nci aoa pacv trends for specialty practices rlv2 07.29.17 … · 2018-04-01 · presentation...

7/31/2017

1

/ ©2017 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED1

Presented by:

Ronald L. Vance, JD, CVAManaging DirectorPhone: [email protected]

Mark A. Benninghoff, MBADirectorPhone: [email protected]

PHYSICIAN ALIGNMENT, COMPENSATION & VALUATION TRENDS AFFECTING PHYSICIAN SPECIALTY PRACTICES

ASSOCIATION OF OTOLARYNGOLOGY ADMINISTRATORS SEPTEMBER 19, 2017

/ ©2017 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED2 / ©2017 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED2

PRESENTATION OUTLINE

1. Welcome & Introductions – Presenters’ Background & Vantage Points Page 3

2. Key Drivers for Clinical Integration and Provider Reimbursement Risk Page 4

3. Implications for Physician Compensation & FMV Assessments 2

4. Additional Q&A Opportunity Page 38

Appendix A: Additional Information re: Firm Background & Vantage Points Page 39

Appendix B: Additional MACRA Background & Considerations Page 45

Appendix C: Pertinent National Physician Compensation & Productions Benchmarks Page 68


1 Welcome & Introductions – Presenters’ Background & Vantage Points

Team Members Background / Role

Ronald L. Vance, JD, CVA • Managing Director • Multiple Navigant leadership roles, including national

leader for Physician Alignment, Compensation & Valuation Services

• 30+ years healthcare experience, including leadership roles for Physician Strategy, Provider Alignment, Physician Compensation and related valuation services teams

Mark A. Benninghoff, MBA • Past President and Lifetime member of the Association of Otolaryngology Administrators; COPM

• Director• Multiple Physician Enterprise Solution roles, including

Senior Project Manager for a wide range of physician operations and strategy projects which include revised physician compensation and performance management initiatives.

• Over 25 years of healthcare experience, including leadership roles in other AMC and health system provider organizations

NAVIGANT TEAM – EDUCATION SESSION PRESENTERS

See Appendix A for additional information on the Navigant Consulting qualifications,

experience and vantage points

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HIGHLY VOLATILE AND COMPLEX INDUSTRYMACRO TRENDS: HEALTHCARE IS IN THE MIDST OF A PROFOUND AND PERMANENT CHANGE

Key Trends Impacting Health Systems, Physicians and Others

Macro EconomicFactors

1. Impact of demographic and disease burden trends2. Increasing health care as percent of GDP, and highest cost globally3. Global financial crisis, national debt crisis, state budget crisis4. Health care reform and changing payment models, flat NIH funding, scrutiny on costs and impact of research5. Growing regulatory burden and increased transparency6. Natural disasters

Science and Technology

Trends

7. Growth in interdisciplinary and team science8. Growth of comparative effectiveness research and implementation science9. HIT adoption/proliferation, evolving into database/statistical science, digital revolution10. Blurring boundaries among academia, industry, government and funders

Workforce and Education

Trends

11. Generational shifts in leadership, faculty, staff, residents and students12. Physician/nurse shortages and resident work hours13. Team-based care and education/training14. Diversity shifts in patients, trainees and faculty/staff15. Evolution of maintenance of licensure and certification

Health Care Trends

16. Growing payer concentration17. Increased focus on outcomes, reliability, safety, cost and the patient experience18. Increasing emphasis on prevention and population health 19. Health system consolidation and physician acquisition20. Emergence of accountable care organizations to improve quality and reduce waste21. Migration to lower acuity/cost settings

2 Key Drivers for Clinical Integration and Provider Reimbursement Risk


THE TRANSFORMATION OF HEALTHCAREMOVING INTO A “TWO CURVE” WORLD

Perf

orm

ance

Time

Hospital and physician providers must address how to optimize performance in the current environment while also preparing to “jump” from Curve #1 to Curve #2

Natural Trajectory

Curve #1: FEE-FOR-SERVICE

All about volume

Reinforces work in silos

Little incentive for “real” integration

Curve #2: VALUE-BASED PAYMENT

Achieving “Triple Aim”, as per IHI:

Better Care Experience for Individual

Better Health for Populations

Lower Per Capita Costs

System must prepare for a future world that requires more clinical integration and in which payments will be more value-based than FFS

Source: futurist Ian Morrison; Institute for Health Improvement

Curve 2 requires: Scale Geographic Distribution Highly efficient and cost

effective delivery points High levels of documented/

provable quality and service



Miami = $17,274

U.S. Average = $8,317

Salem, OR = $5,221

KEY MARKET DRIVERSINEXPLICABLE VARIATIONS IN COST AND QUALITY

Tota

l Med

icar

e re

imbu

rsem

ents

pe

r enr

olle

e (P

art A

and

B) (

2007

)

Today Future

Source: Dartmouth Atlas; Hospital Compare Survey.

Expected Cost Trends

Ove

rall

Patie

nt S

atis

fact

ion;

% o

f Pa

tient

s R

atin

g H

ospi

tal 9

or 1

0 (2

007)

Today Future

Expected Quality Trends

Houma, LA = 76%

U.S. Average = 63%

Minot, ND = 38%

Healthcare costs are expected to move toward a standard set by HRRs

like Salem, OR

Healthcare quality is expected to move toward a standard set by HRRs

like Houma, LA

Prior CMS Declaration: By 2018, well over 50% of all CMS

payments will be value-basedSee Appendix B for an Overview of

Impending MACRA changes


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TWIN PILLARS TO SUCCESS UNDER “CURVE 2” PAYMENT AND CARE DELIVERY MODELS

Increases Value, Equitable & Sustainable

Clinical Integration / Care Model Redesign

Infrastructure / Operational Alignment

Patient and Physician Engagement

Coordinate and Manage Patient Populations

Manage Financial Risk

PAY

ME

NT

TRA

NS

FOR

MA

TIO

NPA

YM

EN

TTR

AN

SFO

RM

ATI

ON

CLI

NIC

AL

TRA

NS

FOR

MAT

ION

CLI

NIC

AL

TRA

NS

FOR

MAT

ION

High Efficiency Care

Source: Navigant Best Practices



NAVIGANT HAS IDENTIFIED THREE INTERRELATED ALIGNMENT CRITICAL SUCCESS FACTORS TO BRIDGE FROM CURVE 1 TO CURVE 2

I. Clinically Integrated Network

a. Will likely include participation by both employed and non-employed but aligned physicians/practices.

b. Must be defined for both clinical/business success in the delivery of the full continuum of healthcare services, as well as avehicle for managed care contracting with payers.

c. Must have functional value and evolve to serve both Curve 1 and Curve 2 needs.

II. High Performing and Aligned Physician Enterprise

a. Includes employed and otherwise exclusive affiliated independent physicians.

b. Serves as key (but not wholly sufficient) partner(s) in the ACO/CIN structures and networks.

c. Will be an ever-increasing essential vehicle for physician recruitment and retention.

d. Will further include management of non-employed physician compensation arrangements.

III. Enlightened Physician Culture, Leadership and Compensation Plans

a. Which include enhanced understanding and commitment by physicians at all levels to the success of the enterprise and not just preservation/maximization of income.

b. That further aligns accountability and reward for Curve 2 value-based behaviors over volume including enhanced opportunities for joint decision-making for care redesign and delivery.

c. That also include opportunities and responsibilities for the design, governance and management of the healthcare enterprise to achieve necessary Curve 2 behaviors.



SOME “REALITY CHECKS” FOR ALLERGY/OTOLARYNGOLOGY STRATEGIC PLANNING & MARKET POSITIONING(ENHANCED RISKS RELATED TO PROVIDER CONSOLIDATION/REFERRAL BASE & NETWORK EXCLUSION)

Mission - The purpose that drives the existence of Practice.

Vision - What Practice wants to be.

Internal Environment - The way internal stakeholders / constituencies view and influence the organization to ensure realization of the Mission and Vision.

External Environment - The way the marketplace and Practice’s external stakeholders / constituencies view and influence the Mission and Vision.

Strategic Focus Areas - Areas that Practice must consider to determine strategic priorities.

Critical Success Factors - Results that must be achieved to realize the Vision.

Strategic Goals - Action steps taken to achieve the critical success factors, including who is responsible, the timeline, and the budget implications.

Tactics - The specific “blocking and tackling” (e.g., action steps) that must occur to accomplish the strategic goal.

