Physician Contracting Best Practices for Health Systems
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This webinar is geared towards health systems and those working with health systems who want to gain efficiencies within physician contracting and learn how to structure internal guidelines and processes. During this webinar, you will: --Learn to create successful strategies for organization-wide policies within health systems --Explore characteristics of high-quality market data --Review studies of MD Ranger subscribers
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Physician Contracting Best Practices for Health Systems
- 1. 1 PHYSICIAN CONTRACTING BEST PRACTICES FOR HEALTH SYSTEMS FEBRUARY 2016 HOSTED BY ALLISON PULLINS, CMO, MD RANGER
- 2. 2 Outline: • Brief introductions • Successful strategies for creating organization-wide policies • Vetting market data • Best practices from MD Ranger subscribers
- 3. 3 ABOUT US
- 4. 4 Our database and subscribers
- 5. 5 MD Ranger includes: • Benchmarks, available as reports and online queries, with market data for call, medical direction, administrative services, leadership positions, hospital-based services, uncompensated care, clinics and diagnostic testing services • A secure, web-based Contract Data Tool to collect and organize contract data (uploads via Excel available) • Analytic Tools to benchmark internal contracts and total expenditures, identify compliance issues, compare facilities and analyze expenditures • Cost and compliance reports, including an annual Executive Report, comparing your contracts to MD Ranger benchmarks • Resources and research to support compliance efforts • Customer support by experts in physician compensation, FMV documentation, and compliance
- 6. Your host 6 • Nine years experience in healthcare consulting and technology; specializing in physician marketing, recruitment, engagement, compensation, negotiations • Helps MD Ranger subscribers leverage data, analyze internal costs and structure physician contract compliance programs
- 7. 7 PHYSICIAN CONTRACTING STRATEGIES FOR HEALTH SYSTEMS
- 8. Overview • Matching physician contracting strategy with overall strategy • Recognizing and acknowledging pressures from hospitals and physicians • Develop your organization’s contracting process (not to fear: we’ll walk you through each step) • Identify opportunities for multi-facility agreements 8
- 9. Health system benefits are many (for physician contracting) • Control costs • Increase operational efficiency • Centralize physician leadership • Decrease duplicative physician payments in some cases (depending on volumes, demand, location of facilities) 9
- 10. …yet so are challenges • Structuring system-wide policies • Ensuring those policies are uniform and consistently applied • Considering financial goals and costs • Honoring the physician’s perspective, income requirements • Being compliant with federal regulations 10
- 11. Your goals for an effective system- wide policy • Principles, guidelines, and procedures defined at the executive level to steer policy and create accountability • Uniform method to obtain payment rate benchmarks • Consistent payments within fair market value • Deliberate and careful cost analysis, and method to benchmark your financial performance 11
- 12. Meanwhile, consider your organization’s overarching strategic goals • Does each contracted position help achieve overall goals? • Do you have the right physician leaders in place to accomplish goals? • Should you build in incentive payment terms to achieve organizational objectives? 12
- 13. CREATING YOUR PROCESS— IN SIX STEPS 13
- 14. Step 1: Assess the situation • What’s the current state of physician contracting? • Are your contracts in one place? At corporate, or at the facility level? • Do you have an FMV process at all? What are your documentation requirements? • Who is in charge? • IS IT WORKING? • Do affiliate hospitals have ownership? How much? • How many physician arrangements are there? Are there potentially duplicative arrangements? • Are there worrisome agreements? 14
- 15. Step 2: Choose a leader and support team • Tone from the top • Executive support essential for physician contracting • Legal, compliance, finance • Involvement with CEO, board • Staff should be compliance-oriented, juggle competing priorities, and pay attention to details 15
- 16. Step 3: Select resources • Market data: overwhelmingly #1 resource for physician contracting across health systems • Organizations can choose to rely on benchmarks from one survey or firm, or could choose to integrate several surveys into the process (remember to be consistent) • Valuation firm(s)? • Study organization-wide benchmarks 16
- 17. Step 4: Plan your policy • Draft plan which includes: • Strategic goals • Organization’s financial objectives, any details on cost restrictions • Discuss what needs to be included (step by step) as your hospitals plan and propose physician payment rates • What specifics will be needed for documentation? • Ensure organizational buy-in throughout 17
- 19. Step 5: Establish guidelines for rates • Use benchmarks to learn how often similar hospitals engage the physician (and how many hours they pay for) • What would be the most appropriate default market range for your organization? • Don’t forget to identify unique factors that affect your situation, e.g. quality initiatives, adverse payer mix, burdensome call schedule, unique qualifications 19
- 20. Step 6: Document rates, compliance • How will you consistently document rates? • What other documents, besides proof of FMV, should you require? • How will you track compliance? • Will you perform annual audits? 20
