Quality Incentive Payments: Team-based or Individualized?

Researchers Look for Answers

July 06, 2015 12:28 pm Sheri Porter

Pay-for-performance programs first appeared on the health care landscape more than decade ago, and ever since then, stakeholders have been struggling with how to best reward health care professionals for their good work. Are physicians and other health care professionals best incentivized with payment based on individual-level work or with team-based compensation?

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Researchers from the George Washington University (GWU) School of Nursing in Washington, D.C., and the University of Oregon's Health Policy Research Group, with offices in Portland and Salem, set out to find answers.

The research team conducted 48 in-depth interviews with clinicians in primary care clinics engaged in pay-for-performance initiatives at Fairview Health Services, a Minneapolis-based nonprofit academic health system.

The findings from that research were published in the May/June issue of Annals of Family Medicine in an article titled "Working Under a Clinic-Level Quality Incentive: Primary Care Clinicians' Perceptions."(annfammed.org)

Study Methods

Researchers were drawn to Fairview Health Services because of its innovative compensation model first piloted in four clinics in July 2010 and implemented clinic-wide in April 2011. Before the switch, clinicians were paid based on a fee-for-service model that included the potential to earn a $15,000 annual quality bonus.

Story Highlights
  • Research published in the May/June Annals of Family Medicine explores whether physicians and other health care professionals favor a team-based or individual-level quality incentive payment model.
  • The research team conducted 48 in-depth interviews with clinicians in primary care clinics engaged in pay-for-performance initiatives at Fairview Health Services, a Minneapolis-based nonprofit academic health system.
  • Overall, 73 percent of clinicians interviewed favored a mix of clinic team and individual-level incentives.

After the switch to a performance-based model, half of compensation was based on the quality of care delivered and patients' perception of experience. The remainder of compensation was based on elements such as panel size and the number of patient encounters.

In addition, Fairview's compensation model emphasized the importance of primary care teams and, therefore, rewarded clinic-based performance rather than individual performance.

Clinic teams ranged in size from five to 15 primary care clinicians and included physicians, nurse practitioners and physician assistants. Quality measures included metrics on diabetes, vascular disease, asthma, depression and cancer screening.

Key Findings

Authors noted that study results highlighted both the advantages and disadvantages of basing incentive payments on clinic-level performance.

Overall, 73 percent of clinicians interviewed said that incentive payments should be a mix of both clinic team and individual-level incentives because this helped maintain collaboration among team members while preserving the importance of individual performance.

In addition, among clinicians surveyed

  • 34 percent favored a 50/50 split between team-based and individual incentive payments,
  • 15 percent favored an exclusively team-based incentive and
  • fewer than 7 percent favored an entirely individual-level quality incentive.

In-depth Commentary

Lead author Jessica Greene, Ph.D., professor and associate dean for research at the GWU School of Nursing, answered questions from AAFP News about the research she and her team conducted.

Q. Why did your team conduct this research?

A. A number of researchers have theorized that team-based financial incentives would be more effective than individual-based financial incentives because they encourage system-level improvement and promote better teamwork. Others have argued that team-level incentives may result in clinicians "free-riding" on colleagues' work. Since Fairview was implementing a large, team-based, quality-focused compensation model, it was a great opportunity to learn first-hand from primary care providers what it was like to work under a large team incentive. The incentive for quality was very large;40 percent of base compensation was based on clinic-level quality performance.

Q. Were there any surprises in the research findings?

A. It was surprising that the vast majority of primary care providers wanted to have a combination of team and individual incentives. The team-level incentive was designed to promote teamwork, while the individual-level incentive would recognize individual effort. The hope was that mixing the incentives would retain the benefits of each type of incentive while mitigating the negative aspects. And clinicians did report negative aspects of the team-level incentive. Most notably was the lack of control many reported feeling over their compensation, since their salary was based on their colleagues' quality performance.

Q. What's the most important takeaway for family physicians?

A. One of the key benefits clinicians reported from the team-based incentive was that it sparked providers to get out of their silos and encouraged learning among colleagues. One clinician described seeking out colleagues with high quality metrics and asking them, "What are you guys doing that's different than I'm doing?" Those types of interactions seem very important, and I wonder what else could spark them without a team-level financial incentive?

Q. What's the single most important finding that you'd like readers to remember?

A. The primary care providers found being paid based on a team-based quality incentive a real mixed experience. On the one hand, many clinicians appreciated the incentive bringing clinicians together to improve quality, but on the other hand, it was highly frustrating to clinicians not to have greater control of their compensation.

Q. Explain the importance of getting the payment piece right as the health care system moves away from fee-for-service and toward value-based payment.

A. To me, this study underscores how challenging it is to design financial incentives. The question of what entity should be incentivized -- clinic or individual -- is just one of many decisions that incentive designers need to make. Yet, incentivizing based upon clinic-level performance had a profound impact on clinicians' experience with the incentive.

Q. Where do we go next with this research?

A. Combining team and individual-level incentives into a hybrid incentive was appealing to most clinicians in this study, but there is little empirical evidence of its impact. It will be important to evaluate how clinicians respond to hybrid incentives to see if they are able to maintain the positive elements of team and individual incentives and mitigate the negative elements.

Interestingly, in October 2014, Fairview moved to a hybrid incentive in which half of performance is assessed at the team level and half at the individual level. So there is an opportunity to learn how this hybrid approach works in practice.

Related AAFP News Coverage
Give Pay-for-Performance Chance to Succeed, Panelists Urge
Finding Right Mix of Incentives Is Key


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