1. Money talks, are we listening? Structuring physician compensation in our Patient- Centered Medical Homes Jennifer E. Lochner, MD Sandra Kamnetz, MD University of Wisconsin Department of Family Medicine December 1, 2012

2. Disclosures It is the policy of the AAFP that all individuals in a position to control content disclose any relationships with commercial interests upon nomination/ invitation of participation. Disclosure documents are reviewed for potential conflicts of interest and if identified, they are resolved prior to confirmation of participation. Only these participants who have no conflict of interest or who agree to an identified resolution process prior to their participation were involved in this CME activity. All individuals in a position to control content for this activity have indicated they have no relevant financial relationships to disclose.

3. Objectives Review background information on physician compensation as it relates to some measures of clinical productivity and quality of care Discuss changes in the environment of health care in this country that are influencing the structure of physician compensation Discuss the benefits and drawbacks to the inclusion of various productivity and quality measures in a physician compensation plan

4. "Money is the opposite of the weather. Nobody talks about it, but everybody does something about it." - Rebecca Johnson

5. Physician compensation – what is the evidence?

6. Does the structure of physician compensation influence the way that care is provided?

7. Conflicting evidence

8. 2010 Outcomes of a Primary care clinic compensation change Descriptive study of a large multi-site urban FQHC that moved from salary to lower base salary plus performance incentives for volume and quality Resulted in an 11-61% increase in encounters/ month depending on specialty. Increased performance on quality measures too. Helmchen LA, Lo Sasso AT. How sensitive is physician performance to alternative compensation schedules? Evidence from a large network of primary care clinics. Health Econ. 19: 1300–1317 (2010)

9. 1998 study of Washington primary care physicians Based on physician group survey data linked to health plan data about cost per member Physician compensation method was not significantly related to use and cost of health services per person. Enrollee, physician, and health plan benefit factors were the prime determinants of utilization and cost of health services. Conrad DA, Maynard C, Cheadle A, et. al. Primary Care Physician Compensation Method in Medical Groups. JAMA. 1998;279:853-858

10. 2011 Cochrane review Included 4 reviews reporting on 32 studies Financial incentives may be effective in changing healthcare professional practice. The evidence has serious methodological limitations and is also very limited in its completeness and generalisability. We found no evidence from reviews that examined the effect of financial incentives on patient outcomes. Flodgren G, Eccles MP, Shepperd S, Scott A, Parmelli E, Beyer FR. An overview of reviews evaluating the effectiveness of financial incentives in changing healthcare professional behaviours and patient outcomes. Cochrane Database Syst Rev. 2011 Jul 6;(7):CD009255

11. Do physicians practice differently when they are reimbursed (by payers) differently?

12. Do physicians practice differently when they are reimbursed differently? Probably

13. 2010 study of FPs in Canada Based on data from the 2004 National Physician Survey Physicians working in non-fee-for-service remuneration schemes spend fewer hours on direct patient care in the office/clinic, but devote more hours to direct patient care in other settings, and more hours on indirect patient care. Sarma S, Devlinb RA, Belhadjic B, Thindd A. Does the way physicians are paid influence the way they practice? The case of Canadian family physicians’ work activity. Health Policy 98 (2010) 203–217.

14. 2008 publication from the same study of Canadian FPs Based on data from the 2004 National Physician Survey Physicians in FFS payment systems conduct more patient visits than physicians in non FFS payment systems Devlin RA, Sarma S. Do physician remuneration schemes matter? Tha case of Canadian family physicians. Journal of Health Economics 2008; 27:1168-1181.

15. 2011 study of Medicare enrollees and their physicians 2,211 PCP survey respondents - 937 internists and 1,274 family physicians who were linked to more than 250,000 Medicare enrollees. Conclusions: Physicians in highly capitated practices had the lowest total costs and intensity of care, suggesting that these physicians develop an overall approach to care that also applies to their FFS patients. Landon BE, Reschovsky JD, O’Malley AJ, Pham HH, and Hadley J. The Relationship between Physician Compensation Strategies and the Intensity of Care Delivered to Medicare Beneficiaries. HSR: Health Services Research 46:6, Part I (December 2011)

16. Does Pay for performance increase the quality of care that patients receive?

17. More conflicting evidence

18. 2012 study regarding P4P in the US Data from the National Ambulatory Medical Care Survey No consistent association between incentives for quality and 12 measures of high-quality ambulatory care. Bishop TF, Federman AD, Ross JS. Association Between Physician Quality Improvement Incentives and Ambulatory Quality Measures. Am J Manag Care. 2012;18(4):e126-e134

19. The British experience with P4P Started in 2004 Conclusions: The scheme accelerated improvements in quality for two of three chronic conditions (asthma and diabetes but not heart disease) in the short term. However, once targets were reached, the improvement in the quality of care for patients with these conditions slowed, and the quality of care declined for two conditions that had not been linked to incentives. Continuity of care was reduced after the introduction of the scheme. Campbell SM, Reeves D, Kontopantelis E, Sibbald B, Roland M. Effects of Pay for Performance on the Quality of Primary Care in England. N Engl J Med 2009;361:368-78.