INTERNALENVIRONMENT

TACTICS

CRITICALSUCCESSFACTORS

STRATEGIC GOALS

MISSION

VISION

EXTERNAL ENVIRONMENT

STRATEGIC FOCUS AREAS

Key Elements of Planning Framework


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SOME “REALITY CHECKS” FOR ALLERGY/OTOLARYNGOLOGY STRATEGIC PLANNING & MARKET POSITIONING(YOU CANNOT DEPEND ON ANCILLARIES TO OFFSET LACK OF CRITICAL MASS & MARKET SHARE)


Fully Assess Your Strategic Options for Clinic Composition & Supporting Components

A.

Unwind / Terminate

B.

Reduced Support

C.

Maintain Support

D.

Selective Expansion

E.

Strategic Growth

Composition, Sites & Services

Infrastructure Needs

Leadership & Management

Organizational Structure(s)

Affiliation & Merger Options

Other Options


SOME “REALITY CHECKS” FOR ALLERGY/OTOLARYNGOLOGY STRATEGIC PLANNING & MARKET POSITIONING(SURVIVAL AS A “SPLITTER” MAY BECOME EVEN MORE CHALLENGED ON THE PATH TO CURVE 2)


Scenario I: Limited Growth or Expansion Reliance upon APC-only support for expanded recruitment of

needed / desired physician specialties and other team members. Predominant reliance upon current specialties, programs, etc. Reliance upon APC-only funding for growth, including expansion

in other sites, services, infrastructure needs.

Scenario II: More Aggressive, Independent Growth Higher level of investments. At least modest growth of new specialties, programs, etc. Likely, retained reliance upon self-funding for growth initiatives;

modest to no support from APC.

Scenario III: More Aggressive Growth Through Merger Combined independent and merger / acquisition growth. Likely expanded and/or significantly more diversified specialties,

sites, etc. Combined reliance upon new organizational / members support for

funding of growth initiatives; modest to no support from APC.

A.Focused on Multi-Hospital/System

Partnerships

B.Focused on

Predominantly Exclusive

Hospital/System Partnership

A.

B.

A.

B.

A.

B.

Review of Sample Physician Group Strategic Planning Scenarios Review


“KEY DRIVERS” FOR NEW PROGRESSIVE COMPENSATION PLANS INCLUDE HEALTH REFORM AND REVISED MARKET ACCOUNTABILITIES

Current State Future State

Siloed, uncoordinated care Collaborative, coordinated care model

Limited DifferentiationDifferentiation based on innovation, cost and quality

Employer as the customer Consumer, retail based market

Utilization-based reimbursement model Value-based reimbursement

Lack of clinical connection across constituents

Robust data exchange across constituents and settings

3 Implications for Physician Compensation & FMV Assessments

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COMPENSATION PLANS PROMOTE DESIRED BEHAVIORS – BUT ARE NOT AN END ALL TO ENHANCE TEAMWORK AND ALIGNMENT WITHIN PHYSICIAN ORGANIZATIONS & SYSTEMS


Money & Financial Alignment

Shared Values & Overall “Culture”

Control & Decision-Making

Structures/Processes

Vision & Strategic Direction

Operational Support & Infrastructure

Key Shared “Drivers” of Successful Practices

Lesson Learned: “Culture Eats Strategy Every Time!”


SYSTEMS ARE RE-ASSESSING THEIR PHYSICIAN COMPENSATION ARRANGEMENTS TO ENSURE STRATEGIC ALIGNMENT, AND BOTH BUSINESS AND FMV REASONABLENESS

TraditionalHospital Medical

Staff Relationship

Traditional/ RecruitmentAssistance

Medical Directors/

PSAs

Mgmt Service Organization

(MSO)

Specialty Institute/

COE

JointVentures

Joint MgdCare

Initiatives

Co-Manage-

ment

Clinical Integration

NetworkContracting

Employed and Other

PSA Models

Support System Provider & Payor Strategies (Support: Mission, Vision and Values)

(Other Board and Management Structures)

Strategic Compensation Arrangement Development Principles The physician compensation arrangements are not necessarily ends unto themselves

They should be viewed as strategic tools to secure desired and needed services

Ultimately, they should help promote or dis-incentivize key physician behaviors and culture

Economies of

Scale

Ongoing Leadership review and confirmation of selected physician affiliation models and terms

CommonOperating Platform

Clinical Effectiveness

Physician Production/

Compensation

PopulationHealthMgmt

All Health Systems must optimize their Physician Engagement relationships, and the compensation and related performance terms (that are within FMV and other regulatory

compliance) are essential elements to promote needed and desired behaviors.



OVERVIEW OF EVOLVING PHYSICIAN COMPENSATION PLAN DESIGNS TO ADVANCE FURTHER “CURVE 2” BEHAVIORS AND OVERALL TEAMWORK

A.Revenue-Less-Expense Plan

B.Production-Based

Plan

C.Combined

Base/Production Plan

D.Base-plus-Incentives

Plan

E.Salary & Discretionary

Compensation Plan

Overview of Representative Plan Design Components

Credited Production/

Revenue

AllocatedExpenses

Other Compensation

Qualitative Incentive

ProductionIncentive

Base Compensation

Other Compensation

Pass-ThroughCompensation

QualitativeIncentive

Other Compensation

PerformanceIncentives

Base Compensation Salary*

(*Allowance for discretionary

compensation for exceptional

performance not otherwise

compensated during the Plan

Year)

Tiered per Production

Base Compensation

Expectation of Increasing Market Utilization of “Progressive” Plans with less Production Reliance Movement Back to Incentives


7/31/2017

6


Base Compensation

ProductionIncentive

QualitativeIncentive

Other Compensation

Integrated Physician Compensation Plan Components & Trends

Key Trends include: (1) reduced reliance upon volume/productivity;

(2) deliberate movement toward “capped” total incentives; and (3) enhanced reliance upon quality, service, and efficiency.

Navigant POV: Priority Design Revisions will include emphasis upon development/enhancement of:

(1) Minimum Work Standards (MWS); and (2) “Stretch Goals” for Quality, Service & Efficiency

MORE ADVANCED PHYSICIAN COMPENSATION PLAN DESIGNS INCLUDE 20%+ OF TOTAL COMPENSATION IN NON-PRODUCTION INCENTIVES

Recruits; PCP Per VBP funding Per re-negotiations; VBP funding Increasing % of total comp; VBP Co-Mgmt.; VBP Less # Med. Admin..



MARKET EXAMPLES OF MINIMUM WORK STANDARDS (MWS)

Defined MWS

MWS Categories & Examples1. Production

Minimum clinical production metric to earn Base Comp. / Draw (e.g., wRVUs, professional collections, patient visits, patient panel, sessions, cases, etc.)

2. Accessibility Department/Subspecialty-defined standard hours/shifts, cross-

coverage responsibilities, etc.

3. Documentation EMR Meaningful Use

Timely Completion of Medical Records

Timely Submission of Charges

4. Quality/Service Floor level of protocol adherence / outcomes

Floor level of patient satisfaction / other service

5. Citizenship Meeting attendance: other “basic” teamwork, etc.

Participation & adherence to evidence-based medicine protocols, order sets, QI plans, etc.

Other group charter / expected behaviors

Base Compensation

or Draw

Recommended Categories of Clinical Compensation MWS

Sample Plan Design - Option “B”

(1) Minimum Work Standards (MWS);



Potential "Points" Distribution for Earned Incentive Amounts

% of Total Points / Earned

Points Payout Level of Funded Incentive Pool

<= 50% Performance Level (as % of Maximum Potential Points)

<= 7.0 Earned Points

0.00% Payout of potential Maximum Eligible Incentive Amount

> 51% Performance Level (as % of Maximum Potential Points)

>= 8.0 Earned Points



>= 9 Minimum Earned Points








EXPANDED MARKET EXAMPLE: QUALITY/SERVICE INCENTIVE - EARNED PER “POINTS SYSTEM”

(2) “Stretch Goals” for Quality, Service & Efficiency

Sample Quality/Service Incentive "Points" Plan

Specialty & Physician

Example Points Distribution to Earn Initial Targets for Performance Incentive Funds

Potential Fund Level

Maximum of "Earned Incentive" = X% of Physician's Eligible Base Salary Level

Category I.