- 22. When multi-campus coverage arrangements are appropriate • When two facilities within the same health system are physically nearby and the emergency department volume is such that call burden for one physician is not overwhelming, it may be possible to have one physician covering both facilities 22
- 23. What’s needed • Physician(s) on panel must have privileges at both facilities • Second call position may be needed to address infrequent conflicting demands 23
- 24. How much it costs • Adding a second campus to one coverage position on average increases the cost of the agreement by 26% • Example: if two hospitals each pay $100 for coverage to two physicians, the estimated appropriate rate if they consolidated contracts to have one physician provide coverage of both campuses would be $126. This is 37% savings per campus! 24
- 25. FMV for multi-facility call arrangements • Use market data to determine appropriate payment ranges for a single position • Use MD Ranger’s formula for multi-campus coverage service (each campus brings a 26% increase) • Document market rates and justification for negotiated payment rate 25
- 26. When multi-facility directorships are appropriate • When two or more facilities within the same health system can rely on the same physician to complete the same duties for both hospitals, a multi-facility medical directorship or administrative position may be advantageous • We seen these for facilities in the same region or across multiple regions in unique situations such as training or system-wide implementation programs or quality initiatives 26
- 27. What’s needed • Physician must have available hours for the position • Though there is no significant difference in hourly rates of pay for physicians with multi-facility administrative positions, there is a significant difference in the average number of hours required • As with all medical direction and administrative positions, the job description must warrant the required number of hours, and timesheets are essential for compliance 27
- 28. How much it costs • On average, a single physician contract for the same service across two campuses costs 37% more than a single campus position, with the difference largely driven by hours required not hourly rate of pay • Each additional campus in the contract commands an average 10.7% increase in the number of hours up to five or more campuses 28
- 29. FMV for multi-facility direction/administrative arrangements • Use market data to determine appropriate payment ranges for a single position • Use MD Ranger’s formula for multi-campus administrative positions. Note that hourly payment rates typically do not increase, but rather annual hours and annual payments for the position are higher • Document market rates and justification for negotiated payment rate • Require and monitor timesheets 29
- 30. Physician payments are higher, yet costs may be lower • Multi-facility contracts typically cost more than single facility arrangements • However, they are less costly than individual facility payments when considered in aggregate • Our data demonstrate that though there is decidedly more work to cover 2+ facilities, the amount of work (measured in hours and annual payment rates) is not proportionate to the number of facilities covered under the agreement 30
- 31. These arrangements are becoming more common In 2015: • 8% of MDR call agreements were multi-facility arrangements • 10% of administrative agreements were multi-facility arrangements Note: these numbers are increasing year to year 31
- 33. Consider • Sample size • Participant characteristics • Consistent, comprehensive collection method • Thorough and transparent auditing processes • Specificity and ‘match’ of job description 33
- 34. What does market data reveal? • What similar hospitals pay • How rates are distributed • Hours per month • Annual payments • Hourly rates 34
- 35. Why is market data important for health systems? • Standardization • Cost control • Market data products can reveal compliance and/or financial challenges in your organization 35
- 36. What market data can do 36 • Give a sense of the range of rates in the marketplace • At minimum, help you establish a general range for payment rates • Select rates for apples to apples services • Create a foundation for your physician contracting process
- 37. What market data can’t do 37 • Address 100% of your physician contracts • Tell you the “right” percentile or range at which you should pay • If you should be paying the physician in the first place*
- 38. 38 BEST PRACTICES FROM OUR PARTNERS
- 39. Educate your colleagues about consequences of violating federal law • Stark Law, AKS, and False Claims Act • Fines, penalties, vary • Physicians are at risk too; make sure to educate them as well • MD Ranger has many resources: mdranger.com/resources 39
- 40. Automate as much of the contract process as possible • Remember: technical violations are still violations • With the volume of these types of contracts across your entire organization, always ask if you can automate. • Contract management systems can be helpful 40
- 41. Identify and segment your high-risk contracts • Slicing and dicing by expiration date isn’t the only way to view contracts • High-performing health systems know when tenuous, difficult agreements come up for renewal well in advance • Make sure your staff have enough support for renewing and documenting these agreements (this could include supplemental, internal documentation) 41
- 42. Cost control: unintended consequences of strict policies • How you structure your policy should have effects— even down to the contract level • Consider policies that could lower your rates overall; make sign off process for high-dollar agreements more challenging 42 *Pseudonym