20. 2006 systematic review on P4P 5 of 6 included studies of physician-level financial incentives and 7 of 9 studies of provider group-level financial incentives found partial or positive effects on measures of quality Petersen LA, Woodard LD, Urech T, Daw C, Sookanan S. Does Pay-for- performance Improve the Quality of Health Care? Ann Intern Med 2006;145:265-272

21. Take home point The way that physicians are paid on both an individual (by their organization) and collective (by payers) basis has the potential to influence how they practice as measured by cost and quality measures.

22. "Don't tell me where your priorities are. Show me where you spend your money and I'll tell you what they are." - James W. Frick

23. Switching gears

24. 24

25. UW Health Primary Care 43 Primary Care Clinics in 32 locations Clinics are owned and operated by UWHC, UWMF, and Department of Family Medicine 251 primary care physicians 266,216 active patients “medically homed” at UW Health 25

26. UW Family Medicine specifics Five residencies, 9 residency training clinics Approximately 125 residents in training Faculty located in 31 clinics statewide, 150 faculty practicing plus midlevel providers, psychologists and dieticians More than 325,000 patient visits annually

28. Addressing physician compensation – why now? Urgent need to address the rapidly changing local market for primary care physicians Local hospital responding to ACA by building a primary care system from the ground up –Hired 11 of our physicians (total of 24 people left in FY 10-12 due to a variety of circumstances) –Hired several new grads at salaries higher than our current faculty – led to poor morale for our teaching faculty

29. Addressing physician compensation – why now? With low morale it was difficult to address anything else until this was addressed. This also an opportunity to engage the faculty in creating a plan that incentivizes and rewards practice styles and behaviors that work towards the Triple Aim – improving patient experience, improving health of populations, controlling costs.

30. Family Medicine Departmental Process Physician Survey –76% response rate 50:50 Residency faculty: Community faculty 87% Dane county (Madison area) Age distribution almost equal for the following groups: 30-40, 40-50, 50 +

31. Survey results Most people dissatisfied both with the structure of their compensation and the amount Current plan was felt to overemphasize clinical productivity –Significant minority favored a straight salary –Majority preferred a large base salary with smaller incentives It was felt that residency faculty and community faculty have significantly different job descriptions and may need different compensation plans –Within the residency faculty strong sentiment that academic and teaching work should be equally valued compared to clinical work.

32. UW Medical Foundation approach Engaged in work to create common benchmarks across all of primary care (FM, IM, Peds) for: –panel sizes –staffing the clinics It led to conversations about physician job descriptions in primary care and then to physician compensation.

33. Primary Care Job description Population Management weighted panel of 1800 patients/1.0 FTE Care Team Leaders Quality Participate in quality improvement Citizenship Participate in Departmental activities

34. Primary Care Job description Clinical care Provide 40-50 hours of total office time per week per 1.0 FTE. This will include: –Minimum standard hours of face to face patient care per week (varies with level of inpatient activity) - currently 27 hours/9 one half day sessions/1.0 FTE –Participate in call coverage

35. Panels Developed with a grant first through GIM, then FM and then peds. Became a primary care product Required cleaning up PCP fields Originally only age and sex

36. Panel weighting Age brackets over 75 60-74 40-59 15-39 4-14 <3 Male - Female Payer mix (Medicaid, Medicare, other) Historical (3 year) face-to-face and telephone non- face-to-face activity per active panel member by age/sex/payer bucket

38. WeightComntWeightComnt 1.51 Male Medicaid: 0 - 3 1.00 Female Medicare 0 - 3 0.85 Male Medicaid: 4 - 14 2.62 Female Medicare 4 - 14 0.69 Male Medicaid: 15 - 39 1.82 Female Medicare: 15 - 39 1.13 Male Medicaid: 40 - 59 2.22 Female Medicare: 40 - 59 1.42 Male Medicaid: 60 - 74 1.71 Female Medicare: 60 - 74 1.04 Male Medicaid: >=75 1.98 Female Medicare: >=75 1.44 Female Medicaid: 0 - 3 1.64 Male Other: 0 - 3 0.78 Female Medicaid: 4 - 14 0.84 Male Other: 4 - 14 1.20 Female Medicaid: 15 - 39 0.53 Male Other: 15 - 39 1.45 Female Medicaid: 40 - 59 0.80 Male Other: 40 - 59 1.57 Female Medicaid: 60 - 74 1.12 Male Other: 60 - 74 1.71 Female Medicare: >=75 1.33 Male Other: >=75 1.00 Male Medicare: 0 - 3 1.55 Female Other: 0 - 3 1.00 Male Medicare: 4 - 14 0.82 Female Other: 4 - 14 1.15 Male Medicare: 15 - 39 0.81 Female Other: 15 - 39 1.65 Male Medicare: 40 - 59 1.00 Female Other: 40 - 59 1.52 Male Medicare: 60 - 74 1.21 Female Other: 60 - 74 1.89 Male Medicare: >=75 1.09 Female Other: >=75 1.00Total

39. UW Medical Foundation approach As standards were agreed to regarding job description and clinic staffing ratios it became apparent that physician compensation for all of primary care should be addressed. Main outcome of this group: –benchmarking panel size against median salary (as opposed to RVUs)

40. Current structure of compensation for UW Family Medicine Pool of dollars available for compensation is based on weighted panel size for the whole department Different formulas for community faculty and residency faculty. Components of the formulas include group and individual panel size, FTE, RVU.

