Physician Compensation Models: Paying It Downstream BY K E N C O H E N , M D , D E E L I N G L . T E N G , M D , A N D J A M I E P H I L L I P S
Introduction: Journey to Two-Sided Risk Ken Cohen, MD Our healthcare system is on a journey to value-based care. For this evolution to meet the quadruple aim—improved patient service and outcomes, better clinician well-being, and decreased total cost of care—myriad capabilities are needed. One of the most important capabilities is a reimbursement model that rewards physicians for high-quality population health management (PHM)—the foundation for success in two-sided risk arrangements.
Ken Cohen, MD
The extent to which value-based payments are added to or replace fee-for-service (FFS) or relative value unit-based reimbursement should be related to the stage of the journey toward two-sided risk. To succeed, though, it’s critical that each stage of this journey is accompanied by incentive payments that flow downstream to providers—in a way that directly reflects the efforts that went into generating the incentive pool.
4 STAGES OF RISK The journey to two-sided risk may be thought of as progressing through a series of stages:
Deeling L. Teng, MD
• Stage 1. At this point, the only additional revenue may come from upside shared savings related to quality and utilization measures. Physician groups and healthcare systems often use these revenues to offset the infrastructure needed for PHM, leaving little for physician revenue. This limits physician engagement in care transformation. Although revenues in these contracts are often not adequate to offer bonus payments to specialists, early engagement of primary care with significant bonus payments is a sound investment in future PHM success. • Stage 2. Contracts will begin to offer downside risk with risk corridors to limit exposure. With successful PHM, additional revenues in these contracts should be adequate to not only help fund the PHM infrastructure, but to also provide meaningful bonus revenue to primary care physicians (PCPs) and possibly key specialists. While accurate reporting of quality and utilization metrics at the individual physician level is important at all stages, it takes on added significance when downside risk is present. • Stage 3. These are usually professional risk or full risk (percent of premium) contracts, but they usually exclude pharmacy risk. At this point, you should consider bonus payments that reflect a quality gate for participation, as well as those based on utilization efficiency measures at the group, sub-group, or individual level.
Jamie Phillips
As providers assume accountability for both quality and total cost of care, the work of PHM increases considerably. Bonus payments should reflect the physician’s added PHM work and performance. It is helpful to begin including specialist physician bonus payments at this stage of contracting. That being said, measuring the quality and utilization of specialists is extraordinarily difficult.
22 l JOURNAL OF AMERICA’S PHYSICIAN GROUPS
Fall/Winter 2021