- 43. Always loop in AP • Making sure that payments are compliant (current contract, hours documented, etc) is harder than it seems • The buck stops with AP 43
- 44. Does your health system need help? MD Ranger, Inc. 650-692-8873 inquiries@mdranger.com 44
Hinweis der Redaktion
- Thanks for joining us today for our webinar on best practices for physician contracting, for health systems. We’re glad to have you here. Also, my colleague Julia Ogburn is on the line to handle any incoming questions or comments. Just type them into your Go To Webinar panel, and if she’s unable to follow up during the time we have today, we will respond to you via email soon. You will all receive a copy of the webinar slides following our presentation, and then the recording will be made available early next week, too. We have a lot to share with you today and want to keep the call to 30 minutes or under—we know you all have busy days. So sit back, write down your questions for later if you have any, and let’s dive in.
- Here’s the agenda for today’s call. First, we’ll have brief introductions given that some of you are new to me and to MD Ranger. Then we’re going to dive right in and explore strategies especially for health systems when it comes to structuring your physician contracting program and maintaining compliant arrangements. Since market data is truly the foundation of most heath system’s contracting programs, we’ll talk about how to select and verify that the marketing data you’re working with his high quality. Then, we’ll wrap up with some best practices from our subscribers.
- But first, a little about MD Ranger since we have some people new to MD Ranger on the line with us today.
- Seven years ago, our founders started MD Ranger to help healthcare organizations get access to better data for contract physician positions. They started collecting data from coverage and administrative agreements, and then expanded to hospital-based services, diagnostic tests, and hospital-based clinics later. When we started out, our database was only 1,400 or so contracts and subscribers were limited to the west coast….but we’ve really grown over the years and now our database and scope of benchmarks surpasses other physician market data surveys.
- Before we dive in, a quick introduction to me your speaker! I have nearly a decade’s worth experience in healthcare consulting and technology, specifically as it pertains to the physician/hospital relationship. At MD Ranger, I help subscribers leverage our data for negotiations and compliance.
- Let’s dive into the first section of our webinar today, which will be discussing strategies health systems can use for their physician contracting processes. Note that this isn’t an exhaustive list, nor are we going to cover detailed, tactical advice on how to execute these strategies. Doing so would take many, many hours. If you’re an MD Ranger subscriber, we look forward to working with your organization on these ideas and how to roll them out across your facilities.
- Within the section on health system strategies, we are going to focus on the following. First, we’ll discuss how to ensure your physician contracting strategy fits into your organization’s mission, values, partnerships, and vision. We’ll also talk about ways that the reality of the hospital/physician relationship affects physician contracting Then, we’ll take you through the six major steps to build a physician contracting process at the corporate level you can roll out to your facilities. The last strategy we’ll discuss today that is unique to health systems are the opportunity to create multi-facility physician contracts. We’ll talk about both call coverage and directorships/leadership positions.
- Let’s begin with the positive.. As a health system, you have so many opportunities to grow your organization and promote your mission of care.
- It’s important to recognize there are dueling forces at work while establishing physician compensation. While the hospital typically focuses on being able to provide services that they must or want to provide and doing it cost effectively, physicians have much at stake. Furthermore, internal policies as well as federal regulations have a considerable impact on the outcome of contractual discussions.
- Of course, each health system’s specific goals for physician relationships, alignment, and contracting will be different. However, there are some pretty standard goals we see at MD Ranger with our system subscribers. Keep in mind that any guidelines you establish at the top levels of your organization will have measurable impacts, both good and bad, throughout the system. The more diverse your facilities are, the more difficult pulling together policies that work throughout your organization is going to be. With larger health systems we work with, we see a fine balance between having firm guidelines and instructions while granting affiliated hospitals the ability to run their businesses. It is important to consider the effects will your policy have. Intended and unintended consequences important to consider. Your health system should aim for consistent, fair payments at or below FMV. Obviously, there will always be exceptional circumstances in a small handful of agreements at your organization; you will need to have a process to determine how to handle those expcetions consistently. Finally, your overall contracting system should have built into a way to check performance of your hospitals and your entire system as a whole. Measuring financial performance and compliance with policies is essential.
