Despite calls for quality and value, most physicians are rewarded by volume

According to a new study by RAND Corporation researchers, most physicians employed in group practices owned by health systems are paid primarily based on the volume of care they provide, despite efforts by insurance companies and other payers to move toward compensating physicians based on the quality and value of care they provide.

Researchers looked at a variety of medical practices operated by health systems and discovered that volume-based remuneration was the most common type of base pay for more than 80% of primary care physicians and 90% of physician specialists.

While health systems frequently implemented financial incentives for quality and cost performance, the share of total physician compensation based on quality and cost was small—9% for primary care physicians and 5% for specialists.

The findings were reported in the JAMA Health Forum journal.

«Despite the expansion of value-based programs and the need to improve value in health care, physician remuneration arrangements in health systems currently do not emphasize value,» said Rachel O. Reid, the study’s lead author and a physician policy researcher at RAND. «Most payment systems in place are designed to increase health system income by rewarding providers to perform more services within the system.»

Both private and public payers have enacted payment reforms in recent years that aim to incentivize health care providers to enhance the quality of treatment they provide while also slowing spending growth in order to give better value to patients. At the same time, the growth of health systems and the number of physicians employed by them have grown dramatically.

The study looked at the physician payment structures employed by 31 physician organizations linked with 22 health systems in four states to see if they mirrored payment changes based on value.

To characterize the compensation arrangements of primary care and specialist physicians, researchers interviewed physician organization officials, analyzed compensation documentation, and surveyed the medical practice.

The most widely cited measure that physicians can take to raise their income is to increase the number of services supplied, with 70% of practices implementing this plan. Volume-based incentives accounted for more than two-thirds of remuneration in these circumstances.

Compensation often included performance-based financial incentives for value-oriented goals such as clinical quality, affordability, patient experience, and access to treatment. However, because those payments made up a small portion of overall income for primary care physicians and specialists, they are only expected to have a minor impact on physician behavior.

Instead, increasing the number of services supplied is the top measure that primary care and specialist physicians may take to raise their income, according to 70% of physician organization leaders.

«To properly fulfill the potential of value-based payment reform and deliver better value for patients, health systems and provider organizations will likely need to modify the way that frontline physicians are compensated to better align with value,» Reid said.