I have had the fortune — both good and bad — of being at the forefront of reforming physician reimbursement as an advocate for physicians. I’ve worked on models spanning private practice, group employment, faculty practice plans, and independent physician associations.
It’s been a bruising journey.
There were the old ways — relative value units (RVUs) and other tortured renditions of volume medicine — that created a lingering culture of compression in which the only way HMOs could continue to squeeze out profits over time was to pay less for services. These contrived value units created a system that could reward only a continuous churn of transactional patient visits rather than rewarding improving patients’ health.
In the 1990s, physician reimbursement models inadequately applied the concepts of capitation and risk adjustment. When they resurfaced in the latest value-based-care efforts, they sent physicians fleeing for the door crying, in “Poltergeist”-fashion, “They’re baaaack!”
Considering our pasts, our mistrust of the reimbursement system — of hospital administrations, of academic departmental models, and, of course, of the insurance industry to fairly compensate primary care physicians (PCPs) — is appropriately enormous. Most “new” reimbursement methods remain based in volume, with relatively small incentives for check-the-box successes that don’t truly amount to a paradigm shift toward value-based reimbursement. Those that do adjust payments away from fee-for-service often don’t recognize and reward the value of primary care providers.
These physicians, who are vital links in the chain of health care, have virtually zero control in the current system on how and how much they get paid.
The system has predecided that primary care services are worth approximately 6 cents of every health care dollar. That is a small sliver of the pie in exchange for the expectation of being patients’ care quarterbacks across multiple clinical caregivers— and even more egregious should the primary care role evolve, as is logical, into also quarterbacking cross-community social determinant and wellbeing initiatives in addition to providing clinical care.
I have heard the gripes and met the resistance over the years from insurance plans, systems, hospitals, and physicians. I have also been able to help develop and implement progressive physician compensation models that appropriately reward physicians not just for treating those who walk in the door but for collaborating on treatment models that encourage fewer people to walk in the door — models that truly encourage cross-caregiver collaboration and reward value in medicine rather than volume. These have proven themselves to offer much larger upside potential for primary care physicians than the ceiling we’ve already hit on speed and volume.
In every flavor of payment models I have worked with, I’ve had to assume I cannot change the insurance industry. But I can affect the spoons that actually feed us as physicians, especially as more physicians become affiliated or employed.
In working with leading providers in New York, California, and other states in between, I’ve learned after many arguments that most compensation methods are currently misaligned, meaning they pay physicians for transactional, volume-based care but they ask those physicians to practice value-based health care. Properly aligning compensation with work is the key, but that means many things to multiple stakeholders, all with varying expectations and timelines.
Alignment between pay and care occurs when physicians are rewarded for activities that promote their patients’ overall health and wellness and for managing chronic disease. In an aligned pay-care scenario, physicians are rewarded when you don’t have a heart attack, not when you do. Wrapping one’s head and one’s payment system around such a concept is a challenge.
When alignment isn’t achieved, we end up sliding back to the familiar: The devil you know is better than the devil you don’t, and volume-based addition is at least easy to understand and administer.
From multiple attempts to engineer value-based care models that value primary care physicians, here are six lessons I’ve learned.
One question matters. The only question that should ultimately matter to primary care physicians is this: “For how many risk-adjusted patients are you providing high-quality care?” The new widget in town is the holistic person, not an RVU or an evaluation/management code.
The rules of the game must change. Primary care physicians got really good at the volume game. We learned to play by the perverse rules handed to us by HMOs. This isn’t a pejorative statement — playing the game was protective. I am confident that when we all understand the new rules for creating value in health care, we will learn how to succeed there, too. Yet the upside should not have an arbitrary ceiling. A piece of the savings that primary care providers help generate should be reserved for them. The same percentage of a bigger pie is, well, more pie. The burnout factor for doing more for less is real. We can change this.
Adequate risk-adjustment is an absolute. Risk adjustment is a lesson from the 1990s that still haunts us. Stratifying patients only by age and sex does little to indicate the cost of care. Primary care physicians were unable to provide the time that very sick patients needed, and this poor risk adjustment was the inherent driver of cherry-picking patients. With data-informed risk stratification and risk adjustment that account for social determinants of health as well as treatment across providers, we can actually entice physicians to reach for the sicker and frailer by rewarding them for doing so.
Change practice operating models. Incrementalism may not only slow us down, it may cause us to fail. Value-based care is about more fluid communication, prevention, reminders for adherence, and at-the-time help, not episodic, infrequent, and fragmented interaction. But new tools are needed to support these new workflows and improved access to wraparound services. Quarterbacking cannot be conflated with just doing more. And that means we’ll need to build new compensation models that reward the outcomes we all seek for our communities.
Weatherproof the cracks. Problems will occur, so arm yourself with the tools to fix them. Success in newer models requires clinical informatics as well as population- and patient-level analytics to maximize the efforts of everyone on the care team and ensure few-to-none fall through the cracks.
Trust is the final frontier. Innovative reimbursement methods require a level of transparency that most payers have been unwilling to share. Transparency is a contractual must. I always say, out loud and often, that if primary care providers do not perceive absolute transparency into data and methods, then they shouldn’t agree to a contract with the payer. Don’t trust the negotiators, no matter how nice they are. Trust the numbers.
Like many physicians, I know the post-traumatic stress disorder generated by 1990s capitation. But times are different. We now have far better data and analytics; we can adjust risk to provide for increased payments for patients who have overlapping conditions that complicate treatment, or whose age or disease progression make them more expensive to treat. Current capitation methods allow for fairer environments in which to run a primary care practice, and for the potential to increase revenues by addressing existing systemic inefficiencies.
Ideally, our health care system would do a better job at keeping people healthier. But since that means that the market for primary care physicians would shrink considerably, then those physicians can achieve higher pay only through greater efficiency. And that means we need to find a better path forward for physician reimbursement.
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