Clinical Quality (e.g., development/adherence to protocols; high

outcomes, etc.) Potential Points

Target Performance Level: Threshold 1

Target Performance Level: Target 2

Target Performance Level: Stretch 3

Category II.Service (e.g., Patient, Referring Physician, and/or Staff

Satisfaction; Accessiblity - per next available appt., etc.) Potential Points




Category III.Clinical and/or Business Efficiency (e.g., adherence to

discharge planning; expense/w RVU, etc.) Potential Points




Category IV.Program Development (e.g., development of new clinical

program; achievement of outreach coverage targets, etc.) Potential Points


Target Performance Level: 2 2


Category V. Other - TBD Potential Points





7/31/2017

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OBSERVATIONS REGARDING ALLERGY & IMMUNOLOGY –NATIONAL COMPENSATION & PRODUCTION BENCHMARK TRENDS


See Appendix C for more details regarding recent National Comp. &

Production Benchmarks

Metrics 25th %tile Median 75th %tile 90th %tile 25th %tile Median 75th %tile 90th %tile 25th %tile Median 75th %tile 90th %tile

Compensation per FTE 231,111$ 283,314$ 367,754$ 491,170$ 244,480$ 300,359$ 404,737$ 546,955$ 256,693$ 316,538$ 434,334$ 613,516$

wRVU per FTE 3,177 3,992 5,150 6,587 3,399 4,120 5,315 6,662 3,416 4,268 5,550 6,979

Compensation per wRVU 62.34$ 70.69$ 86.94$ 117.33$ 64.50$ 74.67$ 93.04$ 116.78$ 64.30$ 73.52$ 92.46$ 131.45$

Collection per FTE 456,693$ 612,964$ 788,145$ 1,032,653$ 457,252$ 664,849$ 992,899$ 1,306,101$ 415,874$ 617,972$ 930,721$ 1,311,127$

Compensation to Collection 41.0% 47.5% 62.3% 80.5% 36.8% 46.4% 62.2% 93.9% 36.1% 50.4% 70.0% 87.4%

Collection per wRVU 98.57$ 122.08$ 164.95$ 187.19$ 121.10$ 163.64$ 214.39$ 319.36$ 108.76$ 152.45$ 203.96$ 314.28$

2015 2016

Allergy & Immunology

2014

Tri-Blend Benchmark Physician Compensation & Production Trends – Prior 3 Years of Reported Data

1. Compensation-per-FTE: consistently increased from CY 2013-2015

2. wRVU production-per-FTE: also increased consistently during the same timeframe

3. Median Compensation-per-wRVU: increased from CY 2013-2014; declined slightly in 2015

4. Professional Collections-per-FTE: increased from CY 2013-2014; declined at median in 2015

5. Median Comp.-per-Prof. Collections: decreased from CY 2013-2014; significant increase in 2015

Sources: blended, weighted averages (BWA) of tri-blend (MGMA, AMGA, SCA) re: 2016, 2015, 2014 physician compensation & production survey benchmarks Caveat: the surveys report on prior year data (e.g., 2016 survey reports on data from 2015, etc. We will update for 2017 when all 3 surveys’ data are released)


OBSERVATIONS REGARDING ALLERGY & IMMUNOLOGY –NATIONAL TRI-BLEND - COMPENSATION & PRODUCTION BENCHMARK TRENDS


260000

270000

280000

290000

300000

310000

320000

2014 2015 2016

Compensation per FTE Median

320000

340000

360000

380000

400000

420000

440000

2014 2015 2016

Compensation per FTE 75th %tile

0

100000

200000

300000

400000

500000

600000

700000

2014 2015 2016


3850

3900

3950

4000

4050

4100

4150

4200

4250

4300

2014 2015 2016

wRVU per FTE Median

4900

5000

5100

5200

5300

5400

5500

5600

2014 2015 2016

wRVU per FTE 75th %tile

6300

6400

6500

6600

6700

6800

6900

7000

7100

2014 2015 2016


68

69

70

71

72

73

74

75

2014 2015 2016

Compensation per wRVU Median

83

84

85

86

87

88

89

90

91

92

93

94

2014 2015 2016

Compensation per wRVU 75th %tile

105

110

115

120

125

130

135

2014 2015 2016



OBSERVATIONS REGARDING ALLERGY & IMMUNOLOGY –NATIONAL TRI-BLEND - COMPENSATION & PRODUCTION BENCHMARK TRENDS


580000

590000

600000

610000

620000

630000

640000

650000

660000

670000

2014 2015 2016

Collection per FTE Median

0

200000

400000

600000

800000

1000000

1200000

2014 2015 2016

Collection per FTE 75th %tile

0

200000

400000

600000

800000

1000000

1200000

1400000

2014 2015 2016


0.44

0.45

0.46

0.47

0.48

0.49

0.5

0.51

2014 2015 2016

Compensation to Collection Median

0.58

0.6

0.62

0.64

0.66

0.68

0.7

0.72

2014 2015 2016

Compensation to Collection 75th %tile

0.7

0.75

0.8

0.85

0.9

0.95

2014 2015 2016


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8


OBSERVATIONS REGARDING OTOLARYNGOLOGY – ALL NATIONAL COMPENSATION & PRODUCTION BENCHMARK TRENDS




wRVU per FTE 5,245 6,683 8,539 10,592 5,278 6,727 8,441 10,360 5,343 6,884 8,691 10,732


Collection per FTE 540,999$ 728,309$ 965,195$ 1,321,957$ 520,287$ 737,416$ 1,046,356$ 1,353,790$ 531,806$ 753,755$ 1,036,273$ 1,345,876$


Collection per wRVU 80.54$ 96.33$ 112.24$ 127.97$ 87.48$ 109.17$ 138.59$ 168.07$ 80.50$ 105.16$ 140.40$ 198.91$

Otorhinolaryngology

2014 2015 2016





1. Compensation-per-FTE: consistently increased from CY 2013-2015

2. wRVU production-per-FTE: also increased at median during the same timeframe

3. Median Compensation-per-wRVU: consistently increased from CY 2013-2015

4. Professional Collections-per-FTE: consistently increased at median from CY 2013-2015

5. Median Comp.-per-Prof. Collections: consistently increased from CY 2013-2015


OBSERVATIONS REGARDING OTOLARYNGOLOGY – ALL NATIONAL TRI-BLEND - COMPENSATION & PRODUCTION BENCHMARK TRENDS


380000

390000

400000

410000

420000

430000

440000

2014 2015 2016


460000

470000

480000

490000

500000

510000

520000

530000

540000

550000

560000

570000

2014 2015 2016


620000

640000

660000

680000

700000

720000

740000

760000

780000

2014 2015 2016


6550

6600

6650

6700

6750

6800

6850

6900

2014 2015 2016

wRVU per FTE Median

8300

8350

8400

8450

8500

8550

8600

8650

8700

8750

2014 2015 2016


10100

10200

10300

10400

10500

10600

10700

10800

2014 2015 2016


59

59.5

60

60.5

61

61.5

62

62.5

2014 2015 2016


71

72

73

74

75

76

77

2014 2015 2016


86

88

90

92

94

96

98

100

102

104

2014 2015 2016



OBSERVATIONS REGARDING OTOLARYNGOLOGY – ALL NATIONAL TRI-BLEND - COMPENSATION & PRODUCTION BENCHMARK TRENDS


715000

720000

725000

730000

735000

740000

745000

750000

755000

760000

2014 2015 2016


920000

940000

960000

980000

1000000

1020000

1040000

1060000

2014 2015 2016


1300000

1310000

1320000

1330000

1340000

1350000

1360000

2014 2015 2016


0.545

0.55

0.555

0.56

0.565

0.57

0.575

0.58

2014 2015 2016


0.6

0.62

0.64

0.66

0.68

0.7

0.72

0.74

0.76

2014 2015 2016


0.75

0.8

0.85

0.9

0.95

1

2014 2015 2016


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OBSERVATIONS REGARDING OTOLARYNGOLOGY – HEAD NECK SURGERYNATIONAL COMPENSATION & PRODUCTION BENCHMARK TRENDS




wRVU per FTE 6,301 8,073 9,290 10,555 5,828 7,601 9,030 9,766 5,679 6,968 8,566 9,998


Collection per FTE ‐$ ‐$ ‐$ ‐$ 689,788$ 809,164$ 1,004,314$ 1,106,703$ 642,329$ 822,179$ 1,011,597$ 1,078,902$


Collection per wRVU ‐$ ‐$ ‐$ ‐$ 77.98$ 95.04$ 95.59$ ‐$

Otolaryn Head Neck Surg

2014 2015 2016



1. Compensation-per-FTE: increased from CY 2013-2014; then decreased in CY 2015

2. wRVU production-per-FTE: decreased at median and P75 all three years; up at P90 in 2015