- In addition to determining what outcomes you want from your physician contracting process, it’s important to simultaneously consider what goals your organization has overall. Your physician contracting strategy and the goals of that strategy should compliment major initiatives for your organization
- With background work and preparation, health systems can create a system that will work for all their facilities and roll it out across the organization.
- First thing you need to do before you either create a policy from scratch or you’re going to change the policy you currently have is: what’s the situation. Here are some questions you want to ask yourself.
- The people you have involved in the contracting process at both the corporate and facility level is the most important piece of a physician contracting program. It’s key that you get an executive who will be accountable for physician contracting and takes compliance very seriously. The folks who have been tasked with the day to day management of physician contracts should be very detail oriented and
- Choose what resources you’d like to use in your physician contracting process beyond the people. This is also a key step. Health systems have the advantage of taking a basic process and rolling it out across multiple facilities, saving people at the facility level time and effort. The types of resources and policies that work for this type of project are as uniform and consistent as possible. Sometimes organizations will hire an external consultant to help them develop a process. That works, but you can also use internal resources to develop your program. One of the advantages of being a health system is that you most likely have professionals at the corporate level who are up to doing this task. Selecting market data is usually an early step. Some hospitals. rely on one survey to meet their needs but this is pretty rare. Usually organizations are participating in and purchasing multiple physician surveys to help inform their physician contract compliance programs. Usually health systems either work with someone internally who can provide valutaion expertise on more difficult arrangements; other companies decide to contract with outside vendors who provide this service.
- Now that you have everything assembled, put pen to paper and draft your plan.
- As you’re going through this process, it’s important to consider the multple, complex forces at work when it comes to the hospital/physician relationship. We suggest that health systems consider to act as more “proactive buyers”—a party that wants to work with physicians and groups to provide compensation for key services well in advance of the request. If you are able to be strategic about what you offer physicians, and you offer first, you could end up with rates that are compliant, fair, and feasible for your organization. Health systems structure adds another layer of complication to this, obviously as the volume of physicians involved in medical staffs across your facilities is large. However, we’re also realistic here at MD Ranger and know that oftentimes, physician payments are made because you’ve either had trouble finding a physician to fulfill these duties, or you’ve been approached by doctors already doing the service. It’s difficult to think about the overall picture when you struggle to make sense of payments on a contract by contract basis. However, as a health system these sorts of ad hoc agreements have a way of snowballing and causing ripple effects across your organization. Once you start paying for a service, a pandora’s box usually opens. You will reach as close to optimal terms for each party by making sure that these forces are in check with one another, and that you always keep in mind the bigger picture.
- Determine commercial reasonableness guidelines first. Then, you’ll want to audit your current payment rates and see where on the market ranges you tend to fall. Some markets demand less; others demand more. At MD Ranger we leave those judgement calls up to the organization itself. Whatever you do, make sure that you are comfortable with the rate from a compliance perspective. In general, you’ll have rates over the 75th percentile for some services but it should not be a trend to pay at or above that rate for a majority of your contracts. You’ll of course need to give your facilities a certain level of flexibility, particularly if they are different demographically from one another.
- Last step but perhaps the most important one is determining how you are going to document your rates.
- MD Ranger data strongly suggests the benefits of multi-facility physician contracts as an important strategy for controlling costs. Hospitals and health systems with more than one campus or facility can save money and streamline both physician emergency coverage and administrative services through multi-facility agreements, particularly if distances are short and call-in demand is modest or uneven.
- Keep in mind that….
- Administrators are often curious if these types of arrangements could save them money, and they will.
- Here are some general guidelines to think about setting a proper payment rate. You’ll need to make sure you’re adhering to your organization’s guidelines and rules about physician contract compensation, of course.
- Directorships and leadership positions are more easily leveraged across two or more facilities than coverage agreements. If your health system is currently not thinking about structuring these types of agreements, it should.
- It’s important that you find a physician willing to put in the extra hours that an administrative position across campus could demand.
- Typically these arrangements do have a higher mark up than coverage agreements; however, it’s possible to have directors that span across more than two or three facilities.
