Abstract
Question
Do health system physician compensation arrangements primarily incentivize volume or value?
Findings
This cross-sectional mixed-methods study of 31 physician organizations affiliated with 22 US health systems found that volume was a component of primary care and specialist compensation for most POs (83.9% and 93.3%, respectively), representing a substantial portion of compensation when included (mean, 68.2% and 73.7%, respectively). While most primary care and specialist compensation arrangements included performance-based incentives, they averaged less than 10% of compensation.
Meaning
The study results suggest that despite growth in value-based payment arrangements from payers, health systems currently incentivize physicians to maximize volume, thereby maximizing health system revenues.
Importance
Public and private payers continue to expand use of alternative payment models, aiming to use value-based payment to affect the care delivery of their contracted health system partners. In parallel, health systems and their employment of physicians continue to grow. However, the degree to which health system physician compensation reflects an orientation toward value, rather than volume, is unknown.
Objective
To characterize primary care physician (PCP) and specialist compensation arrangements among US health system–affiliated physician organizations (POs) and measure the portion of total physician compensation based on quality and cost performance.
Design, Setting, and Participants
This study was a cross-sectional mixed-methods analysis of in-depth multimodal data (compensation document review, interviews with 40 PO leaders, and surveys conducted between November 2017 and July 2019) from 31 POs affiliated with 22 purposefully selected health systems in 4 states. Data were analyzed from June 2019 to September 2020.
Main Outcomes and Measures
The frequency of PCP and specialist compensation types and the percentage of compensation when included, including base compensation incentives, quality and cost performance incentives, and other financial incentives. The top 3 actions physicians could take to increase their compensation. The association between POs’ percentage of revenue from fee-for-service and their physicians’ volume-based compensation percentage.
Results
Volume-based compensation was the most common base compensation incentive component for PCPs (26 POs [83.9%]; mean, 68.2% of compensation; median, 81.4%; range, 5.0%-100.0% when included) and specialists (29 POs [93.3%]; mean, 73.7% of compensation; median, 90.5%; range, 2.5%-100.0% when included). While quality and cost performance incentives were common (included by 83.9%-56.7% of POs for PCPs and specialists, respectively), the percentage of compensation based on quality and cost performance was modest (mean, 9.0% [median, 8.3%; range, 1.0%-25.0%] for PCPs and 5.3% [median, 4.5%; range, 0.5%-16.0%] for specialists when included). Increasing the volume of services was the most commonly cited action for physicians to increase compensation, reported as the top action by 22 POs (70.0%) for PCPs and specialists. We observed a very weak, nonsignificant association between the percentage of revenue of POs from fee for service and the PCP and specialist volume-based compensation percentage (r = 0.08; P = .78 and r = −0.04; P = .89, respectively).
Conclusions and Relevance
The results of this cross-sectional study suggest that PCPs and specialists despite receiving value-based reimbursement incentives from payers, the compensation of health system PCPs and specialists was dominated by volume-based incentives designed to maximize health systems revenue.
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