Episode Details

This is a conversation about physician compensation, which is often oddly misaligned from the way that the whole physician or provider organization is getting paid.

Now, first thing to point out: There are lots of different kinds of physicians doing all kinds of different things. As with most everything in healthcare, lumping everybody together and making general proclamations about what is best is a really cruddy idea.

With that disclaimer, if you think about the main models of physician compensation, there are two; and this is oversimplified, but let's call one fee for service (FFS), which is really getting paid for generating RVUs (relative value units)—in short, getting paid for volume. The more you do (especially the more expensive things you do), the more you get paid. And then we have getting some kind of capitation payment. A capitated payment is some kind of per member per month-ish flat payment to ideally keep patients healthy, and you will make the most money if you can figure out how to have the least volume of expensive stuff. As an individual doc getting a salary to care for a patient panel of a certain size, let's just consider commensurate with that.

These incentive models obviously have a big impact on any given doctor's ability to get paid to do things that they think they should be doing. For example, the current fee-for-service RVU fee schedule frequently rewards those doing the stuff a lot of specialists do much more than those doing primarily cognitive work, including those doing work for patients who aren't sitting in the exam room at the time—like a PCP arranging for a patient to go to hospice or answering patient portal questions.

In my opinion, the goal here should be to pay docs and others fairly for providing high-value care. These payments also should actually be proven to actually incent that high-value care.

Here's the obvious problem: Neither of these two things, either the quantifiable definition of high-value care and/or the best way to pay for it, has any kind of canon. There are no rules which are considered to be particularly authoritative and definitive here, really.

So, what is the downside of not aligning physician compensation models to what good looks like, meaning to the kind of care that patients really need in that particular community?

A couple of downsides for you: One is moral injury. Not the only reason, but a reason for moral injury is getting paid in misalignment with what is best for patients. That sucks. You want to help your patients as best you can, and then you can't earn a living and/or you get in trouble with the boss if you do what you think is right. This can cause real mental anguish for especially PCPs but also others who see the need to do anything that doesn't have a billing code.

Here's another downside to not worrying about physician compensation, and it's for plan sponsors (employers, maybe) who are trying to get integrated care or a medical home for their employees. I was talking to Katy Talento about this. She was telling me that in ASO (administrative services only) contracts, there are often line items for value-based care and for capitated payments. So, good news?

Well, let's follow the dollar here, because we wind up with a disconnect that doesn't help patients but certainly can earn a nice little kitty for those who can get away with it.

Here's where that dollar goes: This VBC (value-based care) or capitated payment kitty may go to a health system that the ASO says is to be a medical home for employees or plan members.

But the PCPs mainly who are treating members in those medical homes are getting paid, it often turns out, fee for service with maybe some quality kickers. So, the plan is