Q&A: Deloitte's Andreaa Balan-Cohen on moving physicians towards value-based care

Some 94 percent of executives at provider organizations say they’re on the path towards value-based care, according to the Deloitte Center for Health Solutions, but only 27 percent say they’ve completed some stage of that transition. What may be holding the transformation back is how physicians are compensated.

The center’s 2016 Survey of U.S. Physicians focused on how physicians can be incentivized to make that transition. Deloitte health economist Andreaa Balan-Cohen, PhD, spoke to HealthExec about the survey’s findings and how it can inform administrators’ plans to make physicians’ road towards value-based care a bit smoother.  

HealthExec: What does the survey say about the state of adoption of value-based payment models?

Balan-Cohen: There is currently little focus on value in physician compensation and physicians are generally reluctant to bear financial risk for care delivery, and both are factors in the slow pace of adoption.

Physicians should change their behavior to make implementation of value-based care models effective, but today there is little incentive for them to change. Many are still being paid under fee-for-service models and they're not equipped with tools that could help them deliver high-value care.

The tools and capabilities to support value-based care are still in short supply for many physicians and vary in maturity. For instance, the survey shows that while 3 in 4 physicians have clinical protocols, only 36 percent have access to comprehensive protocols (that is, for many conditions).

What do the results point to as effective route for encouraging adoption?

In general, healthcare organizations should embrace physicians as part of the solution to achieving enhanced value within the health system. The more we can include physicians on the advancement of clinical protocols, the development of relevant quality measures, and the evaluation of the effectiveness of different care options, the more all sectors within life sciences and healthcare can benefit. To many physicians, it may seem like with all of the focus on new payment models, increasing reliance on quality measures to gauge performance, and new ways to influence how physicians deliver care, their expertise has been pushed to the side. Indeed, 74 percent of surveyed physicians believe that performance reporting is burdensome, and 79 percent do not support tying compensation to quality.

More specifically, healthcare organizations should first consider partnering with physicians and seek to tie physician compensation to performance. Evidence suggests that at least 20 percent of a physician's compensation should be tied to performance goals. However, the survey shows that current financial incentive levels for many physicians are far from adequate; for instance, half of physicians received performance bonuses that were less than 10 percent of their compensation, and one third were ineligible for performance bonuses.  As such, the percentage of physicians’ compensation that is tied to performance should be increased to give physicians strong motivation to improve quality and cost.

Secondly, administrators should equip physicians with the right tools to help them meet performance goals. The survey shows that physicians desire better clinical protocols, quality measures that align with their specialties and emphasize outcomes rather than processes of care, and detailed data on their own performance and on physicians to whom they refer patients. Survey findings suggest that many physicians currently lack these tools. For instance, only 20 percent of physicians receive data on care costs.

Lastly, systems should invest in technology capabilities to provide timely, reliable and actionable information. Survey findings suggest that many physicians distrust the data they receive or find it difficult to integrate that data into their daily practices. However, when delivered in real time, accompanied by reliable benchmarks and goals, and incorporated in workflow, information is more likely to be used by physicians.

Why is there the gap between physicians' willingness to adopt value-based payment models and those models actually being used?

The survey results suggest that many physicians conceptually endorse some of the main principles behind value-based care, such as quality and resource utilization measurement. Most physicians do want to embrace value based concepts, in that they want to provide good quality care with an appropriate use of resources and expenditure levels. However, what’s really lacking for them is appropriate financial incentives and appropriate information.

The absence of information makes it hard to make informed decisions, and the survey demonstrates that the availability of accurate and reliable cost data, for example, makes it hard to choose. In addition, the lack of appropriate financial incentives leads physicians to sometimes pursue high volumes of activity because this is how they are reimbursed.

The survey shows, for instance, that 86 percent of physicians are still compensated under fee for service or salary arrangements, where incentives for volume are blunted if at all existent. To move to an environment where physicians are paid for value, and on the basis of outcome success, will require not just a change in payment reform, but also a significant change in access to information, and a focus on outcome measures that really matter—both to patients as well as to the clinical outcomes.

What about the physicians who are more resistant to adopting these models? What's the typical profile of the physician who's less flexible on this?

Generally, older physicians and those in independently owned practices, especially in solo practices, were more likely to be resistant to value-based payment models. To a lesser extent, those physicians who had a lower Medicare Advantage payer mix, practiced in the south, and were non-surgical specialists were also generally less willing to participate in value-based care than their peers.

What insight did the survey offer on physicians' preparedness for payment changes under the Medicare Reauthorization and CHIP Reauthorization Act (MACRA)?

Physicians will face greater pressure under MACRA, regardless of the route they choose. Those who choose to stay out of the risk game in the first few years will be faced with reporting under the Merit-Based Incentive Payment System (MIPS). While CMS recently announced greater flexibility around reporting in the first year, clinicians must report something to avoid financial losses under MIPS.

Furthermore, many physicians are not informed about MACRA. The survey confirms that many physicians do not know about MACRA, and don’t understand it. MACRA is a complex law and set of regulations, and our survey shows that many physicians aren’t prepared for what’s necessary relevant to reporting, which is part of the reason why CMS pushed back and loosened some of the reporting requirements for 2017. There’s more uncertainty than certainty about what it’s actually going to mean, and there’s still more information to be gleaned before physicians can clearly understand it.

What should a health system administrator looking to encourage greater use of value-based payment take away from the survey?

The key takeaways should be partnering with physicians and relying more heavily on their expertise in the advancement of clinical protocols and the development of relevant quality measures, as well as equipping them with appropriate information, tools, and incentives. In addition, for organizations building value-based care capabilities, understanding physician referral behaviors and patterns can be a way to find savings or improve outcomes. Giving physicians data on their referral patterns could encourage them to rely less on habitual referrals and more on evidence to recommend to patients which care setting or treatment is the appropriate next step.