Physician compensation in a confusing and disordered reimbursement environment (volume to value)

Abstract

The healthcare industry is changing from a reimbursement perspective, in that reimbursement is still predominantly fee-for-service but includes value-based elements. This dual system is widely affecting providers by pushing more of the payment and cost risk onto them (versus insurers). In short, the current reimbursement environment is confusing and disordered. This evolving paradigm calls for a new approach to how physicians’ compensation is pursued, ensuring that a model structure is in place that aligns incentives and/or risk with the respective physicians relative to the reimbursement environment. Furthermore, it must be sufficiently flexible to adapt to the current frenzied nature that precedes this unfamiliar approach. This paper examines current and pending changes and their effect on the healthcare market. It discusses the various risks associated with different payment arrangements and reviews how the passage of the Medicare Access and CHIP Reauthorization Act of 2015 affects reimbursement. It then drills down into the corresponding compensation considerations that should be evaluated in light of the value-based reimbursement structures and strategies. The final focus is on navigating these changes to the healthcare environment.