The nationwide shift in medicine from productivity-based to value-based compensation (VBC), a payment model becoming more prevalent in otolaryngology, is centered on the quality and outcomes of care rather than the quantity of services.
Explore This Issue
June 2024In 2016, ENTtoday covered the initial adjustment to VBC, which aims to improve patient outcomes by incentivizing physicians to deliver high-quality, cost-effective care (2016;12:1). More recently, data from the Centers for Medicare and Medicaid Services (CMS) showed that otolaryngologists receive less compensation for the most common procedures (2023;18:1). In this latest installment, we provide otolaryngologists’ insights on the transition to VBC, including the ongoing need for organizational support to address VBC implementation challenges.
Productivity-Based versus Value-based Models
In the traditional productivity-based compensation model, the “production,” or work output, is directly linked to compensation. The fee-for-service model is the classic model, and, over time, many funds flow structures have evolved to a relative value unit (RVU) instead of a pure cash collection method, “but the tight alignment with work effort and compensation has remained,” explained Gregory Farwell, MD, Gabriel Tucker professor and chair of the department of otorhinolaryngology–head and neck surgery at the University of Pennsylvania in Philadelphia.
Meanwhile, “value-based models insert some risk to compensation based on performance against value-inspired metrics,” Dr. Farwell said. “Many of these are quality-based, where compensation would depend in part on how a group or health system performed against a quality metric such as the length of stay or a surgical site infection metric.” He added that other VBC models base compensation on performance against financial benchmarks to reign in healthcare costs.
The productivity-based care model acknowledges that “there are no funds for compensation without the associated work. It incentivizes productivity, which is critical in an era of tightening economic realities. The risk to productivity-based models is the incentive to bill and produce over and above evidence-based standards and to not be able to influence the cost curve in a positive direction,” said Dr. Farwell. The risk to VBC models “is an overall decrease in compensation for the amount of work being done if predetermined metrics are not met. Additionally, there is a theoretical risk to value-based compensation that the priority is on cost containment, which may override the patient’s best interest and the need to continue to innovate and advance care.”
According to Matthew Naunheim, MD, MBA, an assistant professor of otolaryngology–head and neck surgery at Harvard Medical School in Boston, “value-based care has become a fashionable buzzword but remains an elusive goal.” The holistic approach “rewards less easily measurable outcomes such as patient satisfaction, long-term outcomes, and population health.”
Value-based care has become a fashionable buzzword but remains an elusive goal.” — Matthew Naunheim, MD, MBA