Although most compensation arrangements included performance-based incentives, they averaged less than 10% of total compensation. (Photo: Shutterstock)
Despite the promise of value-based care, the current compensation structure continues to incentivize physicians for volume.
A payment hierarchy exists in the U.S. health care system. Reimbursement mechanisms used by payers create incentives for health systems and physician organizations. In turn, these organizations create incentives for physicians through compensation packages, which may or may not reflect the same structure and incentives as those they face from payers. Evidence suggests that physician organizations are selective in which incentives they pass along to physicians.
Since passage of the Affordable Care Act, public and private payers have tried various payment reforms to improve quality and reduce spending. Alternative payment models and value-based payment seek to redirect the health system's focus toward producing value instead of volume. Whether it is a response to value-oriented payment models or not, during the same period, health systems and their employment of physicians have grown.
Researchers recently analyzed 31 physician organizations affiliated with 22 U.S. health systems in a study reported by JAMA Network. Volume was a component of compensation for 84% of primary care physicians and 93% of specialists, they found. Although most compensation arrangements included performance-based incentives, they averaged less than 10% of total compensation.
The study results suggest that despite growth in value-based payment arrangements from payers, health systems currently incentivize physicians to maximize volume, thereby also maximizing health-system revenues.
"Despite growth in value-based payment arrangements and a push to improve value in health care, physician compensation arrangements in health systems do not currently emphasize value," researchers concluded. "Volume-based incentives dominate health-system primary care physician and specialist compensation, with quality and cost performance incentives representing a relatively small portion of compensation. Many factors may limit alignment of value-based compensation for physicians, and the best mix of incentives to optimize value-based care delivery is unknown.
"However, as health systems and their employment of physicians continue to grow, greater translation of the value-over-volume incentives of payers into physician compensation may be necessary to realize the full potential of value-oriented payment reform."
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