Physician Pay Increasingly Linked to Value-based Metrics

Primary care doctors surveyed by the Medical Group Management Association say nearly 6% of their compensation was pegged to quality metrics in 2013, up from 3% in 2012.

Part of the drive to a value-based healthcare delivery system will be gearing physician compensation to value-based metrics such as quality and customer service, according to the Medical Group Management Association.

"This is going to be a gradual shift. … It will be a trend that we will see evolve," said Todd Evenson, VP of data solutions and consulting services at the Englewood, CO-based organization.  "We're on the cusp of this information being available."

MGMA has been conducting an annual physician compensation survey for three decades. Beginning in 2012, the MGMA began collecting data on physicians who reported having a portion of their compensation linked to a pair of value-based metrics: quality and customer satisfaction.

The data collected in 2012 and 2013 show modest levels of linkage between compensation and the value-based metrics, but there is the start of an upward trend, Evenson says. "We are just at the beginning. You have to be able to measure quality. We're even on the front end of that process."

Excluding doctors in accountable care organizations and patient-centered medical homes, primary care physicians polled in 2013 for the MGMA survey said that an average of 5.96 percent of their total compensation was linked to measures of quality up from 3% in 2012. Specialists surveyed said about 5.70 percent of their total compensation was based on quality metrics up from 2% in 2012.

The number of physicians reporting compensation tied to customer satisfaction was even smaller in the survey, but the MGMA polling showed 43 percent growth from 2012 to 2013 among specialists. In 2012, specialists said 1.61 percent of their pay was linked to customer satisfaction metrics. In 2013, that figure rose to 2.31 percent.

Evenson says the MGMA is trying to set "baseline data" that will help guide the group's members through potentially tumultuous change as healthcare delivery is increasingly designed to provide value. "There's a lot of confusion out there," he says. "We're trying to keep our members aware. We're trying to produce reliable, bite-sized bits of information."

Gauging the impact

Increased linkage between physician compensation and value-based metrics appears inevitable, but the long-term consequences are subject to debate.

"Quality parameters will be part of compensation increasingly in the future," says James La Rosa, chief customer experience officer for East Hills, NY-based North Shore-LIJ CareConnect Insurance Company. "New York State requires every new insurance product brought to market to have some quality indicators and every government-sponsored program will have many quality parameters built in—the ACOs are a prime example—with a significant emphasis on customer satisfaction as well."

La Rosa adds that healthcare payers will play a role as value-based metrics become "tied to payments."

The trend toward greater linkage of physician pay with quality and customer satisfaction metrics will continue with gusto, according to Ingrid Lindberg, chief customer experience officer at Eagan, MN-based Prime Therapeutics. "The requirements that are emerging are that people expect to be treated like people, not patients. They want their time, their questions, their needs to be respected as much as they respect the physician," she says.

"We're seeing [patient] satisfaction being used as a derivation of quality ratings. The subjectivity of the rating the person receiving the care is giving the doctor is becoming as important as the outcome. Can you even imagine the impact? Now, not only do you have to ensure that the quality of care is there, as a physician or hospital you now have to pay just as much attention to the experience you're providing."

Lindberg says embracing customer satisfaction as a prime goal will be a challenge for many small medical practices.

"Hospitals are figuring it out," she said. "Now it will be up to all those smaller clinics and independent physicians to figure out how to make sure that they aren't only providing exceptional care, but also an exceptional experience."  

Critics wonder whether there is enough value in tying physician compensation to value-based measures.

"I'm not convinced this is the most effective way to produce major healthcare cost reductions for the US population," says Kevin Coleman, director of research and data for Sunnyvale, CA-based Healthpocket Inc.

"I'm much more interested in the factors driving per capita healthcare usage among Americans and the overall cost of healthcare delivery than I am interested in the percentage of doctor compensation that is tied to various quality metrics. Addressing consumer lifestyle issues that eventually produce expensive health conditions and reducing consumer misuse of various healthcare services may have a more dramatic effect on healthcare spending than the association of doctor compensation with quality metrics."

Regardless of how physician compensation evolves in the development of value-based healthcare delivery, Evenson says MGMA is committed to providing medical practices with guidance as value-based metrics such as quality and customer satisfaction become greater factors in the healthcare industry.

"We're trying to guide them to sources that have credible information," Evenson says of MGMA members. "We're at a critical point in time where practices are changing their reimbursement models. … I just tell them to think about it."