Skip to main page content
U.S. flag

An official website of the United States government

Dot gov

The .gov means it’s official.
Federal government websites often end in .gov or .mil. Before sharing sensitive information, make sure you’re on a federal government site.

Https

The site is secure.
The https:// ensures that you are connecting to the official website and that any information you provide is encrypted and transmitted securely.

Access keys NCBI Homepage MyNCBI Homepage Main Content Main Navigation
. 2022 Jan 28;3(1):e214634.
doi: 10.1001/jamahealthforum.2021.4634. eCollection 2022 Jan.

Physician Compensation Arrangements and Financial Performance Incentives in US Health Systems

Rachel O Reid  1   2   3 , Ashlyn K Tom  1 , Rachel M Ross  1 , Erin L Duffy  1 , Cheryl L Damberg  1
Affiliations

Physician Compensation Arrangements and Financial Performance Incentives in US Health Systems

Rachel O Reid et al. JAMA Health Forum. .

Abstract

Importance: Public and private payers continue to expand use of alternative payment models, aiming to use value-based payment to affect the care delivery of their contracted health system partners. In parallel, health systems and their employment of physicians continue to grow. However, the degree to which health system physician compensation reflects an orientation toward value, rather than volume, is unknown.

Objective: To characterize primary care physician (PCP) and specialist compensation arrangements among US health system-affiliated physician organizations (POs) and measure the portion of total physician compensation based on quality and cost performance.

Design setting and participants: This study was a cross-sectional mixed-methods analysis of in-depth multimodal data (compensation document review, interviews with 40 PO leaders, and surveys conducted between November 2017 and July 2019) from 31 POs affiliated with 22 purposefully selected health systems in 4 states. Data were analyzed from June 2019 to September 2020.

Main outcomes and measures: The frequency of PCP and specialist compensation types and the percentage of compensation when included, including base compensation incentives, quality and cost performance incentives, and other financial incentives. The top 3 actions physicians could take to increase their compensation. The association between POs' percentage of revenue from fee-for-service and their physicians' volume-based compensation percentage.

Results: Volume-based compensation was the most common base compensation incentive component for PCPs (26 POs [83.9%]; mean, 68.2% of compensation; median, 81.4%; range, 5.0%-100.0% when included) and specialists (29 POs [93.3%]; mean, 73.7% of compensation; median, 90.5%; range, 2.5%-100.0% when included). While quality and cost performance incentives were common (included by 83.9%-56.7% of POs for PCPs and specialists, respectively), the percentage of compensation based on quality and cost performance was modest (mean, 9.0% [median, 8.3%; range, 1.0%-25.0%] for PCPs and 5.3% [median, 4.5%; range, 0.5%-16.0%] for specialists when included). Increasing the volume of services was the most commonly cited action for physicians to increase compensation, reported as the top action by 22 POs (70.0%) for PCPs and specialists. We observed a very weak, nonsignificant association between the percentage of revenue of POs from fee for service and the PCP and specialist volume-based compensation percentage (r = 0.08; P = .78 and r = -0.04; P = .89, respectively).

Conclusions and relevance: The results of this cross-sectional study suggest that PCPs and specialists despite receiving value-based reimbursement incentives from payers, the compensation of health system PCPs and specialists was dominated by volume-based incentives designed to maximize health systems revenue.

PubMed Disclaimer

Conflict of interest statement

Conflict of Interest Disclosures: Dr Reid reported grants from the Agency for Healthcare Research and Quality (AHRQ) during the conduct of the study as well as grants from National Institute on Aging and research support from the US Centers for Medicare & Medicaid Services, American Academy of Physician Assistants, Milbank Memorial Fund, and US Department of Health and Human Services outside the submitted work. Dr Damberg reported grants from AHRQ during the conduct of the study. No other disclosures were reported.

Figures

Figure 1.
Figure 1.. Top 3 Actions Physicians Can Take to Increase Compensation
POs indicates physician organizations.
Figure 2.
Figure 2.. Association Between Physician Organization (PO) Fee-for-Service Revenue and Volume-Based Compensation for PO Physicians
PCP indicates primary care physician.
See this image and copyright information in PMC

Similar articles

See all similar articles

Cited by

See all "Cited by" articles

References

    1. Blumenthal D, Abrams M. The Affordable Care Act at 10 years—payment and delivery system reforms. N Engl J Med. 2020;382(11):1057-1063. doi:10.1056/NEJMhpr1916092 - DOI - PubMed
    1. Chernew ME, Conway PH, Frakt AB. Transforming Medicare’s payment systems: progress shaped by the ACA. Health Aff (Millwood). 2020;39(3):413-420. doi:10.1377/hlthaff.2019.01410 - DOI - PubMed
    1. Friedberg MW, Chen PG, White C, et al. . Effects of health care payment models on physician practice in the United States. Rand Health Q. 2015;5(1):8. doi:10.7249/RR869 - DOI - PMC - PubMed
    1. Friedberg MW, Chen PG, Simmons M, et al. . Effects of health care payment models on physician practice in the United States: follow-up study. Rand Health Q. 2020;9(1):1. - PMC - PubMed
    1. Burwell SM. Setting value-based payment goals—HHS efforts to improve U.S. health care. N Engl J Med. 2015;372(10):897-899. doi:10.1056/NEJMp1500445 - DOI - PubMed

Publication types