3. Median Compensation-per-wRVU: slight increase from CY 2013-2014; then slight decrease in 2015

4. Professional Collections-per-FTE: data not available in CY 2013; at P50 up from CY 2014-2015

5. Median Comp.-per-Prof. Collections: data not available in CY 2013; increased from CY 2014-2015


OBSERVATIONS REGARDING OTOLARYNGOLOGY – HEAD NECK SURGERYNATIONAL TRI-BLEND - COMPENSATION & PRODUCTION BENCHMARK TRENDS


0

100000

200000

300000

400000

500000

600000

2014 2015 2016


520000

540000

560000

580000

600000

620000

640000

2014 2015 2016


620000

640000

660000

680000

700000

720000

740000

760000

780000

2014 2015 2016


6400

6600

6800

7000

7200

7400

7600

7800

8000

8200

2014 2015 2016

wRVU per FTE Median

8200

8400

8600

8800

9000

9200

9400

2014 2015 2016


9200

9400

9600

9800

10000

10200

10400

10600

10800

2014 2015 2016


0

10

20

30

40

50

60

70

80

2014 2015 2016


0

10

20

30

40

50

60

70

80

90

100

2014 2015 2016


0

20

40

60

80

100

120

2014 2015 2016



OBSERVATIONS REGARDING OTOLARYNGOLOGY – HEAD NECK SURGERY NATIONAL TRI-BLEND - COMPENSATION & PRODUCTION BENCHMARK TRENDS


0

100000

200000

300000

400000

500000

600000

700000

800000

900000

2014 2015 2016


0

200000

400000

600000

800000

1000000

1200000

2014 2015 2016


0

200000

400000

600000

800000

1000000

1200000

2014 2015 2016


0

0.2

0.4

0.6

0.8

1

1.2

2014 2015 2016


0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

2014 2015 2016


0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

2014 2015 2016


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OBSERVATIONS REGARDING OTOLARYNGOLOGY – PEDS NATIONAL COMPENSATION & PRODUCTION BENCHMARK TRENDS




wRVU per FTE 5,698 7,487 8,643 10,785 6,301 6,953 7,662 8,410 6,267 7,132 8,969 10,652


Collection per FTE 228,494$ 264,389$ 277,665$ 295,802$ 455,122$ 518,903$ 585,425$ 774,280$ 464,944$ 634,594$ 844,385$ 1,115,006$


Collection per wRVU ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ 67.71$ 76.89$ 101.70$

Peds Otorhinolaryngology

2014 2015 2016



Sources: blended, weighted averages (BWA) of tri-blend (MGMA, AMGA, SCA) re: 2016, 2015, 2014 physician compensation & production survey benchmarksCaveat: the surveys report on prior year data (e.g., 2016 survey reports on data from 2015, etc. We will update for 2017 when all 3 surveys’ data are released)


1. Compensation-per-FTE: increased at median and P90 all three years; decrease at P75

2. wRVU production-per-FTE: decreased at median from CY 2013-2014; then up in CY 2015

3. Median Compensation-per-wRVU: consistently increased from CY 2013-2015

4. Collections-per-FTE: consistently increased at all levels from CY 2013-2015

5. Median Comp.-per-Prof. Collections: slight increase from CY 2013-2014; slight decrease in CY 2015


OBSERVATIONS REGARDING OTOLARYNGOLOGY – PEDS NATIONAL TRI-BLEND - COMPENSATION & PRODUCTION BENCHMARK TRENDS


360000

370000

380000

390000

400000

410000

420000

430000

2014 2015 2016


510000

520000

530000

540000

550000

560000

570000

580000

590000

2014 2015 2016


580000

600000

620000

640000

660000

680000

700000

720000

740000

760000

780000

2014 2015 2016


6600

6700

6800

6900

7000

7100

7200

7300

7400

7500

7600

2014 2015 2016

wRVU per FTE Median

7000

7500

8000

8500

9000

9500

2014 2015 2016


0

2000

4000

6000

8000

10000

12000

2014 2015 2016


0

10

20

30

40

50

60

70

2014 2015 2016


0

10

20

30

40

50

60

70

80

2014 2015 2016


0

10

20

30

40

50

60

70

80

90

100

2014 2015 2016



OBSERVATIONS REGARDING OTOLARYNGOLOGY – PEDS NATIONAL TRI-BLEND - COMPENSATION & PRODUCTION BENCHMARK TRENDS


0

100000

200000

300000

400000

500000

600000

700000

2014 2015 2016


0

100000

200000

300000

400000

500000

600000

700000

800000

900000

2014 2015 2016


0

200000

400000

600000

800000

1000000

1200000

2014 2015 2016


0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

2014 2015 2016


0.58

0.6

0.62

0.64

0.66

0.68

0.7

0.72

0.74

0.76

2014 2015 2016


0

0.2

0.4

0.6

0.8

1

1.2

2014 2015 2016


7/31/2017

11


THE POTENTIAL COMPENSATION ARRANGEMENTS MUST COMPLY WITH PERTINENT LEGAL AND REGULATORY GUIDELINES

Key Regulations Description

Physician Self Referral Law (Stark I, II and III)

» Prohibits physicians from making referrals for certain “designated health services to an entity to which they have a financial relationship (ownership or compensation) unless that relationship is at fair market value

» Bona Fide Employment Relationships Exception: • Remuneration is consistent with FMV and is not determined in a manner that takes

into account the volume or value of any referrals

IRS Regulations

» Prohibit “private benefit” or inurement

» To avoid inurement, a compensation arrangement must:• Be consistent with exempt purposes• Result from arm’s length bargaining• Result in “reasonable” compensation

» Hospitals that pay more than fair market value for services can lose their tax-exempt status under IRS regulations

The Medicare and Medicaid Patient Protection Act of 1987 (Anti-Kickback Statute)

» Makes it a crime to pay physicians in return for referrals or recommendations to purchase supplies and services

Civil Monetary Penalties Statute» Prohibit the inclusion of physician payment incentives to reduce the utilization of

Medicare or Medicaid services



PHYSICIAN COMPENSATION ARRANGEMENTS MUST BE FAIR MARKET VALUE

...the value in arms length transactions, consistent with thegeneral market value. “General market value” means the pricethat an asset would bring, as the result of bona fide bargainingbetween well-informed buyers and sellers who are nototherwise in a position to generate business for the otherparty; or the compensation that would be included in a serviceagreement, as the result of bona fide bargaining between well-informed parties to the agreement who are not otherwise in aposition to generate business for the other party at the timeof the service agreement. Usually, the fair market price is…thecompensation that has been included in bona fide servicesagreements with comparable terms at the time of the agreement…where the…compensation has not been determined in anymanner that takes into account the volume or value ofanticipated or actual referrals.

This definition is long-standing and was cited in the Federal Register: March 26, 2004(69 Federal Register 59).

Standard of ValueExamples

Fair Market Value

Fair Value

Investment Value

Intrinsic Value

Liquidation Value

Healthcare Compensation Valuation Requires Using Fair Market Value



IMPLICATIONS REGARDING THE VALUATION OF PHYSICIAN SERVICES:IN MOST INSTANCES, WE UTILIZE THE MARKET APPROACH METHODOLOGY

Alternative Potential Valuation Methodologies

Income Approach

The income approach is forward-looking premise of value based on the assumption that the value of a service or ownership is equal to the sum of the present values of the expected future benefit of providing a service or owning that interest.

Asset Approach

The asset approach is a general way of determining a value indication of a business, business ownership interest, or security using one or more methods based on the value of the assets net of liabilities.

Market Approach – (Predominantly relied upon for assessment of Physician Professional Services)

The market approach is a valuation approach where market data is analyzed to determine what is actually being paid in the market place for services. The data is gathered, analyzed and a comparison is made between the facts of the subject being valued and the facts of the particular market where the information is obtained.

Observation: The available benchmarks for “comparables” and related “standard” FMV tests are not allowing for consideration of significant value-based performance and risk payments or care team patient care.


7/31/2017

12


SAMPLE FMV ASSESSMENT APPROACH (“DECISION-TREE” REVIEW OF KEY FACTS & CIRCUMSTANCES TO DEVELOP FMV RANGE)

A.What are the

physician services to be valued?

Clinical?

Personally Performed

Team Performed

Teaching?

Research?

Med. Admin.?

B.What is the

practice setting and overall

environment that the

services will be delivered within?

C.1.What is the nature,

level & complexity of the practice setting?

Non-Academic

Predominantly?

Academic

Hybrid

Non-Academic

Academic

Hybrid

Non-Academic

Academic

Hybrid

Non-Academic

Academic

Hybrid

Selection of pertinent clinical benchmark(s) /

comparable(s)

Selection of pertinent teaching

benchmark(s) / comparable(s)

Selection of pertinent research benchmark(s)

/ comparable(s)

Selection of pertinent Med. Admin.

benchmark(s) / comparable(s)

D.What adjustments to the data and/or comparables are

needed to complete benchmarking?

C.2.What are the

providers’ needed qualifications to

deliver the services?

C.3.What other market

factors affect physician

recruitment & retention?

E.What is the

aggregate levelof expected

services to be provided on

behalf of System/AMC or affiliates – and

does the projected level

fall within a reasonable FMV

range and/or require a cap to ensure overall

reasonableness?



