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Pay For Performance: Five New Rules For How Doctors Get Paid

Updated: Jan 10, 2020

You may have heard the term “value-based payment models” before. While it may sound like insider stuff, it’s relevant to anyone who sees a doctor, even just for an annual check-up. The term refers to initiatives that aim to reward doctors financially for improving the quality of care they provide. In addition, the term points to the status quo that has plagued the healthcare industry: fee for service, where doctors have often been accused of providing unnecessary services, solely to collect fees.

Now, it appears as if value-based care and its payment models are here to stay, and they will continue to change how doctors get paid. Here’s how:

1. Doctors will have to demonstrate quality to get paid.

Physicians can be creatures of habit, so value-based payment models use the power of sophisticated analytics and financial incentives to motivate behavioral change. Under these models, doctors are rewarded based on how good of a job they do keeping patients healthy, including making sure patients come in for annual wellness visits, take their medications as prescribed, and maintain healthy lifestyles. Of course, doctors can’t control every aspect of a patient’s life, nor can they prevent every disease, so these new models look at large groups of patients and evaluate how healthy those populations are on average.

In addition, value-based payment models look at very specific measurements, like hospital readmissions, infection rates, and management of chronic diseases, especially congestive heart failure and diabetes. But how do doctors prove they’re doing a good job? They have to religiously use electronic health records and carefully document each patient’s care over the course of time.

2. Doctors will put skin in the game.

A little-known law called the Medicare Access and CHIP Reauthorization Act (MACRA) calls for doctors’ Medicare reimbursement rates to be based on the kinds of measurements mentioned above. This system of reimbursement is known as the merit-based incentive-based incentive payment system, or MIPS. As you can imagine, the system puts a great deal of burden on doctors to dot their i’s and cross their t’s. And if they don’t do a good job of record keeping, they can end up earning a lot less money.

To avoid this burdensome reporting, and to qualify for financial bonuses, many doctors will participate in payment models where they earn extra money if patients’ overall care — including hospitalizations and specialist visits — costs less than specific benchmarks. These models are considered Advanced Alternative Payment Models.

Certain types of accountable care organizations, or physician ACOs, qualify as Advanced Alternative Payment Models. In fact, our company Genuine Health Group owns an ACO that delivered care for $5 million less than the benchmark, so our physician members earned big bonuses for helping to keep healthcare costs down while achieving a quality score of more than 95%.

3. Doctors will prevent disease before patients need hospitalization.

Study after study has shown that it’s far less expensive to prevent disease than to treat disease. More specifically, preventive care delivered in a doctor’s office or even at a patient’s home is much cheaper than hospital-based care. So, as doctors seek to reduce the cost of delivering care (because they get bonuses to do so), they will start to provide more robust preventive care.

This kind of care helps all kinds of patients, but it makes the biggest difference among patients with chronic diseases, like congestive heart failure, diabetes, pulmonary disease, and behavioral health issues. For these patients, doctors and their provider colleagues will go to great lengths to keep patients in better health. It might mean they will send a nurse to patients’ homes to make sure they’re taking their medication as prescribed. Or the doctor may make a house call because it’s easier for the patient then finding a ride to a clinic. As a result, patients will stay healthier, and the cost of care will go down.

4. Doctors will invest more to make more.

The promise of value-based care sounds terrific, right? Patients feel better, doctors make more money, and payers like Medicare and insurance companies save money. However, the transition to value-based care can be a costly one.

Remember, providers have to measure their performance correctly with sophisticated health records systems. In addition, every patients’ health status needs to be accurately determined in order to know what the benchmark cost for care will be. And personalized care plans need to be created to address the complex health needs of patients with chronic diseases. All of these steps require investment in technology, training, and staff.

5. Doctors will enlist nurses and other care providers to extend their impact.

Delivering robust preventive care in lots of different settings can make a powerful impact toward better health. But providing this kind of more intensive care requires more time, and we already face a shortage of doctors in this country. So how will doctors be able to keep up with the added demands of value-based care in a Miami Accountable Care Organization?

We can expect to see far more physician extenders delivering care. “Physician extender” is a term that refers to healthcare professionals beside doctors who can extend a doctor’s impact to more patients. It includes physician assistants, social workers, and advanced registered nurse practitioners, or ARNPs, who can prescribe medication just like a doctor. These professionals will play a growing role in the delivery of care, so don’t be surprised if your next doctor visit doesn’t include a doctor at all.

Yes, the payoff from value-based care can be significant, but the healthcare industry still has a long way to go. Fortunately, we’ve made great progress, and for forward-looking organizations and physicians who recognize that change can be good, the future is bright.

About The Author

Joseph L. Caruncho, Sr., Chief Executive Officer, Genuine Health Group

Joe Caruncho has earned a national reputation for his pioneering work in advancing value-based care and helping physicians transition to this new model of care delivery. Prior to serving as CEO of Genuine Health Group and its Miami ACO, Joe co-founded Preferred Care Partners, a Medicare Advantage plan, which he and his partners sold to United Healthcare. As Preferred’s chief executive, he helped grow membership to 55,000 and generate sales in excess of $750 million.

For more than a dozen years he practiced corporate healthcare law, representing physicians, hospital systems, health care delivery networks, ancillary providers and health plans.


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