- Very much like call coverage, setting payment rates for administrative multi-facility agreements includes using high quality market data and looking closely at the number of hours it will require the physician to complete her duties.
- Replacing single facility physician contracts with multi-facility arrangements can have positive, measurable impacts. Although payments to physicians whose duties span multiple facilities are higher than single facility contracts, they are less costly than separate, individual facility arrangements when the duties are assigned to a single physician. MD Ranger's subscriber-based comprehensive reporting system provides an unparalleled opportunity to evaluate the frequency and benefit of these types of arrangements, providing insight into the payment rates and time differentials of single versus multi-campus contracts. These data can be helpful in providing guidelines for documenting fair market value and commercial reasonableness for situations that, on the surface, appear to exceed common benchmarks.
- I’ve mentioned market data several times during this presentation already. Let’s dive a little deeper into the topic, and discuss how market data can be a very meaningful tool for health systems in particular.
- Selecting high-quality data is incredibly important. Here are some key things you should look for when evaluating data.
- Market data, whether you obtain it through a large, national survey or a small self-commissioned one, should tell you: -what like hospitals pay for specific services (the more specific, the better). -what the distribution of rates in the market is. The distribution of payment rates can be revealing, depending on the attributes of the sample size and specific data set. When you are looking at a distribution of market rates, check how much variance there is in the data. If the distribution is fairly concentrated and there’s not much of a difference between the rates, this is important to note as it suggests that rates are consistent in the marketplace. If there is a much larger distribution of rates, it could mean many things. If the sample size isn’t large and the rates are largely distributed, it could indicate poor quality data. If the sample size is satisfactory or even large, variation could indicate many things, from a less-competitive market to variations in the types of organizations included in the data. -when we’re talking about physician administrative rates, you should be looking at at least two of three possible statistics. Look at annual payments, hours per month, or annual rates. If you have rates and hours, you can calculate payments. Similarly, if you have annual payments you can determine an appropriate hourly rate. However, if you only benchmark hourly rate, you can easily miss large amounts of hours accumulating over time.
- Market data is a more of less objective way to standardize rates across the organization. It can also provide cost control measures. Depending on the survey and product, they can also quite quickly and easily reveal potential compliance issues or financial challenges at your organization.
- Market data can be extraordinarily helpful in situations, but there’s also only so much it can do. Market data generally can…
- But it defintiely cannot do it all….
- We only have a few moments left, so we’re going to take the time we have to talk about some helpful hints and tricks that we’ve picked up from member organizations along the way.
- It’s important to inform your colleagues, frankly, everyone who touches physician contracting at your organization, about the consequences of non compliant agreements. Stark, AKS, and FCA are different laws with different penalties and fines. Physicians also need to know that they themselves are at risk. We have many resources on these federal regulations on our website
- When you are creating your physician contracting process, even if you have the most competent people in seat, make sure that you automate as much of the process as possible. Considering the huge volume of physician agreements at a health system, it is inevitable that things will fall through the cracks. Technical violations of Stark, like an expired agreement, are still technical violations. If anything else, focus on automating the renewal process. Because the law requires physician contract rates to be set in advance, identify all expired contracts within your organization and prioritize them for renewal. If your organization doesn't have a contract management system, consider building or purchasing such a system. The contracting department should be automatically notified of upcoming contract expirations with ample time to review and negotiate the contract or sign an extension. Allow at least 3-6 months for the renewal process (sometimes longer for complex arrangements like hospital-based service agreements).
- We have found that our highest performing subscribers always know the difficult agreements well in advance and have their team working on renewals at least six months in advance.
- We’ve seen health systems very successfully drive down overall costs with some well-structured policies. WE have a health system who created their exceptional agreement process to discourage people “applying” for exceptions. In order to be paid at a rate above the 75th percentile, the organization forces the hospital administrators to go through a difficult exceptions process at the highest levels of corporate. This has drastically reduced the number of contracts above the 75ht at this org, since no one wants to go through the trouble of the ard. Process.
- Oftentimes, the best way to take control of physician payments is to work clsely with AP. They are the people that issue the checks. If you are getting strict about keeping time cards and tracking activities, which you should be, don’t allow AP to generate a check for physicians unless they have properly submitted their timecards or tracked their time using another tool.
- These types of arrangements can be complex. If your organization needs help brainstorming, or you need access to data, call us! We can help.