CAREFUL CONSIDERATION OF WHAT IS “IN” AND “OUT” OF THE BENCHMARKS TO ASSESS MARKET REASONABLENESS IS REQUIRED – FOR ALL FORMS OF PHYSICIAN COMPENSATION

Review of Compensation Benchmark Rate Definitions:[reported total compensation, reported comp/wRVU,

compensation-per-hour, compensation-per-shift, etc.]

Production Based Compensation

Non-Production Based Compensation

With regard to evaluating market based compensation benchmarks, by definition they include both production and

non-production sources of funding

Caveat for Benchmarking:



IMPLICATIONS REGARDING THE VALUATION OF PHYSICIAN SERVICES:APPLYING AVAILABLE FMV TESTS TO ASSESS REASONABLENESS

Base Compensation

ProductionIncentives

QualitativeIncentives

OtherComp.

Our FMV Tests typically evaluate the reasonableness of Clinical Compensation (including Base Salary,

Production Incentives, and Qualitative/Service incentives) to varying benchmarks, including: (1) compensation-per-FTE; (2) compensation-per-production rates (e.g., wRVUs, Professional Collections, shifts, etc.); and

(3) correlation of compensation-per-production benchmark levels.

Med. Admin. stipends may be evaluated per Clinical

Comp/Hour and Physician Executive Comp.

benchmarks.

Although there will be an “All-In” FMV Assessment for most of the Compensation paid for Clinical activities; Medical Administrative Compensation is “earned” separately and requires separate FMV analyses.

Ongoing assessments re: reported physician services “within the benchmarks”


7/31/2017

13


FURTHERMORE, THERE IS INCREASED SCRUTINY ON THE MARKET REASONABLENESS OF HIGHER LEVELS OF COMPENSATION – INCLUDING AGGREGATE COMPENSATION, RATES, AND CORRELATION OF “WORK” TO “PAY”

Increasing scrutiny on both “high” rates and aggregate levels of physician services compensation. However, increasing importance of non-productivity behaviors are also requiring revision of prior “correlation tests”

ProductionPerformance

Quality/ServicePerformance

Compensation Level

P75

P50

P90+

Wider levels of

acceptable “Correlation”

Narrower levels of required

“Correlation”

Highest levels of required

Correlation”

Movement to recognize further “stretch goals” for quality, service and efficiency – without as

much reliance upon volume and personal

productivity, etc.



ADDITIONAL Q&A AND MEETING NOTES

4 Additional Q&A Opportunity


APPENDIX A

ADDITIONAL INFORMATION RE: FIRM BACKGROUND & VANTAGE POINTS

7/31/2017

14


NAVIGANT HEALTHCARE – WHO WE ARE

WHO WE ARE: 600+ CONSULTINGPROFESSIONALS

2,500 BUSINESS PROCESSMANAGEMENT PROFESSIONALS

M U LT I D I S C I P L I N A R Y

WHAT WE DO:

DELIVERED TO:

• STRATEGY

• OPERATIONAL IMPROVEMENT• BUSINESS PROCESS MANAGEMENT

ON MODERN HEALTHCARE’S LARGEST HEALTHCARE MANAGEMENT CONSULTING FIRMS#5

HOSPITALS MEDICAL GROUPS PAYERS AMCS

FORBES – AMERICA’S BEST MANAGEMENT CONSULTING FIRMS: HEALTHCARE 4 STARS

Strategy Solutions

Performance Excellence Solutions

Physician Enterprise Solutions

Revenue Cycle Solutions

Government Healthcare Solutions

Specialized Solutions Centralized Analytics

A Firm Background & Vantage Points


NAVIGANT COLLABORATES WITH PROVIDERS, PAYERS, LIFE SCIENCES, AND GOVERNMENT AGENCIES TO HELP THEM THRIVE IN RAPIDLY CHANGING ENVIRONMENT

Navigant’s Healthcare clients• 300+ health systems, including 11 of 15 U.S. News &

World Report Honor Roll Hospitals and 80% of the largest health systems in the U.S.

• Leading academic medical centers• Many of country’s largest physician groups • 22 of the 25 top global pharmaceutical companies • Numerous state and federal agencies

We help clients build, manage, and protect their future • Building the optimal scale and scope of programs,

products, and services that anticipate change;• Managing clinical, operational, and

financial objectives to achieve peak efficiency; and• Protecting the future by reducing performance risk

and proactively accepting risk in new business strategies

Navigant’s Healthcare Solutions include:

Strategy Solutions

Performance Excellence Solutions

Physician Enterprise Solutions

Revenue Cycle Solutions

Government Healthcare Solutions

Specialized Solutions



NAVIGANT CONSULTING PROVIDES EXTENSIVE COMPENSATION PLANNING AND VALUATION SERVICES TO ADDRESS A BROAD CONTINUUM OF PHYSICIAN AFFILIATION RELATIONSHIPS

I.Limited

Compensation Assessment& Benchmarking

(typically part of operational assessments to identify excessive compensation and opportunities to better align payments)

II.Comprehensive

Compensation Planning Project

(includes more comprehensive reviews of current plans and development of moreprogressive and aligned plans/results)

III.Compensation Plan

Implementation Assistance(includes oversight and phase-in of

approved plan designs & rates from scopeII projects; ongoing redesign assistance

to ensure alignment & affordability)

IV.Limited & Distinct FMV

Assessments(for individual physician or less

comprehensive offers & compensation arrangements that Navigant was not

requested to develop)

V.Integrated Planning & Valuation Services (combined scope for new plan/ arrangement development, as well as FMV reasonableness

assessments and formal opinion)

VI.Ongoing FMV Reviews

& Limited Plan Redesign (annual reviews of group/division

compensation plans and FMV testing to confirm reasonableness; provision of as needed changes to ensure FMV results)

TraditionalHospital Medical

Staff Relationship

Traditional/ RecruitmentAssistance

Medical Directors/

PSAs

Mgmt Service Organization

(MSO)

Specialty Institute/

COE

JointVentures

Joint MgdCare

Initiatives

Co-Manage-

ment

Clinical Integration

NetworkContracting

Employed and Other

PSA Models

We provide integrated compensation plan design development and related FMV assessments for the full continuum of affiliation relationships


7/31/2017

15


PRESENTER BACKGROUND & EXPERIENCE

Ron is a Managing Director with Navigant Consulting and has more than 30 years of healthcare industry experience, serving more than 250 healthsystems, hospitals, medical groups and academic institutions. He is one of the leaders of the Physician Enterprise Solutions (PES) group and servesas the national leader of the Physician Alignment, Compensation and Valuation (PACV) services team in the Healthcare Practice. Ron providesNavigant clients with expertise and assistance with their physician-to-physician and physician-hospital alignment strategic and business planning,advanced medical staff development planning, compensation, performance improvement, organizational development, governance and relatedleadership development issues.

Ron has extensive experience in providing fair market value assessments for a broad range of physician services relationships, including numerouscompensation, professional service and on-call coverage arrangements for hospitals and health systems. He and his team members havedesigned/negotiated, valued and implemented some of the most sophisticated, progressive physician compensation arrangements for private practice,community health system employed and academic medical center/faculty plan member physicians in the United States.

Ron is a frequent national speaker and author regarding Physician Strategy, Physician Compensation and related professional services valuationissues. Although Ron remains licensed to practice law in multiple states, he does not serve as legal counsel or provide formal legal advice toNavigant’s clients. He is, however, a certified valuation analyst (CVA) and has served as an expert consultant and witness in physician affiliation,compensation plan design and related valuation matters.

Ron is a member of the American Health Lawyers Association (AHLA), National Association of Certified Valuators and Analysts (NACVA), and HealthCare Compliance Association (HCCA).

Prior to joining Navigant Consulting, Ron was a Principal at EthosPartners, where he provided leadership in the Physician Services Practice. Inaddition, Ron has served in senior leadership positions at the consulting firms Health Evolutions and Cejka Consulting.

Ronald L. Vance, JD, CVAManaging Director | Healthcare Navigant Consulting, Inc. 3325 Paddocks Parkway | Suite 425 | Suwanee, GA [email protected]



PRESENTER BACKGROUND & EXPERIENCE


Mark is a Director with Navigant and plays an integral role in the Physician Enterprise Solutions section of it’s Healthcare practice. Mark bringsover 25 years of academic and private practice management experience. Mark has served as an Executive VP of a large academic facultypractice and as COO of employed physician practices of integrated health systems, VP of pipeline, business analysis and human-center designteams; and as an accountant/auditor for a big six accounting firm. His skill set includes: team building & leadership; physician practice revenuecycle management; chief financial officer, patient access; talent development & management; patient, physician and staff engagement andsatisfaction improvement; strategic planning; credentials verification office leadership and certification physician employment contract negotiations;and physician practice recruitment and on-boarding.

