Compensating Emergency Physicians: If Not Fee-for-Service, What?

R. Myles Riner , MD, FACEP

Partner Emeritus

Published October 01, 2013

The push for payment reform in US healthcare is getting a great deal of support from every corner, and this will impact compensation for emergency physicians (EPs) just as it will for nearly every specialty. Nearly everyone believes that our fee-for-service (FFS) reimbursement system results in too much care for too little benefit. The perception that preventative and primary healthcare services are undercompensated, and procedural services to rescue failing health are overcompensated, seems to be widely accepted as one of the major reasons why our health system is too expensive and ineffective in producing better health as an outcome. Personally, I think characterizing FFS as the real villain in this drama is a bit overblown. For-profit health insurance plans, pharmaceutical companies, medical equipment manufacturers, industry lobbyists and advertisers, Wall Street's short-term-goal-driven stockholders and lack of political leadership all play a significant role. However, I think FFS as we currently know it is dying, and capitated multi-specialty medical groups focused on disease prevention are gradually going to push out other, less cost-efficient provider systems. Mostly, physicians in these groups will be salaried. So where does that leave emergency physicians?

There are a lot more emergency physicians who are employed these days by hospitals, by EP medical groups and by HMOs and the like, and there are pluses and minuses to this. I am convinced that paying these physicians a straight salary or even a straight hourly may not provide enough incentive for providers to practice cost-effective care, maintain productivity or invest in the operation of their ED. I don't have good data on this, but I suspect that EPs who are paid strictly on an RVU productivity incentive model do not have cost-effective care high on their agenda. I believe that over time, compensation for EPs will be driven by payment reform to reflect the new value-based care model, using incentives to encourage EPs to achieve these goals. Unfortunately, incentivizing physicians to do the right thing, cost-effectively and efficiently, is not a simple matter. All other things being equal, physicians who work hard deserve to be paid better than those that don't. Likewise for physicians who do technically or mentally demanding and difficult work, who have better outcomes, who communicate well with patients and staff and who trained longer and harder. Fee-for-service may encourage some or even most physicians to do too much for too little benefit, but it also generally pays physicians who work harder and are more efficient, more skilled and more compelling in the marketplace better than physicians who aren't. There are unfortunately far too many exceptions.

The practice of emergency medicine does not lend itself well to bundled payments, capitation or other payment reform population-based models that use risk sharing and outcomes targeting as the primary incentive in achieving quality, cost-effective care. EPs have control over their slice of the Acute Care Continuum, the care provided in the ED; but unlike most other clinical physicians, their ability to affect ongoing patient care, or what happens before the patient gets to the ED, and after the patient leaves, is limited. EPs can provide some preventative healthcare services, and can certainly impact in-ED and post-ED outcomes through coordination of care; but it is difficult to see how, on a case-by-case basis, it would be possible to determine what portion of the bundled payment for acute MI or hip fracture should go to paying the EP, who may do a whole lot for some of these patients or not as much for others. Even considering a population of patients, how does one fairly determine the portion of a capitation payment or premium dollar that should be allocated to emergency physician services? If a multi-specialty medical group employing emergency physicians fails to manage its capitated patient population well and provide effective preventative care and good chronic illness care, the group will have less profit to distribute to its primary care providers, but its emergency physicians are likely to have to work harder and see more of these managed care patients in the ED. Should reimbursement for repair of a laceration, or managing the victim of an MVA or GSW, be adjusted based on the financial success of a capitated multi-specialty medical group?

The value-based payment goal for emergency medicine is to encourage cost-effective care with excellent outcomes and high patient satisfaction, and the doctrine of fair compensation requires pay that reflects performance, productivity, work ethic and skills. What kind of compensation system effectively addresses these requirements? Rather than abandon fee-for-service payment for EPs altogether, I think we may need to remodel it. The advantage of RVU-based fee-for-service reimbursement is that it does reflect effort and productivity, yet it does not factor in value and outcomes. First, I would start by revising RVUs for emergency care, which tends to pay more for doing more tests and treatments and to a degree incentivizes over-testing and over-treatment. Some aspects of care, like laceration repair, are not subject to physician discretion; others, like IV rehydration, are. Perhaps RVUs should be based not so much on what you do, but on what kind of patient you care for, in a quasi-bundled EP-specific fashion. This would allow for some adjustment in advance for those services that are discretionary and those that are not, for acuity, for complexity and for other aspects of care that require more or less skill and (yes, I said it) time without encouraging unnecessary services. Secondly, I would establish some ED group risk pools for emergency care services to encourage good outcomes, reduce unnecessary testing, factor in patient satisfaction and reduce variability in care. Risk pool allocation could vary based on individual provider contributions to achieving the risk pool targets. Finally, I would adjust the portion of the population's slice of the policy premium allocated to the ER group to factor in ED patient volume and complexity.

I know this sounds complicated, but the KISS principle and fairness are often less than compatible when it comes to practices as varied and unpredictable as emergency medicine. Also, most of these adjustments to FFS would come under the auspices of employment agreements or contractual relationships between payers and providers. Thus, it may be possible to bypass the painstaking RVU process to get to these remodeled FFS payment provisions. In any case, I would prefer to see EPs develop these models and become true participants in the value-based proposition than to be sidelined and managed as a cost center.

This post first appeared on The Fickle Finger on March 12, 2013.

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