This presentation defined the disconnect between productivity-based physician compensation models and the demands of value-based payment models; identified and evaluated alternative physician compensation models; addressed the challenges in transitioning from volume-based to value-based compensation; studied how current fraud and abuse laws conflict with strategies related to value-based compensation, and explore potential solutions.
1. August 26-29, 2018
Presented by:
Martie Ross
Principal
Aligning Incentives: Value-Based
Physician Compensation Models
ASSOCIATION OF HEALTHCARE INTERNAL AUDITOR’S
37TH ANNUAL CONFERENCE
2. Page 1
Fewer Owners, More Employees
American Medical Association, Policy Research Perspectives (2017)
53.10%
47.10%
40%
45%
50%
55%
2012 2016
% Physicians
with Practice Ownership
5. Page 4
Stark Law
Anti-Kickback Statute
Tax Exemption
Fair Market Value
Commercial
Reasonableness
Not Taking Referrals
into Account
6. Page 5
FMV vs. CR
Fair Market
Value
• Bona fide bargaining between well-informed parties not
otherwise positioned to generate business for other
party
Commercial
Reasonableness
• Reasonable and necessary for arrangement’s legitimate
business purposes
7. Page 6
Demonstrating FMV and CR
Step 1: Facts
• Ascertain key facts surrounding arrangement
Step 2: Other Factors
• Identify circumstances potentially relevant to FMV/CR
Step 3: Benchmarking
• Identify multiple objective data for benchmarking
• MGMA, AMGA, Sullivan Cotter, TW, others
Step 4: Approach
• Identify proper approach for determining FMV
Step 5: Conclusion
• Reconcile approaches and prepare written report
9. Page 8
Two Ends of the Spectrum
Fixed salary
Retire in place
Small # of “prestige” organizations
Eat what you kill
Revenue minus expenses
Percentage of revenue
Productivity
Work Relative Value Units (wRVUs) x conversion factor
10. Page 9
Comp > Revenue
MGMA: on average, hospitals lose $190,000/year/employed
physician
Salary, bonus, overhead, insurance
Qui tam cases
Tuomey - $72.4 million
North Broward Hospital District - $69.5 million
Citizens Medical Center - $21.8 million
Memorial Health - $9.8 million
“Secret” contribution margin reports
Share cost data with physicians?
Physicians as defendants
11. Page 10
Administrative Duties
Demonstrable organizational need/benefit
At initiation and subsequent review
Defined scope of physician responsibilities
Hourly rate of pay
Typically less than clinical time
Documentation of time
“Stacking”
Impact on total compensation
14. Page 13
Best Practices?
No comprehensive survey on incentive structures or metrics; rely on
anecdotal information
Period of experimentation
Sparse research on incentives’ impact on physician behavior
MSSP results
General principles of behavioral economics
15. Page 14
Willingness To Change
…physicians reported that they would be willing to
accept sizeable proportions of compensation at risk, if required to.
The median reported proportion is
15 percent, meaning one-half of surveyed physicians would put
more than 15 percent of compensation at risk and the other half
would accept less than 15 percent.
Deloitte 2016 Physician Survey – Value-Based Care
“
”
16. Page 15
P4P Metrics
• HEDIS
• NQF
• PQRS/QPP
Quality
• CG-CAHPS
• Net promoter score
Patient
Experience
• Extended practice hours
• Care team supervision (PCHM)
Access to
Care
• Committee/initiative participation
• Referral loop
Good
Citizenship
17. Page 16
Merit-Based Incentive Payment System
Quality Cost
Improvement
Activities
Advancing Care
Information
− Report quality
measures
− Scored based on
relative
performance
(historic
benchmarks)
− Practice
transformation
− Patient-
centeredness
− Promote expanded
adoption of EHRs
− Improve utilization
and sharing of
electronic health
information
− Drive efficient care
− Providers forced to
accept risk
60%
0%
15%
25%
60%15%
25%
2017 Performance Year 2018 Performance Year
Impacts 2019 Payments Impacts 2020 Payments
18. Page 17
MIPS Payment Adjustments
2019 2022+2020 2021
+4%
-4%
+5%
-5%
+7%
-7%
+9%
-9%
Performance
Threshold
• Upside scaling factor up to 3x stated amount
• Top performers share $500 million bonus pool (not to exceed 10% of Part B charges)
20. Page 19
P4P Comp Models
Bonus only
At-risk compensation
Earn back withhold + bonus
Adjustment to wRVUs (subsequent to performance year)
Risk adjustments (HCCs)
21. Page 20
FMV Considerations
Real work vs. busy work
• Physician (vs. staff) effort
• Relevance to practice, value to organization
• Benchmarks
Bonus percentage
• Limited market data
• Use MIPS as a guide
“Stacking” – impact on total compensation
• Same issue as administrative duties
22. Page 21
Q:
Must physician compensation
take into consideration
quality, outcomes, patient
experience, and/or efficiency?
Commercially Reasonable?
29. Page 28
Progress to Date
One-quarter of commercial plan payments
now flow through Category 3/4 APMs.*
*Health Care Payment Learning & Action Network 2016 Commercial
Payer Survey. Respondents represent over 128-million covered lives, or
nearly 44% of the combined commercial, Medicare Advantage, and Medicaid
markets.
30. Page 29
Cultural Shift
Incentives Measures Regulators Providers Patients Risk
FFS
Model
Maximize
Patients
Maximize
Services
DRGs and
APCs
CPTs
Fraud and
Abuse Laws
Reimbursement
Rules
Silos
Competitors
Unmanaged
chronic
conditions
Uninvolved
with care
Resides
with payer
Increasing
costs
Incentives Measures Regulators Providers Patients Risk
APMs
and
Value-
Based
Manage
patient
population
Coordinate
continuum
of care
Quality
Efficiency
Network
participation
Continuum
of care
Collaborate
Educated
Engaged
Moves to
providers
31. Page 30
APMs and Fraud & Abuse Laws
Medicare program waivers
Broad for MSSP; more limited for episodic payments
If comply with specific requirements, DOJ/OIG will not pursue
enforcement action
“Automatic” protection for MSSP shared savings distributions
Broader issue?
CMS study: current rules hinder APM participation
32. Page 31
Shared Savings Distributions
Providers’ hesitancy to rely on Medicare waivers
Waivers are relatively untested; may be revised at any time
For non-profits, commercial reasonableness concerns remain
Commercial arrangements not protected by distribution waivers