Mark A. Benninghoff, MBA, CPME, COPMDirector, HealthcareNavigant Consulting, Inc.150 N Riverside Plaza | Suite 2100 | Chicago, IL 60606 | USA(412) 327-2496 Mobile | [email protected]


APPENDIX B

ADDITIONAL MACRA BACKGROUND & CONSIDERATIONS

7/31/2017

16


IN JANUARY 2015, CMS ANNOUNCED NEW GOALS FOR VALUE-BASED PAYMENTS AND APMS

Source: CMS.gov

Goal #2:Medicare fee-for-service payments are tied to quality or value the end of 2016 (90% by the end of 2018)

Goal #1:Medicare payments are tied to quality or value through Alternative Payment Models (APMs) by the end of 2016 (50% by the end of 2018)

New Goals for Medicare Fee-For-ServiceNew Goals for Medicare Fee-For-Service

B Additional MACRA Background & Considerations


CMS’ MAIN IMPERATIVE TO FACILITATE TRANSFORMATION OF HEALTHCARE SYSTEM VIA FOCUS ON 3 AREAS

3 Goals for our Health Care System:

BETTER care SMARTER spending HEALTHIER people

Via a focus on 3 areasBackground

Source: CMS.gov



MEDICARE ACCESS AND CHIP REAUTHORIZATION ACT (MACRA) CHANGES HOWMEDICARE PAYS HEALTH CARE PROVIDERS…

On April 16, 2015, Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) or the So-Called “Doc Fix” Bill Signed Into Law

Medicare Access and CHIP Reauthorization Act of 2015

(MACRA)

Alternative Payment Models (APMs)

Merit-Based Incentive Payment System (MIPS)

What does MACRA do?

• Replaces Medicare Sustainable Growth Rate (SGR)

• Ensures a 5-year period of annual updates of 0.5%

• Streamlines existing Medicare quality reporting programs

• Provides bonus payments for participation in advanced alternative payment models (APMs)

• Supports multi-payer initiatives

Source: CMS.gov


7/31/2017

17


…BY LEVERAGING INCENTIVES TO ENCOURAGE PROVIDERS TO MOVE TO VALUE-BASED AND ALTERNATIVE PAYMENT MODELS (APM)

Medicare FFS payments

Medicare FFS payments linked to quality and value

Medicare FFS payments linked to Alternative Payment Models

Medicare FFS payments linked to advanced Alternative Payment Models

Source: CMS.gov



2015

&

Earlier

Fee Schedule Updates

2016

0.5%

2017

0.5%

2018

0.5%

2019

0.5%

+/-4%

5%

2020

0%

+/-5%

5%

2021

0%

+/-7%

5%

2022

0%

+/-9%

5%

2023

0%

+/-9%

5%

2024

0%

+/-9%

5%

2025

0%

+/-9%

2026

&Beyond

* 0.75% or 0.25%

+/-9%

Excluded from MIPS

MACRA’S NEW PHYSICIAN PAYMENT METHODOLOGY ELIMINATES FEE SCHEDULE UPDATES FROM 2020-2025

MIPS

Advanced APMs

*For 2026 and Beyond: the advanced APM conversion factor is 0.75% and the non-advanced APM conversion factor is 0.25%

MACRA Program Overview



2019 & 20201. Physicians2. Physician assistants3. Nurse practitioners4. Clinical nurse specialists5. Nurse anesthetists

6. Physical or occupational therapists7. Speech-language pathologists8. Audiologists9. Nurse midwives10. Clinical social workers11. Clinical psychologists12. Dietitians or nutrition professionals

MIPS APPLIES TO PHYSICIANS AND OTHER PROFESSIONALS WHO DO NOT MEET ONE OF THREE EXEMPTIONS

Who Participates in and Who are Exempt From MIPS?

Qualified Participants (QPs) Exemptions

1

2

3

First year of Medicare participation

Low-volume Medicare patients ($30,000 or less in charges or 100 or fewer patients)

Certain participants in Advanced APMs

2021 & Beyond


7/31/2017

18


MIPS CHANGES (AND ALIGNS) HOW MEDICARE INTEGRATES QUALITY AND VALUE PROGRAMS INTO PAYMENT MODELS

Source: CMS.gov



COMPOSITE MIPS PERFORMANCE SCORE WILL FACTOR IN FOUR WEIGHTED PERFORMANCE CATEGORIES ON A 0-100 POINT SCALE

Advancing Care Information: 25% (Previously

MU)

• Report key measures

• Rewarded for own performance

Clinical Practice Improvement: 15%• Choose from 90 activities

• Rewarded for own performance

Quality/PQRS: 60% (30% by 2021)

• Clinicians choose six measures to report

• Rewarded for performance against peers

Resource Use: 0% (30% by 2021)

• Value-Based Modifier resource measures; calculated based on claims

• Rewarded for performance against peers

60%

0%

25%

15%

Source: CMS.gov



ACI

CATEGORY DRILLDOWNS: QUALITY, RESOURCE USE, CPIA, AND ACI

Quality

Category Key Takeaways

Source: CMS.gov

Resource Use

CPIA

• Scaled down requirements compared to PQRS and more options for reporting

• No longer solely based on ability to report – scored against performance of peers

• Bonus points for electronic reporting and extra/high-priority measures

• Won’t be calculated in 2017 and won’t be applied to 2019 adjustment

• No separate reporting requirement – all reporting is claims-based

• New measures targeting specialists were added to assess resource use for specific conditions

• Must perform 2 - 4 activities from a diverse list of over 90 activities

• PCMH receives full credit and MIPS/APM participants receive half credit

• Don’t leave points on the table by overlooking this easily attainable category

• Applies to all clinicians – not just physicians as Meaningful Use did

• Score is based on ability to report and performance against peers on at least 5 measures

• Bonus points for reporting measures on public health, clinical data registry and certain CPIA


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19


HOW MUCH WILL MIPS ADJUST MEDICARE PART B PAYMENTS?

*MIPS adjustments are budget neutral. A scaling factor may be applied to upward adjustments to make total upward and downward adjustments equal.

Source: CMS.gov



CMS PROJECTED ONLY 5-8% (70K – 120K) OF ELIGIBLE CLINICIANS WILL QUALIFY FOR THE ADVANCED APM TRACK IN 2017

A small portion of clinicians will be qualified participants (QPs) for the Advanced APM track:

Advanced APM requirements: Take on more than nominal financial

risk

Threshold to trigger losses at least 4%

Loss sharing at least 30%

Maximum possible loss at least 4%

Quality measurement

Use of EHR

Benefit of APM track participants:

Exempt from MIPS payment adjustments

5% incentive payment in 2019-2024

Source: CMS.gov



ADDITIONAL ADVANCED APM DESIGNATIONS HAVE BEEN ANNOUNCED DUE TO FEEDBACK ON PREVIOUS LIST

New Advanced APM models announced in

final rule (details

forthcoming)

-

Source: CMS.gov


7/31/2017

20


APM THRESHOLDS “RAMP-UP” STARTING IN 2021 AND BEGIN TO INCORPORATE NON-MEDICARE APMS

APM Entities Must Meet Percent of Payments of Patient Counts

Payments through Advanced APMs

Patients in

Advanced APMs

Thresholds May Include Non-Medicare APMs Starting in 2021

Medicare Thresholds: Both methods assess Medicare Part B services provided through an Advanced APM

ᵡ Non-Medicare Thresholds: CMS is finalizing methodologies to evaluate the Medicare and All-Payer methods

Source: CMS.gov



ADVANCED APM QUALIFICATION AND BONUS PAYMENT IS BASED ON A TWO-YEAR LAG IN CLAIMS DATA

Qualified Participants Must Meet Advanced APM Thresholds in 2017 to Receive the 5% Bonus in 2019

Source: CMS.gov



THERE ARE TWO TRACKS BUT FOUR POTENTIAL OUTCOMES

1

23 4

Source: CMS.gov


7/31/2017

21


THE FINAL RULE HAS NOW ALLOWED FOR THE 2017 REPORTING PERIOD TO SERVE AS “A TRANSITION YEAR” – WITH 2018 TRACKING FOR 2019 IMPACT

Report one measure for CPIA, Quality, and ACI for 90 continuous days & avoid a negative adjustment in 2019

#1: Min. Participation

Report more than one measure for CPIA, Quality, and ACI for 90 continuous days & receive a discounted adjustment in 2019

#2: Partial Participation

Report complete data for at least 90 continuous days to qualify for full payment adjustment

#3: Full Participation

Achieve patient/payment thresholds through a qualifying advanced

alternative payment model

#4: APM Participation

There are Four Reporting Options for 2017 Participation in MACRA

Reporting delayed from 2017 to 2018, with anticipated impacts to be

implemented 2019

CMS publication of “final” rule

2016 2017 2018


Source: CMS.gov


THE FINAL RULE WAS RELEASED ON OCTOBER 14, 2016 - WHICH ANSWERS SEVERAL BUT NOT ALL KEY QUESTIONS

Expand List of Advanced APMs

• It was requested that CMS allow for other payment models to qualify.