41. Residency faculty comp plan Pool of dollars available for compensation is based entirely on the panel size of the 4 residency clinics pooled together. These dollars are then split 80:20 panel:RVU with panel size determined as FTE % to total FTE in these clinics and RVU % to total RVUs. Flat amount added for participating in OB and inpatient work ($12,000 per year for each) 5% withhold of these dollars to be distributed if basic citizenship expectations met (chart completion, participation in committees, etc.) 5% quality bonus on top of salary available – metrics this year are 2 patient satisfaction measures and 3 quality measures (2 preventive, 1 diabetes)

42. Residency faculty comp plan Reasoning behind this formula: –In general this group valued team performance –Pooling of the panels makes it easier to include the resident panels in the formulas –Pooling the panels eliminates any competition for patients within the clinic (and faculty v. resident) –Pooling across the sites eliminates differences that would emerge between different clinics –80:20 split favoring the panel size was intended to address the many part time faculty managing their patients outside of visits

43. Residency faculty comp plan Concerns –Every time anyone in the residency changes their clinical FTE it affects everyone’s compensation –New hires affect everyone in the residency, not just at a single site

44. Community faculty comp plan Dollars for compensation based on individual panel size benchmarked against FTE – target is 1800 patients per 1.0 FTE 50:50 panel:RVU split – 50% of everyone’s panel dollars are pooled and then redistributed based on your percent of RVUs generated within your site. Flat amount added for participating in OB and inpatient work ($12,000 per year for each) 5% withhold of these dollars to be distributed if basic citizenship expectations met (chart completion, participation in committees, etc.) 5% quality bonus on top of salary available – metrics this year are 2 patient satisfaction measures and 3 quality measures (2 preventive, 1 diabetes)

45. Community faculty comp plan Reasoning behind this formula: –This group valued individual responsibility as a priority –Not ready to move as far away from RVU productivity as the residency group was A concern: –Because of different panel sizes at different sites and lack of pooling the dollar value of an RVU varies from clinic to clinic – is this ok?

46. Lessons learned Importance of mocking up a new system to identify unintended consequences both now and with likely future changes Looking forward to anticipated changes in your group –expecting new hires? –expecting growth of the practice? –expecting change in the way the practice is compensated (ACO, capitation?)

47. Lessons learned How to address new physicians on a guaranteed salary –Their patients are not included in the overall pool which determines the dollars available for compensation –When to bring new physicians onto the compensation plan, affect on colleagues’ salaries How fellows impact the plan –Resident panels contribute toward the panel size but if a resident stays on as a fellow paid on salary (not on the comp plan) those patients come out of the panel size for the residency and drop dollars available to pay the faculty

48. Lessons learned Importance of being able to access the data needed to inform and manage decisions that impact compensation –We now have to track active panel size very carefully, this is a new metric for us to address so carefully –For example, reassignment of resident patients every summer MUST happen correctly and smoothly or we will lose dollars for our comp pool

49. Discussion time What do you see as the pros and cons of including each of the following in a compensation plan? –RVUs –Panel size –Quality indicators Patient satisfaction Clinical indicators –Or should we have a flat salary?

50. RVU PROSCONS

51. RVU PROS Allows physicians who do more face to face patient care to be compensated for doing so Incentivizes physicians to add clinic sessions or work in extra patients when a clinical need arises CONS Incentivizes quantity over quality Penalizes people who use their vacation and CME time Incentivizes behavior that includes less self-care, risk of burnout May be associated with overall increased cost of care

52. Panel size PROSCONS

53. Panel size PROS Fits more with our overarching goal of taking care of our patients as a whole Fits more with new models of reimbursement (capitation, care management fees) Compensates for non face to face care CONS Incentivizes large panels; if over-paneled, a physician could have poor access and rely on partners to provide the day to day care Need a good way to weigh panels

54. Patient satisfaction PROSCONS

55. Patient satisfaction PROS Highly patient centered approach CONS Physicians may feel powerless to change how “well-liked” they are by their patients

56. Clinical quality indicators PROSCONS

57. Clinical quality indicators PROS Incentivizes care that adheres to evidence based guidelines CONS Disadvantages physicians who have patient populations with fewer resources Often these metrics are more about how the clinic functions than an individual physician How to pick metrics May lead to lower quality of care for conditions not measured May lead to “cherry-picking” patients

58. Balance If we want to include many factors in a comp plan, what ratios to use? Must avoid an overly complex plan that physicians do not understand

59. "A wise man should have money in his head, but not in his heart." - Jonathan Swift