Defining value - Practical applications for ‘Medical Practice Today: What members have to say’ research

By Heather Grimshaw
July 1, 2015

It’s one thing to recognize shifts in the business of healthcare delivery, which some describe as tectonic; it’s another to respond in ways that position your medical group for success, according to members who participated in the 2015 “Medical Practice Today (MPT): What members have to say” research conducted Jan. 2-25.

“Preparing for value-based payments” topped the list of challenges for members, who continue to be skeptical about their ability to meet requirements set by the government and private payers, and note the practical challenges of implementing quality programs.

“A value-based payment system is nearly impossible to implement,” wrote Wendy Stoehr, clinic administrator, Advanced Dermatology & Skin Surgery, PLLC, Spokane, Wash. “There are [too] many specialty groups and variables to create a fair and equitable system. It makes it very difficult to strategize, budget and guide my physician group into the future.”

Hundreds of respondents ranked 29 challenges by applicability and intensity, which are combined into a single applicability-weighted index (AWI) score. Using the AWI, it is easy to see how practice ownership, specialty and other factors influence members’ opinions. Members shared ongoing frustration with what they describe as dealing with an onslaught of federal regulation, addressing difficulty with payers, incorporating new technologies and optimizing software to gather and track actionable data while trying to remain solvent.

“I’ve done this kind of work for 30 years and it keeps getting harder to stay on top of things,” wrote one member. “EHRs and all the government regulations are beyond ridiculous.”


Challenges shift when you break down member responses by healthcare setting and specialty though “Preparing for value-based payments” remains in the Top 5 for all respondents. This is not surprising when you consider the Centers for Medicare & Medicaid Services (CMS) announcement that it will base 30% of reimbursement to physicians and hospitals on alternative payment models by 2016 and 50% by 2018. (Available resources)

For example, while value-based payments are the No. 1 challenge for respondents who work in groups that are owned by hospitals and integrated delivery systems, “Participating in the CMS EHR meaningful use incentive program” ranks No. 1 for independent practices. And when you delve into specialties, you see that the No. 1 challenge for primary care groups is “Participating in the CMS EHR meaningful use incentive program” while specialty groups say “Dealing with rising operating costs” is No. 1 and members in academic practices say “Recruiting physicians and nonphysician providers” takes the No. 1 spot.

From a holistic perspective, we saw a jump in intensity percentage and AWI score for the meaningful use (MU) challenge from 14.5% or .13 AWI in 2013 to 68.4% or .63 in 2015, which comes as no surprise to Robert M. Tennant, MA, director, health information technology policy, MGMA Government Affairs. “When it comes to MU, it’s like a desert where the sands keep shifting,” he explains. “Just when practices got their footing in Stage 1, the government significantly changed the regulations for the next stage, adding complexity, cost and no small measure of anxiety for practice administrators.”

In addition, physicians and groups face a shortage of clinically relevant and statistically valid quality measures to report for PQRS across a variety of reporting mechanisms, explains Sara Brown, representative, MGMA Government Affairs. Finding the most appropriate measures to report and using the most feasible reporting mechanism require a significant amount of work that ultimately detracts time and resources away from providing care to patients, she adds. However, it is important for groups and physicians to report quality measures data for PQRS because CMS will use what is reported for PQRS in 2015 to calculate the value-based payment modifier (VBPM), which will modify payments for all groups and solo practitioners in 2017. 

“The good news is that groups and physicians will only need to report quality data for each of these three federal quality reporting programs through the end of 2018 before transitioning to the new merit-based incentive payment system (MIPS) in 2019,” Brown adds. “MIPS will streamline PQRS, EHR meaningful use and the VBPM into one program, or groups and physicians have the opportunity to bypass reporting under MIPS if they choose to align with an alternative payment model, such as an accountable care organization or a patient-centered medical home.”

MGMA’s top advocacy priority is to develop MIPS through the regulatory process into a program that truly and accurately reflects quality of care while reducing administrative and cost burdens on groups and providers. Until that time, groups and providers still need to report for the current quality reporting programs to avoid steep penalties.

As Brown noted, even when a group meets the regulations, there is an effect on productivity, which influences a group’s bottom line when members are “Dealing with rising operating costs,” the No. 2 challenge this year. The onslaught of changes to medical group practice also affects staff morale at a time when there is increasing concern about burnout and loss of control over how physicians work with patients and run their groups.

“The current environment is the worst I’ve experienced in 24 years of practice management,” said one member, who pointed to “diving incomes, overwhelming regulation, [a growing] hospital-physician communication gap, lack of physician involvement in decision-making at all levels of healthcare, a total disconnect between CMS and what is doable (MU, EHR adaption, HIPAA regulations).”

This member’s list mirrors the MPT challenges, which are all time-sensitive issues, many of which require advance planning and changes to daily operations that have a direct effect on a group’s bottom line. As a result, members talk about the need to prioritize issues.

“I wear all the hats: management, human resources, operations, finance, executive decisions, information technology liaison, credentialing, etc.,” wrote Ellen Boyd, administrator, Centennial (Colo.) Valley Pediatrics. “That is why all the questions were extreme needs. … I truly love my job, but it gets harder every year to meet all the needs and responsibilities for my primary care practice.”

