Physician Pay Shifts from Volume to Value

The move to paying hospitals and physicians based on value instead of volume is well underway. As programs ultimately designed to offer a global payment for a population (accountable care organizations [ACOs]) or an episode of care (bundled payment) expand, we are left with this paradox: How do we reward physicians for working harder and seeing more patients under a global payment system that encourages physicians and hospitals to do less?

It appears that the existing fee-for-service payment system will need to form the scaffolding of any new, value-based system. Physicians must document the services they provide, leaving a “footprint” that can be recognized and rewarded. Without a record of the volume of services, physicians will have no incentive to see more patients during times of increased demand. This is what we often experience with straight-salary arrangements—physicians question why they should work harder for no additional compensation.

Through the ACO lens, Bruce Landon, professor of healthcare policy at Harvard Medical School in Boston, states the challenge in a different way: “The fundamental questions become how ACOs will divide their global budgets and how their physicians and service providers will be reimbursed. Thus, this system for determining who has earned what portion of payments—keeping score—is likely to be crucially important to the success of these new models of care.” (N Engl J Med. 2012;366:393-395).

In another article addressing value-based payment for physicians, Eric Stecker, MD, MPH, and Steve

Schroeder, MD, argue that, due to their longevity and resilience, relative value units (RVUs), instead of physician-level capitation, straight salary, or salary with pay for performance incentives, should be the preferred mechanism to reimburse physicians based on value (N Engl J Med. 2013;369:2176-2179).

Drs. Stecker and Schroeder observed: “Although RVUs are traditionally used for episodes of care provided by individual clinicians for individual patients, activities linked to RVUs could be more broadly defined to include team-based and supervisory clinical activities as well.” I include “multidisciplinary discharge planning rounds” as a potential measure. One can envision other team-based or supervisory activities involving physicians collaborating with nurses, pharmacists, or case managers working on a high-risk medication counseling or readmission risk assessment—with each activity linked to RVUs.

Once established, a value-based RVU system could replace the complex and variable physician compensation landscape that exists today. As has always been the case, an RVU system could form the basis of a production incentive.