Half of medical groups tie physician compensation to quality measures in 2024

Medical group leaders report an even split between those using quality measures in determining physician compensation and those who do not, according to a new MGMA poll.

An April 16, 2024, MGMA Stat poll found that 50% of respondents say quality performance metrics are included in their organizations’ physician compensation plans, and the other 50% use compensation methodologies that lack any quality metric component. The poll had 383 applicable responses.

This latest poll signals the continuation of an almost predictably slow and steady incorporation of quality into compensation models amid a similarly glacial trend away from fee for service (FFS) and toward value-based arrangements:

• A May 16, 2023, MGMA poll put the mark at 47% of medical groups using quality performance as part of their compensation plans.
• That mark stood at just under four in 10 groups (38%) in a March 2019 poll.
• In 2016, just more than one in four (26%) of medical groups reported tying quality performance to physician compensation.

Among medical groups with quality metrics embedded in their compensation models, almost one-third (33%) of them noted they increased the percentage of total compensation tied to quality metrics, whereas most (63%) said the share based on quality stayed the same, and only 4% reported pulling back on how much quality performance metrics weight into physician compensation models.

Among respondents whose organizations do not include quality metrics in compensation, the majority told MGMA that they do not anticipate adding quality as a component to their methodologies in the next year.

That doesn’t necessarily mean these organizations are not tracking quality measures or engaging in value-based arrangements with payers, however. Several of the “no” respondents mentioned that they are measuring quality performance but have avoided incorporating them into compensation either due to lack of buy-in or concerns about transitioning during a period of “unstable workforce,” as one practice leader told MGMA. Finally, several respondents from independent practices noted that their physician-owners split profits evenly and would be highly unlikely to add further complexity to their pay.

Still, several “no” respondents acknowledged they likely will need to embrace some form of quality performance tied to compensation and that they are discussing how to make the transition and manage the culture shift it entails.

MGMA benchmarks for value-based revenue and quality metrics

Recovering from the impacts of the pandemic years and the subsequent strain of staffing shortages from the Great Resignation, medical group practices did not surge ahead significantly into value-based care arrangements, as reflected in 2022 medical revenues reported in the latest MGMA DataDive Cost and Revenue data set.

As detailed in an August 2023 MGMA data report:

• Surgical and nonsurgical specialties reported only slight upticks in their relative share of incentive-based revenue, defined as payments received from insurance companies and government agencies for incentive-based activities including pay-for-performance, risk-sharing, shared savings, quality and technology.
• While primary care practices continue to have the largest share of incentive-based revenue compared to their nonsurgical and surgical practice counterparts, those levels of revenue in 2022 were half of what they reported in 2021, signaling a higher emphasis on traditional FFS performance.

Looking beyond quality as compensation evolves

A broader, multiyear review of data from the 2021 and 2023 MGMA DataDive Provider Compensation survey reports finds evidence of growing use of salary-based compensation models.

In recent years, medical group leaders have told MGMA that, following a recovery in productivity post-pandemic, they were increasingly considering more quality elements in their compensation models. “Now that we have stable volumes, we can focus more on quality performance,” one respondent told MGMA. Another respondent said that their group previously had quality performance tied to compensation before the pandemic but “took them out” of the physician compensation formula during the COVID-19 lockdowns. As contracts term or renew, many practice leaders have said they are taking a fresh look at how they weight existing quality performance against elements such as productivity.

Additional resources

• “Compensation is to recruitment as culture is to retention” (MGMA Connection) — Tony Stajduhar of Jackson Physician Search explores the importance of considering culture and compensation together to address the interconnected challenges of recruitment and retention.
• “Defying gravity — Are medical groups entering an era of increased productivity?” (MGMA Connection) — Retired MGMA senior fellow David N. Gans, MSHA, FACMPE, explores recent MGMA DataDive findings around productivity.
• “Benchmarking For the Future of Your Physician & APP Workforce” (Data report) — Discover key trends and benchmarks from the 2023 MGMA DataDive Provider Compensation and Productivity survey report.