physician compensation models medical group management association may 5, 2011 susan b. orr, esquire...
Post on 26-Mar-2015
216 Views
Preview:
TRANSCRIPT
Physician Compensation ModelsMedical Group Management
Association
May 5, 2011
Susan B. Orr, EsquireTsoules, Sweeney, Martin & Orr, LLC
29 Dowlin Forge RoadExton, PA 19341
Tel.: (610) 423-4200Fax: (610) 423-4201
E-mail: sorr@tshealthlaw.com
Outline of Presentation
Marketplace Trends in Physician Compensation
Regulatory Requirements
Overview and Analysis of Popular Compensation Models
Copyright © 2011Tsoules, Sweeney, Martin & Orr, LLC2
Trends in Physician Compensation
Performance Based Incentive Plans are on the rise* 92% of Groups offer incentive plans 63% of Hospitals 67% of Integrated Health Systems
Increase with payouts tied to quality Accountable Care Organizations Patient Centered Medical Home
Productivity remains the most common* Hay Group, 2010 Physician Compensation Survey
Copyright © 2011Tsoules, Sweeney, Martin & Orr, LLC3
Regulatory Framework for Analysis of Physician Compensation
Anti-kickback Statute
Physician Anti-referral (Stark Law)
False Claims Act
Tax-exempt Organization Law
Copyright © 2011Tsoules, Sweeney, Martin & Orr, LLC4
Anti-Kickback Statute
Criminal offense to knowingly and willfully solicit, receive, offer, or pay any remuneration to induce referrals of items or services paid for by a federal health care program
Government must prove intent to induce referrals The Statute is violated even if one purpose of
remuneration paid under a business arrangement is to induce referrals
Violation of Anti-kickback = violation of False Claims Act
Copyright © 2011Tsoules, Sweeney, Martin & Orr, LLC
5
Anti-Kickback Statute Safe Harbors
Statute contains certain “safe harbor” exceptions
Protect certain payment and business practices from prosecution if all elements of a particular safe harbor are met
Transactions that do not fit within a safe harbor are not necessarily illegal, depends upon particular facts and circumstances
Copyright © 2011Tsoules, Sweeney, Martin & Orr, LLC6
Bona Fide Employment Safe Harbor
Any amount paid by an employer to an employee (who has a bona fide employment relationship with such employer) for employment in the provision of covered items or services is not considered remuneration
What is “bona fide employment”? W-2 employee for tax purposes
No FMV required
Copyright © 2011Tsoules, Sweeney, Martin & Orr, LLC7
Personal Services Safe Harbor
Applicable to Independent Contractors
Written Agreement for at least one (1) year
Specifies services to be provided
FMV compensation
Copyright © 2011Tsoules, Sweeney, Martin & Orr, LLC8
Stark Law
Prohibits a physician from making referrals for “designated health services” to an entity with which physician (or immediate family member) has a direct or indirect financial relationship, unless a specific statutory exception applies Also prohibits entity and physician from billing for
services provided pursuant to a prohibited referral Any violation of Stark, even unintentional, results in
liability
Copyright © 2011Tsoules, Sweeney, Martin & Orr, LLC9
Stark Law
What is a Financial Relationship? Broadly defined to include any direct or
indirect ownership or investment in an entity furnishing DHS
Or compensation arrangement with an entity furnishing DHS
Financial arrangement is protected if activity falls within an exception
Copyright © 2011Tsoules, Sweeney, Martin & Orr, LLC10
Bona Fide Employment Exception
Employment is for identifiable services; Amount of compensation is consistent
with fair market value for the services; Compensation is not determined in a
manner that takes into account (directly or indirectly) the volume or value of any referrals by referring physician; and
Agreement is commercially reasonable (even if no referrals)
Copyright © 2011Tsoules, Sweeney, Martin & Orr, LLC11
How to Determine Fair Market Value?
Identify comparable data that reflects the services performed
CMS states: “Reference to multiple, objective, independently published salary surveys remains a prudent practice for evaluating FMV.”
