How Cardiology Compensation is Changing
As payment models in healthcare shift away from fee-for-service, some provider organizations are changing cardiology compensation contracts to reflect value instead of volume.
This article appears in the July/August 2015 issue of HealthLeaders magazine.
The march toward value-based reimbursement isn't being made with confident steps. That's because most healthcare providers are living in a fee-for-service world. Having a foot in value-based care while still getting paid on volume is a difficult reality, especially within the cardiology service line, because it is heavily weighted on relative value unit generation. But some organizations are facing the challenge head-on by tying a portion of cardiologists' compensation to quality metrics.
Compensation for the specialty traditionally has been based on productivity, and while that still is the foundation of most contracts, some organizations are renegotiating compensation that relies less on RVUs and instead rewards physicians for things that do not generate revenue, such as patient communication, documentation, and professionalism.
Edward Fry, MD
"Our compensation model is still weighted toward fee-for-service and reimbursement based on generation of RVUs, but within that is a significant and growing component of rewarding for nonclinical work," says Edward Fry, MD, chair of the cardiology division and physician director of the cardiology service line at St. Vincent Medical Group, a physician-led multispecialty medical group with more than 600 providers that is part of St. Vincent, a 22-hospital health system based in Indianapolis, which is part of St. Louis–based Ascension Health.
Fry says cardiologists and other specialists have to be willing to accept changes in how they're paid because value-based care reimbursement will not support a volume-based paycheck.
"Everybody sees the handwriting on the wall," says Fry.
Until recently, that handwriting was faint. Value-based care reimbursement was on the horizon, but there were no clear goals and there was no definite end to fee-for-service. The Centers for Medicare & Medicaid Services has funded several value-based pilot programs over the past few years, such as the Hospital Value-Based Purchasing program, the Pioneer ACO program, and the Bundled Payment for Care Initiative, and commercial payers have rolled out their own proprietary value-based programs. But it wasn't until January that the ambiguous future of what a value-based care reimbursement system might look like became clearer. CMS announced an aggressive and ambitious schedule of tying 85% of all Medicare reimbursement to quality by 2016 through its value-based purchasing and readmission-reduction programs.
Fry and others are skeptical of those goals, but they are a signal that healthcare executives cannot and are not ignoring. At some organizations, the first target is transforming cardiology compensation contracts to reflect value instead of volume.
Success key No. 1: Evaluate cardiologists' contributions
At Spectrum Health Medical Group, a multispecialty physician group that includes 1,100 providers and is part of the Grand Rapids, Michigan–based Spectrum Health, a nonprofit health system that includes 11 hospitals, 170 ambulatory sites, and a health plan, leaders completely abandoned a productivity-based compensation model for its 38 cardiologists and opted instead for a straight salary compensation package, with two opportunities to earn more based on quality metrics.
Not many groups outside of Cleveland Clinic have attempted to pay cardiologists a straight salary, but Spectrum's venture could signal to other cardiologist groups and large health systems that the specialty is ready for a new compensation structure.