Partial QP MIPS Decision

• Will ECs have enough information to determine whether or not to participate in MIPS if later deemed Partial QPs?

Clinician Affiliation and “Inherited” Scores• How will CMS and groups handle payment adjustments related to

“inherited” scores for a clinician’s past MIPS performance?

Group Reporting• How will CMS account for a multispecialty group? Do all report the

same measures or different measures?

Timely Performance Feedback• Will clinicians have enough information in order to benchmark, predict

performance, and make course corrections?

Publicly Reported Data• Which measures should or should not be made available on the

Physician Compare website?

Questions from Proposed Rule

• Answered: Additional models have been announced (i.e., MSSP Track 1+ and CJR)

• Not Answered: CMS has announced that it is still “finalizing an accelerated timeline for making QP determinations”

• Answered: If a clinician moves from one TIN to a new TIN, their respective performance score will be applied individually and not to all NPIs in new TIN

• Answered: There will not be subgroups if clinicians elect to report as a group under a single TIN – all clinicians under the TIN must report the same measures

• Answered: In 2017, performance feedback will be provided on an annual basis – later on feedback will be more frequent

• Answered: The Physician Compare website will ultimately post the total final score for each MIPS EC and their performance within each MIPS category

Response in Final Rule



MACRA WILL DRIVE PHYSICIAN ALIGNMENT IN A BIG WAYSMALL PRACTICES ARE EXPECTED TO BE HIT HARDEST

• Shared Risk – Stratify risk for an Advanced APM or MIPS APM

• EHR Build – Gain infrastructure without full burden of investment

• Economies of Scale – Achieve greater presence in the market

• Payer Relations – Improve negotiating position with vendors, payers

Motives Behind Physician Alignment

Practice Size

# of Total Eligible Clinicians (ECs)

% ECs with Negative Adjustment in 2019

Projections w/2017 transition period

Initial projections w/o 2017 transition period

1-9 148,000 10% 70%

10-24 64,000 10% 60%

25-99 132,000 7.4% 45%

>100 333,000 1.5% 18%

Small Practices get a break in 2019 – but what about 2020?

• CMS is allowing Eligible Clinicians to report minimal measures in 2017 but what will happen in 2018 when then are required to report complete data on all measures?

• Note: $20M in annual funding for next five years has been allocated to assist small practices.

Source: CMS.gov


7/31/2017

22


MIPS APM PREFERENTIAL SCORING IS AVAILABLE FOR APMS THAT DO NOT MEET QP STATUS

Benefit #1: The ACO will submit quality data

to CMS on behalf of all ACO providers – no need to report

individually

Benefit #2: Collective quality scores will be used for all ACO providers giving

the benefit of aggregate performance

Benefit #3:Automatically earn 30 points out of the 60 and reducing the

burden on individual providers or groups

Benefit #4:This category will be eliminated (category weight is re-distributed

to CPIA and ACI)

Quality Quality CPIA

1. Entities participate in an APM under agreement with CMS (i.e., MSSP Track 1 and similar models)

2. Entities include ≥1 MIPS eligible clinician on participation list

3. Bases payment incentives on performance, cost/utilization, and quality measures

MIPS APM Criteria

Benefits of MIPS APM Participation

“Special” MIPS APM Eligibility Criteria and Benefits

Resource Use



ADVANCED APM MEDICARE ACO MODELS REQUIRE SIGNIFICANT FINANCIAL RISK –ADVANCED APMS ARE NOT A FREE 5% BONUS

MSSP

NextGeneration

MACRA (MIPS)

Figure below shows the risk associated with a medical group managing 80k Medicare lives with an average per-member per-month (PMPM) payment of $725

Track 1

Track 2

Track 3

Option A

Option B

9% of Fee Schedule

4% of Fee Schedule

Program Risk Track

-$14M $14M

-$6.1M $6.1M

-$69M

-$103M

-$103M

-$103M

$69M

$103M

$103M

$103M

$138M

No Downside Risk

MIPS vs APMs

Note: Assumes that Medicare Part B accounts for 22% of total Medicare FFS spend

New Advanced APM (details not yet announced) Track 1 +

Not an Advanced APM

Source: CMS.gov



THE WINDOW IS SMALL FOR THE ADVANCED APM INCENTIVE PAYMENT TO PROVE MORE FAVORABLE THAN MIPS PARTICIPATION

Health System Physician Group

Scenario #1 Scenario #2 Scenario #1 Scenario #2Total Revenue $2,000M $2,000M $500M $500M

Total Medicare FFS Revenue $400M $400M $100M $100M

Medicare Part A (Facility) $320M $320M $20M $20M

Medicare Part B (Professional) $80M $80M $80M $80M

MIPS Downside Risk 2% 4% 2% 4%

$$$ Risk under MIPS $1,6M $3,2M $1,6M $3,2M

% of Medicare FFS Revenue at Risk 0.4% 0.8% 1.6% 3.2%

The potential loss associated with MIPS performance only represents 0.4% - 0.8% of the risk for health systems regarding most approved Advanced APM models. Key issue with MIPS is whether payment trends can keep pace with healthcare cost inflation.


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78-73% OF CLINICIANS ARE EXPECTED TO OPERATE IN MIPS TRACK CHECKLIST TO ASSESS MIPS PERFORMANCE

Quality ACICPIAResource Use

Review participation in current PQRS program

Monitor measure performance throughout the performance year as part of your quality improvement plan

Prepare your organization to report new MIPS measures in 2017

Select reporting option for 2017

Review cost measures on VBPM Quality and Resource Use Reports (QRUR)

Use QRUR to identify gaps and opportunities for improvement

Incorporate gap/opportunity analysis into quality improvement plan

Assess CMS inventory of 90+ proposed CPIA activities

Target at least 5-6 activities (mix of high- and medium-weighted activity) to ensure maximum points in this category

Review Modified Stage 2 requirements

Analyze performance under new scoring methodology

Prepare for 2017 attestation

Focus on improvement in objectives and measures for patient electronic access, coordination of care through patient engagement, and HIT

Explore bonus point opportunity



APPENDIX C

PERTINENT NATIONAL PHYSICIAN COMPENSATION & PRODUCTION BENCHMARKS


OVERVIEW OF TRI-BLEND OF NATIONAL BENCHMARKS

C Pertinent National Physician Compensation & Production Benchmarks

Allergy/Immunology

25th %tile Median 75th %tile 90th %tile

Selected Benchmark Surveys Specialty Designation Not e n n n n

Medical Group Management Association Allergy/Immunology 1 245 $240,000 245 $311,750 245 $468,784 245 $663,499

American Medical Group Association Allergy/Immunology 2 200 $249,009 200 $294,245 200 $403,889 200 $535,179

Sullivan Cotter & Associates Allergy and Immunology 3 259 $232,803 259 $276,537 259 $341,120 259 $474,698

704

CPI Adjustment to 2016

Medical Group Management Association Allergy/Immunology 1 245 $240,000 245 $311,750 245 $468,784 245 $663,499

American Medical Group Association Allergy/Immunology 2 2.125% 200 $254,300 200 $300,498 200 $412,472 200 $546,552

Sullivan Cotter & Associates Allergy and Immunology 3 2.125% 259 $237,750 259 $282,413 259 $348,369 259 $484,785

Resulting Blended & CPI Adjusted Compensation Range $243,235 $297,760 $408,486 $564,527

Calculated Blended & CPI Adjusted Hourly Rates 5 2000 $121.62 $148.88 $204.24 $282.26


Medical Group Management Association Allergy/Immunology 4 2.125% 245 $245,100 245 $318,375 245 $478,746 245 $677,598

American Medical Group Association Allergy/Immunology 4 2.125% 200 $259,704 200 $306,883 200 $421,237 200 $558,166

Sullivan Cotter & Associates Allergy and Immunology 4 2.125% 259 $242,802 259 $288,415 259 $355,772 259 $495,087



Note 1: Source: Medical Group Management Association (MGMA) Physician Compensation and Production Survey, 2017 Report, Data Dive Physician Total Compensation, Full Time, Fully Clinical

Note 2: Source: American Medical Group Association (AMGA) 2016 Physician Compensation Survey, All Specialties > All > National > Compensation

