Changing Reimbursement Models Challenging Physicians, Administrators

July 6, 2011
Aubrey Westgate

Physicians, if quality of care and productivity measures are not yet influencing your compensation, a new reimbursement model is likely headed your way. Health reform initiatives are significantly altering the way physicians - even those that remain independent - will be paid in coming years.

Physicians, if quality of care and productivity measures are not yet influencing your compensation, a new reimbursement model is likely headed your way.

Health reform initiatives, such as patient-centered medical homes, ACOs, and bundled payments, are significantly altering the way in which physicians - even those that remain independent - will be paid in coming years.

“Whether they stay independent or not, you're going to have the same or similar reimbursement changes as those that do align with hospitals: partial capitation, capitation, taking shared savings,” Warren Skea, director of PricewaterhouseCooper's Health Enterprise Growth Practice said in an interview with Fierce Practice Management earlier this year. “That's with commercial insurance or Medicare/Medicaid. That's the trend you're seeing fairly consistently across the industry.”

It’s a “trend” that’s already causing practice managers to begin adjusting compensation methodologies.

In fact, of 44 issues currently facing practice managers today, preparing for reimbursement models with greater financial risk is the most “extreme challenge,” according to a recently released survey conducted by the MGMA.

From an operational standpoint, it’s difficult for practice managers to implement the compensation changes. And from a personnel standpoint, many physicians are reluctant to accept them.

That’s because the newer risk-based reimbursement models are altering the way in which compensation has traditionally been handled throughout the primary-care community.

Just last year, the majority of physicians said they were paid with a set salary that did not include bonuses or incentives, according to our 2010 Physician Compensation Survey. And less than seven percent of physician jobs available last year featured salaries with bonuses based on quality of care, according to physician recruiting company Merritt Hawkins’ 2011 Review of Physician Recruiting Incentives.

Unfortunately, despite the reluctance of some physicians to adopt new compensation methodologies, it’s time for them to accept them and begin to adapt to them. Just as their practice managers are doing.

Practice managers participating in the MGMA survey said they were beginning to implement compensation changes that included adding quality metrics to relative value unit (RVU) productivity measures and implementing bonuses for meeting quality indicators.

“Operational and financial challenges – and the uncertainty associated with those issues so fundamental to the financial health and viability of a practice – continue to be difficult territory for those who lead medical practices,” MGMA President and CEO William F. Jessee said in a statement. “Also, the pressure to adopt technology and the morass our members face in determining the best systems for their practices, and then complying with the various government programs to receive incentives and avoid penalties, are proving to be of particular concern.”

Other top challenges facing practice managers according to the MGMA survey are: meeting meaningful use incentive requirements, facing rising operating costs, selecting and implementing a new EHR, and implementing and/or optimizing an ACO.