providers.

“The economy is very strong, and there is a shortage of talent just like in every industry, and it is even more pronounced in the healthcare field,” Chris Gorey, leader of commercial market strategy and growth for the Population Health division of Providence Health & Services, said at an LAN presentation. “And there are a lot of people within our organization who get very nervous about pushing too much compensation change on our providers because if you don’t have providers, if you don’t have physicians, we don’t have an underlying business.”

Despite that pressure, Gorey said his organization has continued to push such measures.

“We’re working on it; we’re taking baby steps in that direction,” Gorey said.

How to Change Behavior

Another key question that has arisen is how much physician compensation needs to be tied to quality before physician behavior is affected.

The Deloitte survey found that a majority of physicians who receive such compensation had 10 percent or less of their total compensation tied to value or quality.

“It is debatable whether 10 percent of compensation or less is enough to persuade physicians to embrace the fee-for-value model, but the exact percentage that would elicit this change is likely to vary by physician and at this point is difficult to calculate,” the report stated.

The Physicians Foundation survey found 77 percent of physicians who receive value-based compensation had 20 percent or less of their compensation tied to value—meaning at least 79 percent of their pay was still tied to FFS.

The Deloitte report recommended that organizations tie at least 20 percent of physician compensation to “performance goals.”

“Current financial incentive levels for physicians are not adequate, as indicated in our survey, and should be increased to give physicians strong motivation to improve quality and cost,” the authors wrote.

Smith urged caution.

“I don’t think we know what the perfect formula is—do you have to have 15 percent or 12 percent?” Smith said.

Other Factors

The healthcare industry continues to weigh clinicians’ intrinsic and extrinsic motivations for changing how they deliver care, Smith said.

“How much are doctors and nurses and others motivated by paying them a little more or a little less or by some sense of professional responsibility, and what’s the right mix of that?” Smith said. “Everybody I know who has actually been in the business of paying doctors for a long time feels like there has to be some mixture of fixed salary-type payment, some kind of volume-type payment and some relationship to productivity, and then some kind of quality or patient/peer evaluation component.”

One high-profile health system working to find the right mix is Kaiser Permanente, where physicians are salaried but have volume and quality components added to their compensation, along with ratings by other clinicians.

Smith said the right balance depends on the expectations of providers in a particular market based on how far the community has come toward value-based payment.

Smith also urged caution by organizations working to find the right balance of incentives.

“Doctors sometime get offended—and rightly so—[by the notion] that they are like rats with a piece of cheese,” Smith said. “‘You shouldn’t have to pay me to do the right thing.’ On the other hand, let’s be honest, people are motivated by money.”


Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare

Publication Date: Thursday, November 03, 2016