Physician Compensation

Engaging Physicians in Value-Based Compensation Models

January 16, 2019 2:44 pm

One medical center’s goal was to drive physician engagement in programs that increasingly dictate revenue and recognize the extra burden physicians take on in value-based models.

As the number of value-based programs in which the University of Maryland St. Joseph Medical Center participated grew, hospital leaders knew they needed to revamp their physician compensation model to incentivize physician cooperation. A purely work relative value unit (RVU) model no longer seemed fair, considering physicians spent more and more of their time on documentation required for quality metrics. 

The medical center had joined a patient-centered medical home network requiring physicians to focus more intently on care coordination and documentation of quality metrics. In addition, physicians who previously participated in the Physician Quality Reporting System subsequently transitioned to the Merit-Based Incentive Payment System under which they are required to report quality measures, reduce costs, and improve outcomes.

This year, eligible physicians will also participate in the Comprehensive Primary Care Plus program, another quality-driven initiative. In addition, more than 70 percent of the medical center’s contracts with commercial payers incorporate quality-based incentives typically in the form of an increase in the physician fee schedule the following contract year, permitted quality benchmarks are met or exceeded.

“We wanted to drive physician engagement in these programs that increasingly dictate our own revenue,” says Mitchell Clay, executive director of the University of Maryland St. Joseph Medical Group that includes approximately 100 physicians in 25 practices throughout Towson, Maryland, and the surrounding areas. “We’re also trying to be sensitive to the burnout that so many physicians—especially in primary care—are going through. Having to worry about your work RVUs every day while we’re also asking them to do health maintenance and care management isn’t easy. We’re trying to alleviate some of that burden.”

Revamping the compensation model was about maintaining relationships with physicians, says Clay. “We wanted to partner with physicians,” he says. “It doesn’t send a good message when you continue to ask physicians to report on quality metrics to generate revenue for the practice, but you don’t share the additional income with them.”

Transitioning from Volume to Value

Clay and several others at the medical center began the transition to a new physician compensation model by taking two initial steps:

  • Soliciting feedback from their primary care physicians about how to share incentive payments fairly.
  • Consulting with their population health department to ensure they understood the specific quality metrics that drove each payer contract. 

Examples included health maintenance measures (e.g., screening colonoscopies, mammograms, and hemoglobin A1C) as well as hospital utilization measures (e.g., number of admissions, number of emergency department visits, and number of readmissions). The idea was to accurately capture the quality-related drivers of payment and reward physicians when the metrics achieved resulted in increased revenue to the group.

The medical center ultimately rolled out its new compensation model in August, 2018. The model layers a 50/50 share of any incentive payments on top of a work RVU-based component. “The lion’s share of our revenue is still generated by the number of patients that providers see, so we couldn’t quite shift away from that model fully,” says Clay. 

The model also includes two other requirements as a pre-requisite for sharing in the bonus payments: Minimum number of patient contact hours (i.e., times when patients can schedule appointments) and attendance at a minimum number of hospital meetings.

“One of the big tenants of these programs is patient access,” says Clay. “We wanted to encourage our providers to maintain open panels.”

Continuing to Evolve

However, this new model is fluid—and will likely continue to evolve commensurate with payer contractual changes and particularly as contracts begin to incorporate downside risk for the organization, he says. 

“We wanted to at least get physicians engaged and participating and then start looking at what the contracts would entail if we included some downside risk for physicians,” he adds. An example of downside risk could include a base salary plus a percentage of the incentive payments. If a physician provides poor quality care, their earning potential will be capped at the base, and they won’t earn as much as their engaged counterparts.

The medical center is also considering the idea of eventually incorporating physician-specific metrics in its compensation model so that physicians who perform well on quality-based metrics will share in the incentive payments while others may not.

“We’re not necessarily at a place where we feel like we can generate accurate, timely quality data out of our EHR [electronic health record] that we’re willing to build into a contract or a legal document,” says Clay. The organization has been on its current EHR since 2016 and is still in the process of establishing workflows for preventive maintenance services that make it easy for physicians to document in discrete data fields so critical information is submitted for quality reporting.

“Our goal right now is to be transparent, use metrics that we can calculate in a timely fashion, and develop something we can administer without taking on too many resources,” he adds. “I’m hopeful that as we grow and become more mature in these programs, we can get down to the granular level of data.”

For now, the priority is physician engagement, says Clay. “We’re trying to keep it simple at the outset,” he adds. “Our hope is that as these programs grow and mature, our ability to measure performance in these programs will grow and mature as well—and we can start to drive some of the more specific individual performance measurements.”

Lisa A. Eramo is a freelance writer based in Rhode Island.

Interviewed for this article:

Mitchell Clay is executive director of the University of Maryland St. Joseph Medical Group and is a member of HFMA’s Maryland Chapter.


googletag.cmd.push( function () { googletag.display( 'hfma-gpt-text1' ); } );
googletag.cmd.push( function () { googletag.display( 'hfma-gpt-text2' ); } );
googletag.cmd.push( function () { googletag.display( 'hfma-gpt-text3' ); } );
googletag.cmd.push( function () { googletag.display( 'hfma-gpt-text4' ); } );
googletag.cmd.push( function () { googletag.display( 'hfma-gpt-text5' ); } );
googletag.cmd.push( function () { googletag.display( 'hfma-gpt-text6' ); } );
googletag.cmd.push( function () { googletag.display( 'hfma-gpt-text7' ); } );
googletag.cmd.push( function () { googletag.display( 'hfma-gpt-leaderboard' ); } );