Value-Based Purchasing: How Physicians Will Be Compensated in the Future

Frank G. Opelka, MD

Frank G. Opelka, MD, is the executive vice president of Health Care and Medical Education Redesign for the Louisiana State University (LSU) System. He also serves as vice chancellor for Clinical Affairs and is a professor of Surgery at the LSU Health Sciences Center in New Orleans. With expertise in healthcare patient safety, quality improvement, and healthcare finance, and as a recognized national leader in patient-centric healthcare, Opelka has been involved at the national level in the design and implementation of the Affordable Care Act.

Opelka delivered the Ambrose-Reed Lecture at the 77th Annual Southeastern Section of the American Urological Association (SESAUA) meeting held in Williamsburg, Virginia. The Ambrose-Reed Lecture honors two pioneers in the field of health policy: Samuel S. Ambrose, MD, and Josiah F. Reed, Jr, MD, both of whom held leadership offices in the AUA.

Urologists in Cancer Care conducted an interview with Opelka to explore some of the health policy initiatives that will impact how physicians will be compensated in the future.

Urologists in Cancer Care: Dr Opelka, you stated that, in the general framework of the Affordable Care Act, performance measurement and performance improvement are linked “by design.” Can you comment on this as a goal of the Centers for Medicare & Medicaid Services (CMS)?

Dr Opelka: CMS is not just measuring for its own sake, but [is using performance measurements] in order to improve the quality, safety, and patient experience of care. CMS is challenging the profession to come up with performance measures that are actionable by physicians, hospitals, patients, and purchasers.

Physicians feel that performance measurement is important if the measures are important to patients, meaningful, actionable, relevant, feasible, clinical, and within practice workflows.

In your lecture title, you use the term “value-based purchasing.” Can you explain what that means?

The federal government or private corporations that purchase the healthcare or health insurance want to know that what they are purchasing has value—that they are getting a product that improves the quality of life of the patient and of overall healthcare. Or, if there is no way to improve it, that it at least provides the patient with all the relief he or she can potentially get in their care system.

How does the concept of “resource appropriateness” apply to the purchase of healthcare or to physicians who are involved in the delivery of healthcare?

Of all areas of performance measurement, resource use, or appropriateness, is one of the most complex and difficult. It is really quite easy to say that you have a structural measure that says you’re licensed and board-certified—a “check the box” measure. With “appropriateness” such as in prostate cancer, the clinician may be looking at four different diagnostic tests, of which perhaps three are absolutely appropriate, but the fourth one is questionable; it is a waste of resources to administer the fourth one. With surgeons, we have found that appropriateness lives on a scale; it is not black and white. But there are times when we order diagnostics or other tests that are of limited overall value. Today, we cannot afford that.

What do you mean when you say that the Measures Application Partnership is not driven by measuring physicians, but instead by measuring an outcome for a patient?

The Partnership is part of the Affordable Care Act, and the goal or function of the Partnership is to look at the National Quality Strategy (NQS), which is patient-centric, and to try to provide measures that optimize NQS. Using cancer care as an example, instead of just measuring one moment in care, such as one office visit, the Partnership is more interested in the overall outcome of cancer care for that patient over a continuum of, say, three months, six months, or one year, regardless of providers.

What does the patient expect at the end of a given time period? Instead of talking about whether the patient got antibiotics in a timely fashion around the time of surgery, we want to ensure the patient had a surgery that resulted in the lowest possible level of complications and the best and most optimal quality of life subsequent to the surgery.

In light of the new “value-based” payment approaches, would you say that fee-for-service is dead?

Some people have made public statements regarding the death of fee-for-service. It is not so much the death of fee-for-service as it is that purchasing based on volume will significantly diminish. But even now there are many instances where physicians are not compensated by fee-for-service by their employer, but they don’t know it. The employer may have global cap in an HMO contract or some alternative payment system. Yet, administratively, the physician’s contributions to the overall practice are still measured by some scale of relative value similar to a fee-for-service environment. They measure the clinician volume of services, whether it is done by dollars and cents or by relative value units, and then align these results with their alternative means of financing, such as paying for a global cap, or being salaried in an HMO, or packaging services into a bundle of care.

A new array of considerations is emerging about how physicians are compensated using alternative payments. Physicians will hear about the death of fee-for-service, or the diminishing of aspects of fee-for-service. But actually, we will always need to measure the volume of physician contribution as part of an overall value proposition.

Fee-for-service isn’t dead, but how we track performance will go away and how we use that to compensate physicians will now change.

How might shared savings affect certain physicians’ bottom line under the new business model?

Whether it is in an alternative payment system such as an Accountable Care Organization or bundled payment or even in a fee-forservice world, the payers are adding various incentives, such as related to diving down readmissions, or driving down emergency room use, or moving away from the less appropriate testing.

