OVERVIEW
In an ideal scenario, provider compensation incentives would align with organizational goals and objectives. However, provider compensation model incentives have inordinately focused on increasing provider productivity, which was a primary mechanism to positively impact patient care revenues.
As value-based, pay-for-performance reimbursement models infiltrate, and progressively nudge, volume-based, fee-for-service reimbursements in most markets, provider compensation incentives must evolve to keep pace.
CHALLENGES
When organizations don’t prioritize critically reviewing their provider compensation models, they run the risk of misalignment between incentives and overall organizational goals and objectives. And when misalignment happens, particularly related to value-based care tenets and revenues, negative effects can be felt across the organization.
APPROACH
HSG’s Insights to Action Methodology takes clients through six key steps to identify problems and create long-lasting solutions.
HSG’s Compensation and Compliance experts have long worked with clients to evaluate and redesign their provider compensation models to create greater emphasis on non-productivity incentives. Our process follows the steps outlined below in order to create a thorough understanding of the current model, and pinpoint any necessary changes or redesigns.
DATA ACQUISITION
What data do we aggregate to solve the problem?
- Organization can start by getting a firm grasp on their current provider compensation models and incentive structures.
- Next, they must understand the reimbursement parameters in their current payor contracts, the “quality” metrics and targets contained and incentivized in the payor contracts.
- Additional considerations include organizational “pain points” like:
- Delinquent encounter documentation completion
- Objective patient access metrics.
HSG adds further insights by conducting:
- An online provider compensation survey to determine how providers and administration feel about the current compensation model(s).
- 1:1 interviews to obtain a greater depth of understanding about the pros and cons of the current provider compensation model(s).
DATA TRANSFORMATION
How do we extract information from the data?
HSG assesses how the organization is performing against those metrics and targets, providing knowledge and understanding of the baseline data.
This knowledge allows organizations to:
- Determine the revenue impact that improved performance could generate (and a mechanism to pay for the incentives).
- Provide the reasoning for pursuing provider compensation model(s) redesign.
- Establish practical, desirable, specialty-specific non-productivity incentive metrics and targets.
PROFESSIONAL SERVICES
What expertise do we apply to find a solution, and how do we find a comprehensive solution?
HSG’s experienced experts facilitate an objective and unbiased analysis with a quality committee for provider groups, engaging clinical and administrative leaders in designing the new compensation model to ensure organizational ownership. Providing this initial platform which can be modified and built upon saves the network considerable time and effort.
Whether working with an existing employed network quality committee or developing an ad hoc or newly formed standing employed network quality committee, the metrics, targets and payment parameters should all fall within certain criteria or guidelines as outlined below.
Metrics Categories
- Clinical Quality: Metric options include MIPS, ACO, national specialty databases (e.g., ACC, ASCO, ACS NSQIP), and others.
- Patient Experience/Satisfaction: Metric options include provider-specific CG-CAHPS questions (such as rate the provider from 0-10 and likelihood to recommend this provider) and others.
- Patient Safety: Metric options include Surgical Site Infection rates and others.
- Operational Efficiency/Financial Sustainability: Metric options include patient access (CG-CAHPS, time to 3rd next available appointment v. benchmarks), cost per case, budget performance, and others.
- Citizenry: Metric options include chart completion, meeting attendance, and others.
Metrics Criteria
- Start with only two to three metrics and only consider metrics that providers can influence and work to improve. Ensure they represent an opportunity to improve the current state to a desired future state.
- Select metrics that are aligned with organizational goals and objectives. Emphasize metrics associated with current or planned performance improvement initiatives.
- Establish clinical quality metrics that are meaningful and specialty-specific.
- Verify that data integrity exists for the selected metrics.
- Ensure that the employed network/ health system has the management infrastructure capabilities necessary to reliably support metric data collection, reporting, and improvement efforts.
Target and Payment Parameters
- Start simply: Select a single target to achieve (all or nothing) rather than a tiered or sliding scale approach to target achievement.
- A sliding scale above a base expectation can offer credit for achievement that represents improvement even though it falls short of the selected target.
- Consider a fixed amount per metric that is not linked to productivity but linked to a fixed percentage of base compensation, such as a national median – e.g., a total amount that is 9% of base compensation.
- Linking non-productivity incentives to individual or group productivity (e.g., portion of earned wRVUs) triples down on the productivity emphasis (base expectations, productivity incentives, non-productivity incentives) – which tends to negate the “importance” of the non-productivity emphasis.
- This philosophy may require establishing a separate funding pool.
- Ensure that the selected targets represent a challenge to achieve but are not unrealistic or completely out of reach.
PACKAGING
How do we structure our findings and solutions?
The quality committee’s metrics and targets end products become the foundation for the non-productivity tier of the compensation model.
Evaluating the current provider compensation model for the introduction of or expansion of non-productivity incentives can be undertaken separately or as part of an overall provider compensation redesign initiative.
When tackled separately, HSG still recommends a similar approach: involving employed network leadership and representative physicians and APPs to evaluate the data and develop metrics and targets.
DELIVERY
When and how do you receive solutions?
The quality committee’s recommended non-productivity incentive metrics and targets must be incorporated into the existing compensation model. Most organizations target the start of a fiscal year to introduce the new incentives so that the anticipated maximum incentive amounts can be incorporated into the budget planning process.
Payments are recommended to be distributed quarterly where possible to keep the incentive at top of mind for the providers and to reward performance in a timely manner. Certain metrics, reporting structures, or metric volumes may require semi-annual or annual payment structures.
- Payment intervals should be considered on a standalone basis to continually promote and reward provider effort, even though most payer reimbursement methodologies reward cumulative annual performance.
Providers should also receive monthly reports of their performance against the metrics whenever possible – again, to keep the initiative top of mind and to promote a continuous improvement mentality. Non-productivity metric performance (and target expectations) can be combined with the productivity report (and target expectations) so that providers are ever aware and mindful of the impact of their efforts.
IMPLEMENTATION & MONITORING
How do we provide ongoing support to your organization?
After the initial assessment and redesign, the quality committee that created the metrics and targets can morph into performance improvement mode and generate suggestions for incorporating metric performance into daily practice operations.
The quality committee should also perform annual reviews of the metrics and targets to ensure each continues to represent opportunities for improvement.
Future iterations of the provider compensation model can progressively increase the emphasis on non-productivity incentives and decrease the emphasis on productivity incentives by:
- Increasing the percentage of base compensation available for non-productivity incentives, and
- Decreasing the rate paid for productivity incentives, i.e., decrease the $/wRVU rewarded for wRVUs earned above the threshold expectation.
ADDITIONAL CONSIDERATIONS
Not uncommonly, the process of introducing or expanding the presence of non-productivity incentives in the provider compensation model may uncover issues related to:
- Underlying provider compensation model(s)
- Management infrastructure needed to support this new initiative
- Linkage with system-level shared services (like payor contracting), or
- Existing employed network provider leadership structure
Whatever the issue or concern may be, HSG has the resources to address these issues as they are identified.
If your organization is ready to review its Provider Compensation Model, reach out to Neal Barker to begin the conversation.
