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April 27, 2017 Guest articles No Comments

Carrot or Stick? Physician Compensation in Value-based Cancer Care Delivery
By Lucy Langer, MD and Lalan Wilfong, MD

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A previous post on re-designing cancer care in the context of the Centers for Medicare and Medicaid Innovation’s (CMMI) Oncology Care Model focused on physician engagement in cancer care delivery redesign and how to create a framework to engage physicians in quality improvement and the delivery of better patient care. In this article, we will discuss considerations around physician compensation when trying to strike a balance between productivity and value in this new care model.

The OCM pilot, which began in July 2016, is an alternative payment model designed to test whether specific changes in the payment for cancer care delivery can result in better care, smarter spending, and healthier people. Under the OCM, physician practices are subject to both financial and performance accountability during episodes of care defined by active chemotherapy administration to cancer patients. Reimbursement in the OCM is fee-for-service, but also includes a per-beneficiary Monthly Enhanced Oncology Services payment. According to CMS, this $160 MEOS payment is intended to assist participating practices in effectively managing and coordinating care for oncology patients during episodes of care. The potential for a performance-based payment is designed to incentivize practices to lower the total cost of care and improve the quality of care for beneficiaries during treatment episodes.

Evolving Models

Physician engagement is an essential component for success in payment models like the OCM. Practices can change physician behavior through the compensation model. Most oncologists are compensated based on relative value unit-generation, and some contain a small, additional bonus or incentive for activities such as supporting leadership roles in the practice. But how will compensation models evolve in the era of value-based care delivery?

New compensation models ought to include:

  • Productivity measures.
  • Incentives to provide high-quality care and thresholds that are relevant to the practice.
  • Visibility and reporting once key quality metrics are included.
  • Physician buy-in and full engagement to support the quality initiative.

In the new era of value-based care, practices must determine how to recognize physicians for their contributions to the larger practice’s ability to meet quality and cost-containment targets. This means creating a financial incentive for balancing both personal productivity and practice accountability to improve the quality of care provided.

Real-World Experiences

The US Oncology Network brings together more than 1,400 independent physicians from more than 45 physician-owned practices and over 400 sites of care across the United States, including primarily medical oncologists, radiation oncologists, surgeons, and urologists. We are both part of a committee within the network that has come together to think through and provide guidance as we transition to value-based care. Collectively, this committee has put resources in place to help 14 affiliated practices successfully enroll more than 19,000 Medicare patients (to date) in the OCM. In addition to the OCM, many practices affiliated with our network are participating in similar APMs.

As a result of this level of participation and the potential impact of these programs on each practice’s financials, key questions regarding physician compensation have emerged. For instance, with more than 420 physicians, Texas Oncology is focusing efforts to use a small proportion of compensation to incentivize clinical guideline- or pathways-based treatment protocols. With the implementation of a clinical decision support tool and tying 2 percent of salary to pathways performance, we have seen pathway adherence increase from 78 percent to 90 percent over a one year time frame*. On the other hand, Compass Oncology, with over 40 practitioners, is pursuing a different model and moving towards implementation of a novel total compensation model that shifts away from RVUs to a “Balanced Scorecard.” The Balanced Scorecard emphasizes three key elements – practice growth, fiscal responsibility, and quality metrics – that identify where physician behaviors can align with practice goals, patient needs, and payer contracts.

Productivity remains an important contributor to the health of a practice, and eliminating productivity from physician compensation entirely would be unwise. By pairing productivity with value and quality goals set at the practice level, we believe that physicians will be more likely to alter behaviors towards a more team-based approach.

The transition to true patient-centric care is the essence of new payment models aimed at reducing waste, enhancing patient services, and optimizing patient outcomes. An engaged physician brings value to the practice by providing leadership as a member of a larger team focused on meeting the patient needs. While the doctor-patient relationship remains central to this care, additional services are recommended to meet the needs of the patient. These include social work and financial counseling to decrease the barriers to receiving care, survivorship and palliative care to address patient symptoms and advance care planning, and triage nursing and advanced practice providers to provide clinical services between physician visits. Physicians should be incentivized and compensated for facilitating effective teams and providing mentorship, education, and leadership to drive practice transformation and success in value-based payment policies.

Metrics, Metrics, Metrics

Practices that participate in the OCM and similar models will be held to reportable metrics that emphasize value. Payments will be made based on performance compared to historical data for our own practices as well as the performance of other practices in the model. Baseline value metric data is available to us through CMMI, and tracking performance to these value metrics is an important element when considering physician incentives.

We believe that by incentivizing performance via novel payment models to address quality metrics and improvements in patient care, we must also ensure this approach fully aligns with our practice culture, values, and goals. Metrics that are widely held to be important in oncology as indicators of ‘best practice’ and high-level care, such as days on hospice, performance to established pathways and guidelines, and patient satisfaction, are under consideration for inclusion in the model.

Carrot or Stick?

Ultimately, in considering how to incentivize and motivate physicians through enhanced compensation models, each practice will have to wrestle with some fundamental questions: Is it better to use a carrot or a stick? How can the practice ensure ‘buy in’ to any major changes in compensation? What are the underlying values and strategic goals that you are trying to achieve? How do we balance productivity and value-based care? While we do not purport to have THE answer to physician compensation in the era of value-based care, it is clear that for our practices, legacy RVU models may not truly reflect physician activities that contribute to success with non-fee-for-service contracts. Each practice will have to customize any compensation formula to fit the practice culture, demographics, and payer contract mix.

Lucy Langer, MD is president of Compass Oncology in Portland. Lalan Wilfong, MD is medical director of quality programs at Texas Oncology in Dallas. Both practices are in The US Oncology Network.


1J Clin Oncol 34, 2016 (suppl 7S; abstr 187)


Jenn, Mr. H, Lorre

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