Value-Based Payment for Physicians Stays Flat: Survey

One priority that physicians appear to share with policymakers is the need for a greater focus on addressing the social determinants of health—both in provider payment models and directly with patients.

Sept. 21—The share of physician compensation tied to value-based payment metrics has remained stuck below 15 percent, according to a recent national physician survey.

The share of physicians’ total compensation tied to value-based metrics dropped from an average of 14.8 percent in 2016 to 14.2 percent in 2018, according to the latest survey by the Physicians Foundation.

“That’s significant,” said Walker Ray, MD, chair of The Physicians Foundation research committee and a retired pediatrician.

Although experts are divided over the share of physician income that must be tied to value to drive changes in behavior, Merritt Hawkins has put the number at 10 percent. Among the 42.8 percent of physicians with any compensation tied to value-based metrics, value-based pay was 10 percent or less of total pay for 41.9 percent of them.

Ray said the outlook for value-based pay remains uncertain, with one influential health system—Geisinger—abandoning value-based payment add-ons in favor of straight salary for physicians.

Another complication is that physicians remain dubious of the benefits of value-based pay. Nearly 57 percent of physicians disagreed that value-based compensation is likely to improve quality of care and reduce costs, while only 18 percent agreed.

“Physicians really have a negative view about whether value-based compensation is likely to improve quality of care or reduce costs,” Ray said in an interview.

Such physician views come as the Trump administration plans a renewed push to implement value-based physician compensation.

“You’ll see us placing more accountability and risk on physicians who want to assume that risk,” the recently appointed director of the Center for Medicare & Medicaid Innovation (CMMI), Adam Boehler, said at a recent media briefing.

Boehler clarified that not every physician or hospital should be risk-based, “but for those groups that are interested in that, we want to create the avenue.” Boehler said another priority is for independent physicians be given the ability “without major downside risk to share in upside outcomes.” 

One new Medicare route may be direct primary care models, regarding which the administration recently sought comments from healthcare stakeholders. Ray said the proposal is similar to direct care models that physicians have previously negotiated with health plans. Beneficiaries with those policies can backstop them with catastrophic insurance plans.

The Physicians Foundation survey, based on responses from 8,774 physicians across the country for this year’s edition, has been conducted every two years since 2010.

Social Determinants

One priority that physicians appear to share with policymakers is the need for a greater focus on addressing the social determinants of health—both in provider payment models and directly with patients.

For instance, 56.4 percent of physicians said many or all of their patients are affected by a social situation (e.g., poverty, unemployment, lack of education, drug addiction) that poses a serious impediment to their health.

Boehler repeatedly emphasized the need to address social determinants of health and account for them in payment models.

 “Right now, medical care is siloed from housing, from social services, from food stamps,” Boehler said. “If you were going to design the American system today from scratch, you wouldn’t silo those.”

Boehler said Medicare is looking at launching CMMI models that invest more in prevention of disease and worsening health—for example, through an effort to ensure that all available transplant kidneys are used.

“We want to look very closely at the integration of housing, social, and food,” Boehler said. “If we can invest in that, we can avoid healthcare expenses.”  

Physician Employment

The share of physicians identifying as independent practice owners or partners has declined from 48.5 percent in 2012 to 31.4 percent in 2018. In the same time frame, the share of physicians identifying as hospital or medical group employees increased from 43.7 percent to 49.1 percent.

Approximately 19 percent were employed by a hospital and 17.4 percent by a hospital-owned medical group, for a total of about 36 percent who received their compensation directly or indirectly from a hospital.

“Physicians paid by a hospital, whether directly or indirectly, may alter their practice patterns to align with the goals and interests of the hospital, ceding some of their clinical autonomy for the security and manageable schedule associated with employment,” the survey authors noted.

However, many physicians (57.5 percent) did not agree that hospital employment of physicians was a positive trend “likely to enhance quality of care and decrease costs.” Even among hospital-employed physicians, 34.6 percent did not agree with that statement.

The 2018 survey for the first time asked about relationships between physicians and hospitals. Significantly more physicians said that the relationship was somewhat or mostly negative (46.4 percent)  than indicated it was somewhat or mostly positive (31.7 percent).

However, 4.3 percent of physicians said that within the next one to three years they planned to become employed by a hospital.

Ray said hospital finance leaders could improve their relationships with clinical staff through improved transparency around compensation.

“They need to understand how they are going to be paid, when they are going to be paid, and the manner in which they are going to be paid, and not have it be a black box,” Ray said.

For his part, Boehler said he was neutral regarding hospital employment of physicians but that he wanted to help physicians who seek to remain independent.

“A lot of the reason when you think of physicians moving to employed status is, ‘I have a revenue cycle to deal with, I have an office staff, I have all of these burdens,’” Boehler said. “What I want to do is to the extent possible let them focus on their patients and let them focus on their outcomes.”

Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare