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Top 10 Considerations When Transitioning Physicians to Payment-for-Value

By Tawnya Bosko, MHA, MSHL, MS, Senior Manager, The Camden Group

change-ahead-signWith increased focus on payment based on value, physician practices and those involved with physician practices need to plan for how to transition to new reimbursement models. Here are the top considerations to keep in mind when implementing value-based structures:

1. How do you define value? 

For all the talk of compensating physicians based on value as opposed to volume, there is no consistent methodology for measuring “value.” Often, payers define value in different ways, making it difficult for physician practices to understand what is required of them in order to meet criteria. Leadership should define what value means to the practice with insight from key payers. Typically, initial steps in measuring value are based on compliance with designated measures from the Healthcare Effectiveness Data and Information Set, but depending on the program, different criteria may be used. Further, the practice may include measures that it has identified as needing improvement, such as patient access, completing notes, meeting meaningful use, or responding to lab results in a timely manner.

2. How do you report on value?

Once the practice has determined the clinical measures or other criteria that will define value, it must proactively assess information system readiness for reporting on these measures. Historically, many payers have tracked these values based on claims data. Practices must be able to monitor, track, and report on performance related to value metrics. Assess the system, and ensure that necessary data can be extracted efficiently and accurately for reporting. Build custom fields within the electronic health record (“EHR”), or consider an add-on reporting tool if needed.

3. How do you document value?

Just as important as determining how to generate reports to measure the value metrics, practices must determine how physicians and other providers should document their work within the EHR in order to ensure their results are captured. Often, EHRs have several ways and areas in which documentation of a certain procedure or services can be documented. Best practice is determining the field or area to document each measure so that it is clearly communicated to physicians and easily reported on, retrospectively.

4. Incentive program - carrot or stick?

Once the metrics to measure value have been determined, what is the incentive (carrot) or penalty (stick) for meeting or failing to meet value as defined by the group? There must be enough incentive to gain buy-in so that physicians do not feel as though extra work is being added without additional benefit. And, there must be enough penalty at stake for the program to be taken seriously. It is about finding the right balance. Is it a withhold on revenues with the opportunity to earn X times the withhold in return if measures are met? Is there a “direct” line of sight between the incentive earned by physicians and the impact on their compensation? There are many models that could be implemented to meet the practice’s needs.

5. Educate, educate, educate.

This point cannot be emphasized enough. Often, healthcare leaders think the difficulty is in defining value, measuring value, and designing the incentive program. While those can be complex, educating the physicians on the measures, model, and how to document them is a very important step and could make or break your program. Remember that these situations often involve changing the way a physician has practiced and/or documented and that it takes time, education, and re-education. Ensure the appropriate processes and tools are in place to communicate and educate effectively.

6. Living in a grey world/burden of value.

Understand that during this transition to payment-for-value, physicians are living in a grey zone. They are expected to take extra steps to meet value criteria, but the majority of reimbursement may still be based on a fee-for-service or volume-based methodology. Essentially, they are asked to spend extra time with patients and on documentation in order to meet quality measures but also to continue to meet their productivity targets in order to sustain the viability of the practice. Typically, the burden of many of the value-based measures falls hardest on primary care physicians. Be aware of this when designing incentive models. Do not do too much at once and overwhelm physicians to the point where they give up.

7. Transparency of data.

Physicians, rightfully so, are often skeptical of performance-related data. They have questions...make sure tyou have answers. Be transparent with data. If a physician asks for the names of patients where they failed on a certain measure, ensure the information is provided. It is important to not only be transparent with data but to build confidence in results.

8. Timeliness of results.

Be timely with reporting. Provide information to physicians in a timely and regular manner so that they are able to improve any deficiencies in the measurement period. Do not wait until the point where it is too late to correct issues for the current performance year. It is in the practice’s interest to improve each physician’s performance. Use the data and reporting to provide feedback and to help them be successful in the program.

9. Impact on total compensation.

Understand the impact that the design of the incentive program has on total compensation. What percentage of total compensation does the incentive (or withhold) represent? Does the physician employment agreement need to be revised to incorporate the incentive model? If physicians are on salary guarantees, how is that addressed so that the incentive/penalty falls on them and not the employer?

10. Engage payer partners.

Work with payer partners and do it early. Discuss their needs when measuring value and pursue discussions on how they can support the transition. Make it a collective effort where initiatives are streamlined and convergent. It is not practical for practices to have multiple different models for multiple different payers; be open with major payers, and develop a program that is supported uniformly.

As medical groups and hospitals that own medical groups look for ways to be more efficient and seek stability in a quickly changing marketplace, embracing a transition to value-based reimbursement is necessary. The focus should be on managing the care of a population, and incentive models should be designed with the end goal in mind.

bosko_headshotMs. Bosko is senior manager with The Camden Group and specializes in designing and implementing clinical integration, high growth medical service operations (“MSO”) and finance, physician hospital organization (“PHO”) and MSO development, managed care strategy, and physician alignment. She may be reached at tbosko@thecamdengroup.com or 310-320-3990.

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