Are healthcare regulations and incentives about to disrupt physician compensation models again? Although there are many models of physician compensation in effect, each with its own rewards and risks, the uncertainty following the U.S. presidential election has made it necessary for physicians and medical systems to take a wait-and-see approach as to what comes next.
Here are some of the models currently in use:
Fee-for-Service: This model focuses on paying for service with the focus on throughput and productivity. The risk with FFS is the tendency for overuse.
Fee-for-Value: The move to this model was meant to improve outcomes and reduce costs across the continuum of collaborative care. In the Fee-for-Value model, success requires a model to produce improved care outcomes while lowering costs of care.
Straight Salary: This simply means annual pay for doing the job. Misuse and underuse are both concerns with this model.
Pay-for-Performance: This model pairs compensation with predefined performance benchmarks. With P4P models, there is less chance for misuse, but overuse can result in a decrease in quality.
Capitation: This classic model of compensation is based on a fixed amount of patients per month.
Bundled Payment: Based on episodes of care across a continuum of healthcare professionals (individuals and teams) as well as organizations, this model lines up services with need.
Concierge: This model combines Fee-for-Service with an annual retainer. There is a low risk of overuse with this model because of the high cost.
ACO: This model is based on savings from which pay is determined by other metrics tied to the three goals (also known as the Triple Aim) of improving the patient experience of care—including quality and satisfaction, improving the health of populations, and lowering the per capita cost of health care.
Direct Contracting: This model pays physicians based upon a contract with an employer, eliminating the insurance intermediary. There is little to no value-based incentive, so the potential for overuse and misuse exists.
Production RVU: Based on a percentage of a physician’s productivity, the RVU stands for Relative Value Units—a RVU is given to each patient encounter, including procedures and surgery, and the physician.
One of the objectives of the Affordable Care Act was to tie physician compensation to increased patient quality and outcomes. What comes next remains to be seen, but flexibility and adaptability will be a key to sustainability. How is your organization preparing for potential change?
