Volume Still Overwhelms Value in Physician Pay, Survey Says

June 06, 2017

Value-based pay for physicians is supposed to be healthcare's brave new world, replacing fee for service (FFS) and its perverse incentive to pump up the volume of services for the sake of greater revenue.

However, the old FFS world is still the norm, and value-based pay plays such a tiny, timid role that it's not yet an effective incentive for physicians to change how they practice, a new survey by the recruiting firm Merritt Hawkins suggests.

The company reports that in 72% of the jobs it was trying to fill in the 12 months ending March 31, 2017, physicians were offered a salary and a "production bonus" (the rest were offered a straight salary, an income guarantee, or something else). Thirty-nine percent of the bonuses were based completely or partly on quality metrics such as patient satisfaction scores and adherence to treatment protocols.

That percentage of bonuses with some kind of quality component represents progress of sorts, since just 23% of bonuses were structured that way in 2015, according to Merritt Hawkins. However, only 21% of the bonus money on average in 2016-2017 was based on quality, down from 29% the year before. And quality generally accounted for only 4% of total compensation.

Is 4% enough of a financial incentive to improve physician performance? No, said Travis Singleton, senior vice president of Merritt Hawkins, in an interview with Medscape Medical News.

"Anything less than 10% and you're probably not changing someone's day-to-day behavior," said Singleton. "Have we solved any problems? Not yet. At least we're getting physicians used to value being a part of our world."

Merritt Hawkins isn't the first to report that physicians receive a small amount of value-based pay. The Medical Group Management Association found that about 8% of physician compensation in 2013 reflected patient satisfaction scores and quality metrics such as the percentage of patients with hypertension who have their blood pressure under control.

Physicians complain that roughly half of the quality dollars depends on factors out of their control, said Singleton.

"Patient satisfaction — they can't control that," he said. "Hospital readmission rates — if patients go back to the hospital because they were not compliant (with care instructions), physicians get dinged."

Value-based pay in Medicare promises to become more widespread under the 2015 law called the Medicare Access and CHIP Reauthorization Act (MACRA), designed to phase out FFS. Singleton said he hopes for the best.

"When you talk to physicians about MACRA, most will say they don't have a good handle on it," said Singleton. He recalled giving a MACRA presentation recently to a group of physicians who appeared ill-prepared.

"It was like looking at an audience of scared kids," he said.

Follow Robert Lowes on Twitter @LowesRobert

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