Dr. Neal Little, MD, FACEP, is an emergency physician in Chelsea, Michigan and an adjunct clinical professor in the Department of Emergency Medicine at the University of Michigan Medical School. In 1999, Dr. Little was faced with the daunting task of managing an increasingly complex incentive payment program for a growing provider group. He met that challenge by implementing a computer system to handle the idiosyncrasies of a diverse set of requirements needed by each medical director for each facility to fairly pay each clinician. Sheila Conant interviewed Dr. Little about the benefits a computer system can deliver in paying providers incentive based compensation. This is the third article in a four part series. Sheila Conant: Do you think incentives work?

Dr. Little: Yes, incentives do work. If the incentive is rewards providers for volume, a production kind of thing, some people simply cannot work in more than one gear, at more than one pace, and those people won't be very well incentivized by the system. But most people will respond to incentives. They have to be viewed as "fair" and in keeping with good clinical care, but every group of people responds in some way to incentives.

Sheila Conant: A lot of groups don't know how to get started with an incentive payment system. Do you think RVUs are a good metric to use for incentive payments?

Dr. Little: I think they are "a" metric, and they're what's available and generally agreed upon. You can pick apart any given metric and say that it should be more or less for some reason, but it's kind of a standard we have. It's what the government recognizes. It's what every other medical specialty uses as a metric. The other thing that using RVUs does is incentivize documentation, because you can't maximize your RVUs without having the documentation to support it. So it provides a double incentive, if more and better documentation matter. Again that's an alignment of goals between physician groups and the hospital, because unless the physician documents properly, the hospital can't charge properly. One way to incentivize proper documentation is to provide regular down-coding reports for what percent of patients seen could have been at a higher level but weren't because the documentation wasn't adequate. In my personal situation, if my overall score is below a certain threshold, I don't qualify for the pool bonus. Other key measurements for me are the length of time before a patient is seen, the down-coding percentage, the average for the site, and where I stand relative to other people.

Sheila Conant: How do you feel about that, being analyzed at everything you do?

Dr. Little: One thing that has shown to be an incentive is when a physician is put on a list where they stand relative to their peers; nobody wants to be an outlier in a bad sense. Seeing where you stand is useful and is also useful for directors when counseling various people because everyone always assumes that they are working harder than everyone else. They all believe they're seeing more difficult patients. And when they see real data that they can believe in, that can help change behavior or at least allow someone to believe that they are being fairly compensated. Software needs to constantly change to support what it is you're doing in response to what it is that is important at that time. For example, should you put more into midnights or weekends or expand what we mean as a holiday day? As the group agrees to change definitions, the software needs to accommodate those changes. I think it can be a recruiting tool for a group to say that we have a sophisticated way to provide appropriate incentives and rewards that is transparent to the doctor who comes on board, and that we can and do change it systematically.

In the next and final article, Dr. Little answers the question, "Do you think an incentive payment system can increase revenue?"