Practical realities

While value-based payment has been splayed across media channels for years, most reimbursement does not align with these concepts and support the infrastructure changes that need to be made for successful implementation. For example, more than 36% of the respondents report exclusive fee-for-service payments while another 44% receive 76% to 99% of their payments through fee-for-service contracts.

However, members recognize the need to accommodate different payment models and are shifting their compensation models to reward quality outcomes as noted in the MGMA DataDive™ Physician Compensation 2015, which notes adoption of compensation models that include quality metrics.

In their MPT responses, many members complain that value-based payment is a subjective term and that quality formulas vary by payer, which makes them onerous to implement. Yet most agree that future payer contracts will include arrangements that shift risk from payers to providers and base reimbursement on documented quality and the total cost of care.

“We don’t have a standard definition, and there are different interpretations for value-based payment,” explains David N. Gans, MSHA, FACMPE, senior fellow, MGMA Industry Affairs. “Many payers have developed rating systems that use patient claims and other reported information to assign stars or other measurements to providers in their networks. However, as long as the mechanism remains a ‘black box’ internal to the payer’s information system, the amount of actionable information flowing back to providers is very limited. Even so, the rating reports are distributed as measures of quality for patients and self-insured employers to use when they choose a provider.”

To cut through the confusion, Gans advises practice leaders to think of value-based payment in the context of three consistent components:

  • Quality or patient outcomes
  • Patient experience (not satisfaction)
  • Total cost of care

Jeffrey B. Milburn, MBA, CMPE, consultant, MGMA Health Care Consulting Group, adds that value-based plans can come in many forms — from pay-for-performance to a patient-centered medical home model. In Strategies for Value-Based Physician Compensation, he outlines several steps to take when implementing a value-based compensation plan, including:

  1. Involve physicians in the decision and development immediately. “It is usually better to err on the side of too much information rather than too little,” he says. The book includes questionnaires for physicians to list wants and expectations in the compensation model.
    In some cases, changes might have to be phased in. For example, if someone’s salary needs to be decreased by 15%, phase it in at 5% per year for three years. “Most physicians could live with a 5% annual reduction,” he adds. “They won’t like it, but they could adapt to it. By year two and three, they will probably find a way to increase their compensation anyway.”
  2. Create a compensation plan committee that is separate from your governing board/approval authority body to ensure a different representation and ask at least one member of your governing board/approval authority to participate. Involve a diverse physician mix to get different viewpoints on what is considered fair.
    For smaller practices, Milburn recommends that the committee include any of the following:
    - A physician leader and administrator
    - Some other type of administrator-physician team
    - All physicians in the practice
    For larger practices, he suggests the committee include all of the following, if possible:
    - A subset of the organization, including physicians and administrative personnel
    - An outside consultant to promote objectivity and “absorb some of the unhappiness” or “take the heat” if needed
    - A financial officer or accountant
  3. Use data to build your plan. Physicians must consider the data that determine incentive payments and bonuses to be relevant in order to accept the plan, Milburn says. For example, when it comes to patient satisfaction, include a number of patient care measures, number of referrals, inpatient admissions, length of stay, ancillary services, patient panel size and patient satisfaction survey results. Incentive amounts should make sense. A bonus that is meaningful and appropriate for a pediatrician might be too small for a cardiovascular surgeon because of the relative differences in specialty-based compensation. Get more details in the Value-Based Compensation: An MGMA Research & Analysis Report, a free download.


Financial challenges once again tip the scales for MGMA members, however this year’s results show decreased interest in mergers and integration. While 14% of respondents said they had merged with another practice in the last two years, only 5% said they plan a merger in the next two years.

However, more than half of the survey respondents are planning to or have been recently engaged in a clinical integration process, which entails coordination of care between physician offices, health plans, payers, hospitals and patients, as outlined by Joan Hablutzel, MBA-HA, CMPE, MGMA senior industry analyst, MGMA Professional Development, in her article “Sharing means caring.”  “Clinical integration is a component of the new healthcare system and supports the triple aim of improving patient experience, improving the health of populations and reducing healthcare costs. The Patient Protection and Affordable Care Act includes provisions to help increase effectiveness and efficiency of care, increase innovation and technology advances, and address areas of cost containment,” Hablutzel explains. (Read more about clinical integration.)

And while there was a sense of despondency among MGMA members, who shared comments about the industry at large, there were a few who shared glimmers of hope for the future.

“I hear so many negatives about how bad things are in healthcare,” one member wrote. “We need to stop complaining and find solutions to lead change. Healthcare is a very fragmented, ‘me first’ industry and we lost focus on how we can provide the best healthcare to our citizens and have doctors and other professionals make a decent wage. Tie compensation to patient care outcomes. There is so much waste/duplication/noncoordination in the current system! We can do a better job.”

Read these ACMPE Fellow papers focused on value-based payments:

Heather Grimshaw, senior editorial manager, MGMA Corporate Communications

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