ACOs Not Ahead of Others on Compensation for Quality Outcomes

Primary care physicians in accountable care organization (ACO) practices, on average, received similar compensation arrangements to those of physicians not in ACOs, and did not have substantial risk for primary care costs, according to a study published in the Annals of Family Medicine and reported in HFMA Weekly News.


On average, compensation for ACO primary care physicians (PCPs) was based 49 percent on salary, 46 percent on productivity, 3.4 percent on quality and 1.5 percent on other factors. Compensation for PCPs was shown to vary considerably across physician practices, irrespective of models of payment.


PCPs who were not in ACOs but who participated in other payment arrangements with substantial risk for primary care costs had an average compensation breakdown of 66.6 percent from salary, 32.2 percent from productivity, 0.8 percent from quality and 0.4 percent from other factors. The authors of the report acknowledged the greater role of salaries among such physicians. (“Physician Compensation: Study Shows Wide Variation, But Little Connection to Quality Outcomes,” HFMA Weekly News, July 24, 2015)


The variation in PCP compensation across practices probably reflected different financial incentives and a lack of consensus about the most appropriate ways to pay PCPs, according to the study.


The ACO physician results and conclusions were similar to the findings of separate research by consulting firm Bailit Health. A Bailit executive noted that providers still are being paid based on volume, so their employed physicians would also be paid on volume. Being paid based on value is gaining traction, but is a long way from wide implementation. (“Physician Compensation: Study Shows Wide Variation, But Little Connection to Quality Outcomes,” HFMA Weekly News, July 24, 2015)


With many of the new payment models in their early stages, and many providers still deriving only a small share of their revenue from such models, there is less incentive for physician compensation models to align with new payment models until the shift in payment has occurred, the Bailit executive said.


The slower transition to linking physician compensation and value-based care identified in the study also reflected a necessary self-preservation strategy by provider organizations, according to another expert. If compensation is too heavily quality- or salary-based and the contracts don’t exactly reflect that, there will be problems.


Some of the physician compensation challenges of include:

  • The continuing lack of value-based payment from many private payers
  • For ACOs, the inclusion of independent practices with compensation policies over which health system participants in the ACO have little control.


A 2015 HFMA survey showed less than one quarter of hospitals and health systems described their organizations as either highly or extremely capable of compensating physicians in a way that accommodates both fee-for-service and value-based models. But 42 percent of respondents said flexible models for physician compensation are “extremely important” capabilities to have over the next three years. (“Physician Compensation: Study Shows Wide Variation, But Little Connection to Quality Outcomes,” HFMA Weekly News, July 24, 2015)


In addition to physician compensation, ACOs have other ways to control costs including effective use of electronic health records, use of nurse care managers to coordinate care for high risk patients and the production of internal reports on physician performance.




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