If outcomes remain the same or improve, and the other complications that are driving up the cost of care are reduced, the payer can create a shared savings model which would incentivize physicians to reach certain goals. If the physician is on the upside of that, he/she will win not only in the shared savings model, but will probably gain market share. Those who are on the downside will lose market share and dollars. So, physicians will want to make sure that they are moving toward or performing above the mean.

How will the National Surgery Quality Improvement Program impact the lives and practices of clinicians in this new healthcare environment?

The National Surgery Quality Improvement Program (NSQIP) began in the mid-1980s, and it was brought into the College of Surgeons, where it was promoted. It is now in almost 500 hospitals across the country. NSQIP is a risk-adjusted outcomes database that tracks the care of a population that receives care and undergoes procedures within the involved hospitals.

With the NSQIP database, multiple data points can be entered, including the expected [patient] outcome to be on a risk-adjusted basis. So, it is possible to identify high-risk patients who are more likely to have more complications and low-risk patients who should be expected to have fewer complications. Along with that you get the observed outcome. So once you have the expected outcome and compare that to the observed outcome, you create a ratio of performance that is risk-adjusted. This exists in multiple specialties, including urology, and it allows hospitals to drive improvement.

There are multiple examples of how NSQIP has generated enormous improvements in quality of care. The overall outcomes have included fewer complications and the delivery of better overall care. This is all invaluable to patients. It has also created a team-based approach to care.

How could this play out in, for example, an association such as the American Urological Association (AUA)? The AUA could look at this and further enhance it or enrich it, or make it a part of their membership. Ultimately, the goal would be to consider NSQIP for its use in a value-based payment system.

The “putting the patient in the middle” concept is part of the new business model, you said, and prostate cancer is an example of how things might develop in other medical specialties in terms of patient-reported outcomes. Can you explain this?

We are learning about the ability to use patient-reported outcomes as a way of establishing the overall success of care. As clinicians, we are accustomed to thinking in terms of the basic sciences, research sciences, and clinical sciences. Patient-centric outcomes are not so similar, but when you put them together you have a valuable tool for assessing care. It is more than the patient experience of care—more directed to their expected outcomes— and whether or not those outcomes were achieved. If I were asking a patient who had major prostate surgery about his postoperative experience with incontinence, this patient-reported outcome is probably going to be more accurate than a providerreported outcome of the patient experience. That kind of patientreported outcome work remains to be defined, however.

How will these patient outcomes and physician performance data be used to ultimately improve patient care?

Measuring physician performance using a billing and collection system is of limited usefulness. By bringing the range of clinical metrics into registries, we can get to more meaningful and actionable performance measures. There are other registries in addition to NSQIP, and the more and sooner medical associations get involved in establishing registries, the sooner they will be appreciated by the performance measurement world. CMS has recently put out an inquiry about registries, and multiple professions have submitted comments.

Registries feed off clinical data that have been entered into EHRs (electronic health records), but if EHRs are used only to record the delivery of care, the data they contain will not have been leveraged in such a way that it can fully drive improvement.

This national concept of how to capture and use big data is sweeping industries of all ilk. This is where all of this change in healthcare is going, and registries are a part of it.

What are the important take-home messages for urologists?

I think the most important message is that getting reasonable, actionable, and important performance measures that drive real improvement and a better patient experience of care comes jointly from the patients and the profession. We as clinicians have got to do our part and also make it easier for [the patients] to do their part, so that we can get to better, more affordable care.

We have been fighting, resisting this change. But I am starting to see the profession step up and put forth efforts into defining the best elements that can drive improvement. This whole new area of science—performance measurement, patient-reported outcomes, improvement sciences—is not going away.

Some thoughts about surgical measurement and innovation… There is a group in Massachusetts that got “tiered out” and wanted to get back in. So, they changed their cost structure and quality and went back to the payer and said, “We will give you a condition-specific risk calculator, and we will put the risk of our patients into it. We’ll give you an appropriateness score for the procedure(s) we’re doing and we’ll give you an outcomes target.” For the payer this was a game changer. The payer sees this as the innovation that could improve care and change the status of a provider’s tiering in the network.

Physicians are on a journey and there is no going back. The only real solution is in our hands. We are the only ones who have the skill set and training. By jumping on board, we are saying that these rules for improvement are reasonable, actionable, relevant, “in my work flow,” and “I can use these.” And by the way, most surgeons just want to operate and are eager to get to that point with a business model that is sustainable and rewarding.

We are going to be looking at system-based care, and we, as surgeons, are going to lead teams within that system. We look at risk, outcomes, and appropriateness. We are the source of the evidence: we generate it, we test it, we validate it and re-validate. We drive the data. We know the experience in care and will have to work that experience in care in a new way.