Copyright © 2011Tsoules, Sweeney, Martin & Orr, LLC12
In-Office Ancillary Services Exception
Physicians Must qualify as a “Group Practice” Must meet Performance, Location and Billing
Requirements
Solo practitioners can refer and receive compensation from in-office ancillaries
Physicians can refer DHS within their “Group Practice” (even if group is Hospital-owned) and can receive compensation indirectly related to DHS under certain specified criteria
Copyright © 2011Tsoules, Sweeney, Martin & Orr, LLC13
Federally Tax Exempt Organizations
No Private Inurement No part of net earnings or other charitable assets of a Section
501(c)(3) organization may inure to the benefit of any private shareholder or individual
No “de minimis” exception for private inurement May pay “reasonable” compensation for services Total compensation package for physician services must be
reasonable for the geographic market and physician specialty Total Compensation = salary, bonus, fringe benefits, deferred
compensation and other forms of compensation Benchmark physician compensation using comparable
information
Copyright © 2011Tsoules, Sweeney, Martin & Orr, LLC14
Third Party Surveys*
Sullivan, Cotter & Associates, Inc. – Physician Compensation and Productivity Survey http://www.sullivancotter.com
Hay Group – Physicians Compensation Survey www.haygroup.com
Hospital and Healthcare Compensation Service – Physician Salary Survey Report www.hhcsinc.com
Medical Group Management Association – Physician Compensation and Productivity Survey www.mgma.org
ECS Watson Wyatt – Hospital and Health Care Management Compensation Report www.watsonwyatt.com
William M. Mercer – Integrated Health Networks Compensation Survey www.mercerhr.com
*Cited in March 26, 2004 Federal Register as data sources for determining physician compensation
Copyright © 2011Tsoules, Sweeney, Martin & Orr, LLC15
Compensation Models
Copyright © 2011Tsoules, Sweeney, Martin & Orr, LLC16
Goals of Compensation Arrangements
Comply with complex regulatory requirements Comply with strategic business decisions Be Competitive based on physician labor
market Physician satisfaction Incentivize/Motivate Physicians Match compensation with services provided
Copyright © 2011Tsoules, Sweeney, Martin & Orr, LLC17
Steps in Designing a Compensation System
1. Articulate what you want the Compensation System to accomplish
2. Look backwards to see how well the prior system accomplished the goals
3. Brainstorm how to better measure behavior that supports new goals
4. Reform the model until all are in agreement
5. Evaluate the effectiveness of the new system
Copyright © 2011Tsoules, Sweeney, Martin & Orr, LLC18
Design Variances
1. Single Specialty Group Most homogenous Spread between producers is narrow
2. Multi-Specialty Group Most challenging/tension among specialties Each specialty must carry its own weight
3. Hospital-owned Practices Trust building Physicians take risk for production
4. Academic settings Issue of non-clinical activities
Copyright © 2011Tsoules, Sweeney, Martin & Orr, LLC19
Compensation Models
Equal Division of Revenue Fixed salary Base Plus Incentive/Bonus Pure Productivity Other responsibilities
Medical Director Managing Partner Supervision of ancillary staff Non-clinical activities
Copyright © 2011Tsoules, Sweeney, Martin & Orr, LLC20
Equal Compensation
Generally found in single specialty practices (radiology, general cardiology)
Applicable to owners
After expenses paid, revenues are allocated equally among owners
Copyright © 2011Tsoules, Sweeney, Martin & Orr, LLC21
Equal Compensation
Pros: Simple Promotes idea of one united group and team
behavior Avoids Stark issues
Cons: High produces not incentivized Low produces allowed to coast Can result in conflicts among physicians – based on
varying volume
Copyright © 2011Tsoules, Sweeney, Martin & Orr, LLC22
Fixed Salary
Income guaranteed regardless of productivity Common for new physicians just out of Residency
How to Determine Salary? Use objective data: salary surveys
Formula: Estimated Gross Revenue, less expenses attributable to Physician and profit margin
(Continued)
Copyright © 2011Tsoules, Sweeney, Martin & Orr, LLC23
Fixed Salary
Pros: Worry free – sense of security for Physicians Simple, easy to understand and administer
Cons: Offers little long-term incentives Encourages minimum work effort Discourages entrepreneurship
Copyright © 2011Tsoules, Sweeney, Martin & Orr, LLC24
Base Salary Plus Incentive
