Q&A: The Key to Successfully Managing Provider Incentives and Bonuses

For many medical groups and health systems, the missing ingredient in success with incentives, bonuses, and other at-risk pay is visibility. Without real-time visibility and transparency into the link between incentives and provider activities – and thus clinical and business outcomes – organizations are essentially asking their providers to drive without a map.  

To gain insight into the road to transparency and success in managing incentives and bonuses, we’ve tapped two experts in the field, Hallmark Health Care Solutions’ Aarika Cofer, Vice President for Heisenberg II, and Ciara Williams, Solutions Consultant for Heisenberg II. Here’s what they say medical groups and health systems need to know. 

What opportunities are health systems and physician groups missing when it comes to incentives, bonuses, and other forms of at-risk payments for providers? 

AC: The biggest opportunity is in the data. When creating compensation models and recruiting providers, organizations need visibility into financial data as correlates to provider performance and payor reimbursements. This transparency allows them to track the success of their compensation strategies and reevaluate variables within the compensation models if needed. 

Equally important is the providers themselves being able to track their performance month over month. For example, the provider should have visibility into how they're performing against the thresholds set for them in their contract. Can they see what is happening from a wRVU perspective? Can they see their quality scores in real time? Are they accurate? Are they seeing them on a regular basis? Can they track how those payments are being made or what their bonus accrual is month over month?  

How can organizations gain that needed visibility? 

CW: Technology is obviously a big piece of the puzzle. For most organizations, the most difficult, labor-intensive parts of calculating incentives are (1) aggregating all the performance data and (2) validating that it's all correct. If you’re still administering bonuses and incentives for multiple physicians across different sites via Excel spreadsheets, it can be very challenging to get an accurate read on quality and performance data.  

By leveraging technology to automate your compensation calculation and reporting processes, you’re able to quickly gain visibility into real-time for your providers. This not only gives you the information you need to assess compensation plan and provider performance, but it also saves you a massive amount of time on manual work that could be better spent on higher-impact activities. 

More specifically, what can you do with that kind of technology-powered data visibility that isn’t possible through manual processes? 

CW: Anyone that's works in data analysis knows that data is just data until you turn it into information. What technology like Heisenberg II helps you do is take that data and translate it into both usable information and a story that helps improve decision-making. The benefit of having accurate real-time data aggregated in one space is that you can pull the analytics from the previous year and see how your provider's compensation tied to the revenue that was generated through those activities, e.g., how performance either increased or decreased throughout the year.  

Organizations can also start looking at variances in the compensation plans, locate errors, and correct those errors and variances. Whereas if you're just managing your data and analyzing it in a spreadsheet, sometimes you're not able to see the full picture to make the right decisions. 

AC: In my previous role, one of our biggest pain points was tying compensation incentives back to shared savings initiatives from ACO type revenue models. We were receiving payment based off Risk Adjustment Factor (RAF) scores and seeing patients at a certain risk level. We wanted to attribute some of the payment we were receiving for those visits to the providers that were providing the services. To do this, we knew it was critical to have a powerful compensation technology platform, so we adopted Hallmark Health Care Solutions’ Heisenberg II Physician Compensation platform. As a result, we gained the transparency needed to start bringing in all those dollars and allocating the correct percentage of incentive based off those performance metrics. 

Technology also lets you identify and then manage variation in a way spreadsheets cannot. It's the one-off nuances that make the management of those compensation models more strenuous. Standardization of these variations is key to any successful compensation division, from both an administrative and provider engagement perspective. It also helps the recruiting division communicate the right compensation structure, so when they’re negotiating with potential new providers, they know the boundaries to stay within versus where there's flexibility to meet recruiting and organizational goals.  

What are the benefits for providers when operations can gain greater visibility into performance or quality data? 

AC: With increased visibility into compensation performance, group administrators can clearly show their providers, “If your performance is X, Y, and Z throughout the year, I can forecast your total cash comp for the end of the year based off of that performance structure.”  

In addition, administrators can pinpoint and provide more clarity on where levers can be pushed within the variables of the compensation plan to impact provider pay. If physicians thinks that their earnings should increase over the next year, then there can be conversations about rates within the clinical portion of their compensation models, but the structure of those compensation models does not need to change from provider to provider. That gives room for flexibility within the organization to satisfy their providers without having to create new and different compensation plans. 

CW: I'm big on systems thinking, and a platform like Heisenberg II allows you to create a system within your organization to manage your time, administer your goals and reach your strategic initiatives more efficiently. There's a quote that I love: “Show me your incentives, and I'll show you your outcomes.” For both providers and their employers, being able to easily view and manage your incentives and bonuses from a total view within a single platform isn’t just nice, it’s fundamental if you want to address gaps and reach targeted outcomes. 

Special thanks to our Contributors: Aarika Cofer and Ciara Williams 

Aarika Cofer is Vice President for the Heisenberg II (HII) solution. Prior to joining HHCS, Aarika worked for Texas Health Physician Group, where she led their provider compensation administration initiatives.  

To furtyer explore the benefits of leveraging technology to streamline and improve your provider compensation process, or to schedule a demo, contact Aarika at aarika.cofer@hallmarkhcs.com.