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Incorporating quality measures in your physician compensation plans

MGMA Stat - August 2, 2018

Operations Management

While the majority of compensation plans still largely rely on productivity, including wRVUs and cash collections, many of today's larger private practices and hospital-/health system-owned practices are using additional metrics to determine total compensation. Some of these include quality metrics, citizenship or behavioral metrics and compensation for serving on committees as required by the group or hospital. 

A July 31 MGMA Stat poll asked healthcare leaders if their practice ties quality performance metrics to their physician compensation plans. Of the 1,349 respondents, more than one-third (36%) indicated quality performance metrics are linked to physician compensation plans, 60% said they are not and the remaining 4% were unsure.
Many of the larger private practices and hospital-owned groups MGMA Consulting has worked with are using quality metrics in calculating total compensation. Numerous groups are reviewing clinical outcomes and Healthcare Effectiveness Data and Information Set (HEDIS) metrics from the National Committee for Quality Assurance (NCQA). Some groups are using quality metrics derived from their specialty. 

For example, a large primary care group I recently worked with based 10% of total compensation on quality metrics. One of these metrics was giving the flu shot to all of its high-risk patients. As the group discussed this measure, it had to first decide how to categorize high-risk patients. For simplicity, one categorization could be elderly patients 62 years of age and older. 

The practice then set annual goals of 75% of those patients in year one, 85% in year two and 95% in year three. It set 95% as the upper limit recognizing that some of their patients refuse to receive the flu shot. Next, the practice ran reports of all eligible patients and the staff developed criteria for contacting and scheduling these patients. Monthly reports were distributed to management and each physician, so they were aware of their efforts. Meeting these agreed-upon quality metrics qualified each physician for up to 10% of their income. 

Medical practice leaders must factor in the time and effort needed to change compensation programs. On average, it takes six to nine months to make significant changes to compensation plans. Practices must gather accurate data, validate that data, develop a process to share that data with providers, form a compensation committee to facilitate communication between those proposing plan changes and the providers, identify financial staff to model changes and share those changes with the providers. 

The most difficult part of changing compensation plans is the transition time from current plan to new plan, which can take 12 to 18 months to fully implement. Buy-in takes time, so it's important to formulate a sound plan to gain acceptance. 

For more insight on understanding benchmarking drivers and how they can be applied to your provider compensation plans, watch "What drives the need for benchmarking compensation plans."

Additional resources: Learn more about MGMA Consulting
Learn more about MGMA Stat

Nick A. Fabrizio, PhD, FACMPE, FACHE
MGMA Consulting

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