Fixed Base Salary (75% of total Compensation) Based on survey data/historical data May be an advance against total compensation
Incentive tied to: Productivity (Revenues vs. wRVU’s) Non-productivity related measures, i.e., patient
satisfaction, quality meeting evidence based guidelines
Copyright © 2011Tsoules, Sweeney, Martin & Orr, LLC25
Incentive Compensation
To Determine Available $ for Incentive Compensation: Collect Data Expenses
By Physician Expenses Ancillary Overhead allocation
Productivity Information Charges Net collections RVU’s Encounters
Copyright © 2011Tsoules, Sweeney, Martin & Orr, LLC26
Incentive Issues
% as Reserves for future Practice development Allocation between Owners vs. Employed
Physicians Allocation of DHS Revenue
Productivity Bonus based on personally performed DHS services
Ancillary revenue pool to be distributed equally to all physicians
% Equal Distributions % Physician Productivity % Qualitative Factors
Copyright © 2011Tsoules, Sweeney, Martin & Orr, LLC
27
Productivity Defined
Gross Professional Charges
Gross Revenue Net Collections RVU’s
Days Worked
Patient Encounters Points Customized System
Copyright © 2010 Tsoules, Sweeney, Martin & Orr, LLC28
Physician wRVU
Components: Physician time required for each service Technical skill and physical effort Mental effort and judgment Psychological stress associated with Dr’s concern
about treatment risk to patient
Based on CPT code Fixed compensation rate per wRVU Base future compensation on current RVUs
Copyright © 2011Tsoules, Sweeney, Martin & Orr, LLC29
Productivity Based on Collections(Proportional Overhead)
Dr. A Dr. B Dr. C Dr. D Practice Total
Productivity % 19% 21% 28% 32% 100%
Revenue 475,000 525.000 700,000 800,000 2,500,000
Overhead 242,630 268,170 359,560 408,640 1,279,000
Net Income $232,370 $256,830 $340,440 $391,360 $1,221,000
Copyright © 2011Tsoules, Sweeney, Martin & Orr, LLC30
Productivity Based on Collections(Equal Overhead)
Dr. A Dr. B Dr. C Dr. D Practice Total
Productivity % 19% 21% 28% 32% 100%
Revenue 475,000 525.000 700,000 800,000 2,500,000
Overhead 319,750 319,750 319,750 319,750 1,279,000
Net Income $155,250 $205,250 $380,250 $480,250 $1,221,000
Copyright © 2011Tsoules, Sweeney, Martin & Orr, LLC31
Productivity Plus Equal Share
Dr. A Dr. B Dr. C Dr. D Practice Total
Productivity % 19% 21% 28% 32% 100%
Equal Compensation (50%)
152,625 152,625 152,625 152,625 610,500
Productivity (50%)
115,995 128,205 170,940 195,360 610,500
Net Income $268,620 $280,830 $323,565 $347,985 $1,221,000
Copyright © 2011Tsoules, Sweeney, Martin & Orr, LLC32
Non-Productivity Related Measures
Medical Home Model/Accountable Care Organization Reimbursement tied into quality/meeting
certain outcomes
Performance outcomes are more likely to be achieved when: Compensation is tied to the achievement of
those outcomes Programs rolled out gradually, with
considerable education prior to linking measurements with payment
Copyright © 2011Tsoules, Sweeney, Martin & Orr, LLC33
Quality Measures
Participation in quality performance program Adherence to evidence based guidelines, clinical
protocols; reporting performance Clinical outcomes Patients up-to-date for needed services Cost control Use of EHR/CPOE Patient satisfaction Leadership, participation, citizenship Call Coverage Peer Chart Review
Copyright © 2011Tsoules, Sweeney, Martin & Orr, LLC34
Base Salary Plus Incentives
Pros: Rewards for hard work Continues to offer some security Directs behavior Rewards achievements that promote goals/objectives of group
Cons: Can place a large amount of income at risk Cause minimum work standards
Copyright © 2011Tsoules, Sweeney, Martin & Orr, LLC35
Pure Productivity Model
Most complex Range from complex formula for multiple
factors to a simple model based on amount billed, or amount collected for physician services or quantity of RVUs
Goal = enhanced productivity, but can result in competitive work environment
Encourage overutilization of Services
Copyright © 2011Tsoules, Sweeney, Martin & Orr, LLC36
A Good Compensation Plan Must:
Work for the entire group
Clearly understood
Be equitable/fair: define physician’s work
Data and contribution reliability
Promote trust among physicians
Promote Group Incentives/objectives (New Partners/Non-clinical activities)
Copyright © 2011Tsoules, Sweeney, Martin & Orr, LLC37
383838Copyright © 2011 Tsoules, Sweeney, Martin & Orr, LLC
38
QUESTIONS?
QUESTIONS
ANY QUESTIONS
top related