Note 3: Source: Sullivan Cotter & Associates (SCA), Physician Compensation and Productivity Survey, 2016 Report, National (All) Total Cash Compensation

Note 4: Source: U.S. Department of Labor, Bureau of Labor Statistics, 2012-2016 Average Rate of Changes for CPI (Consumer Price Index): Medical Care - Physicians' Services

Note 5: Utilizing 2000 estimated annual hours for all specialties per prior CMS example in Phase II of the Final Stark II Regulations (effective July 2004)

Compensation-per-FTE

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Allergy/Immunology



Medical Group Management Association Allergy/Immunology 1 80 $443,696 80 $653,262 80 $994,130 80 $1,350,304

American Medical Group Association Allergy/Immunology 2 102 $401,602 102 $634,548 102 $973,915 102 $1,313,680

Sullivan Cotter & Associates Allergy and Immunology 3 82 $395,666 82 $507,584 82 $800,867 82 $1,308,923

Blended Weighted Average $412,514 $600,783 $926,291 $1,323,301

Note 2: Source: American Medical Group Association (AMGA) 2016 Physician Compensation Survey, All Specialties > All > National > Net Collected

Note 3: Source: Sullivan Cotter & Associates (SCA), Physician Compensation and Productivity Survey, 2016 Report, National (All) Collections

Professional Collections-per-FTE

Note 1: Source: Medical Group Management Association (MGMA) Physician Compensation and Production Survey, 2017 Report, Physician Collections for Professional Charges All Physicians Full Time Fully Clinical




Allergy/Immunology



Medical Group Management Association Allergy/Immunology 1 78 33.40% 78 48.10% 78 58.90% 78 82.80%

American Medical Group Association Allergy/Immunology 2 102 36.60% 102 51.50% 102 76.70% 102 90.30%

Sullivan Cotter & Associates Allergy and Immunology 3 82 38.55% 82 53.91% 82 67.90%

Blended Weighted Average 36.26% 51.24% 68.65% 87.05%

Note 2: Source: American Medical Group Association (AMGA) 2016 Physician Compensation Survey, All Specialties > All > National > Compensation / Net Collected

Note 3: Source: Sullivan Cotter & Associates (SCA), Physician Compensation and Productivity Survey, 2016 Report, National (All) Comp to Collections

Compensation to Professional Collections

Note 1: Source: Medical Group Management Association (MGMA) Physician Compensation and Production Survey, 2017 Report, Physician Compensation to Collections Ratio All Physicians Full Time Fully Clinical




Allergy/Immunology



Medical Group Management Association Allergy/Immunology 1 193 3,336 193 4,484 193 6,215 193 7,359

American Medical Group Association Allergy/Immunology 2 183 3,512 183 4,216 183 5,586 183 6,794

Sullivan Cotter & Associates Allergy and Immunology 3 157 3,356 157 3,978 157 5,103 157 6,312

Blended Weighted Average 3,402 4,243 5,671 6,857

Note 1: Source: Medical Group Management Association (MGMA) Physician Compensation and Production Survey, 2017 Report, Physician w RVUs Full Time Fully Clinical

Note 2: Source: American Medical Group Association (AMGA) 2016 Physician Compensation Survey, All Specialties > All > National > Work RVUs

Note 3: Source: Sullivan Cotter & Associates (SCA), Physician Compensation and Productivity Survey, 2016 Report, National (All) w RVUs 2007 or later

wRVUs-per-FTE

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Allergy/Immunology



Medical Group Management Association Allergy/Immunology 1 186 $63.40 186 $74.42 186 $90.79 186 $118.69

American Medical Group Association Allergy/Immunology 2 183 $63.70 183 $72.52 183 $89.22 183 $110.14

Sullivan Cotter & Associates Allergy and Immunology 3 157 $63.89 157 $70.32 157 $86.19

Blended Weighted Average $63.65 $72.54 $88.87 $114.45

Note 1: Source: Medical Group Management Association (MGMA) Physician Compensation and Production Survey, 2017 Report, Physician Compensation per w RVU Full Time Fully Clinical

Note 2: Source: American Medical Group Association (AMGA) 2016 Physician Compensation Survey, All Specialties > All > National > Compensation per Work RVU

Note 3: Source: Sullivan Cotter & Associates (SCA), Physician Compensation and Productivity Survey, 2016 Report, National (All) Total Cash Compensation per w RVUs 2007 or later

Compensation-per-wRVU




Otorhinolaryngology


Selected Benchmark Surveys Special ty Designation N ot e n n n n

Medical Group Management Association Otorhinolaryngology 1 657 $350,000 657 $448,470 657 $591,220 657 $777,211

American Medical Group Association Otolaryngology 2 688 $336,819 688 $419,818 688 $522,056 688 $702,508

Sullivan Cotter & Associates Otolaryngology – General 3 676 $327,169 676 $395,090 676 $476,133 676 $623,442

2021


Medical Group Management Association Otorhinolaryngology 1 657 $350,000 657 $448,470 657 $591,220 657 $777,211

American Medical Group Association Otolaryngology 2 2.125% 688 $343,976 688 $428,739 688 $533,150 688 $717,436

Sullivan Cotter & Associates Otolaryngology – General 3 2.125% 676 $334,121 676 $403,486 676 $486,251 676 $636,690




Medical Group Management Association Otorhinolaryngology 4 2.125% 657 $357,438 657 $458,000 657 $603,783 657 $793,727

American Medical Group Association Otolaryngology 4 2.125% 688 $351,286 688 $437,850 688 $544,479 688 $732,682

Sullivan Cotter & Associates Otolaryngology – General 4 2.125% 676 $341,221 676 $412,060 676 $496,584 676 $650,220












Otorhinolaryngology



Medical Group Management Association Otorhinolaryngology 1 190 $502,320 190 $693,378 190 $1,006,464 190 $1,265,234

American Medical Group Association Otolaryngology 2 392 $525,802 392 $731,883 392 $1,026,764 392 $1,357,480

Sullivan Cotter & Associates Otolaryngology – General 3 258 $518,679 258 $731,200 258 $943,404 258 $1,226,452

Blended Weighted Average $518,303 $722,964 $996,569 $1,296,371





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Otorhinolaryngology



Medical Group Management Association Otorhinolaryngology 1 186 47.40% 186 63.30% 186 79.10% 186 100.00%

American Medical Group Association Otolaryngology 2 392 45.70% 392 57.80% 392 73.50% 392 92.90%

Sullivan Cotter & Associates Otolaryngology – General 3 258 46.55% 258 57.97% 258 73.53%









Otorhinolaryngology



Medical Group Management Association Otorhinolaryngology 1 523 5,185 523 6,799 523 9,023 523 11,367

American Medical Group Association Otolaryngology 2 619 5,481 619 6,903 619 8,910 619 10,735

Sullivan Cotter & Associates Otolaryngology – General 3 508 5,420 508 6,846 508 8,440 508 10,377





wRVUs-per-FTE




Otorhinolaryngology



Medical Group Management Association Otorhinolaryngology 1 514 $56.12 514 $64.40 514 $77.23 514 $103.27

American Medical Group Association Otolaryngology 2 619 $51.64 619 $61.37 619 $73.39 619 $90.95

Sullivan Cotter & Associates Otolaryngology – General 3 508 $50.48 508 $59.84 508 $74.80






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Otolaryngology: Head & Neck Surgery



Medical Group Management Association 1

American Medical Group Association Otolaryngology - Head and Neck Surgery 2 42 $344,380 42 $471,226 42 $667,800 42 $719,196

Sullivan Cotter & Associates Otolaryngology – Head and Neck 3 20 $336,750 20 $370,937 20 $446,156 20 $545,154

62



American Medical Group Association Otolaryngology - Head and Neck Surgery 2 2.125% 42 $351,698 42 $481,240 42 $681,991 42 $734,479

Sullivan Cotter & Associates Otolaryngology – Head and Neck 3 2.125% 20 $343,906 20 $378,819 20 $455,637 20 $556,739




Medical Group Management Association 4 2.125%

American Medical Group Association Otolaryngology - Head and Neck Surgery 4 2.125% 42 $359,172 42 $491,466 42 $696,483 42 $750,087

Sullivan Cotter & Associates Otolaryngology – Head and Neck 4 2.125% 20 $351,214 20 $386,869 20 $465,319 20 $568,569
















American Medical Group Association Otolaryngology - Head and Neck Surgery 2 42 $642,329 42 $822,179 42 $1,011,597 42 $1,078,902

Sullivan Cotter & Associates Otolaryngology – Head and Neck 3

Blended Weighted Average $642,329 $822,179 $1,011,597 $1,078,902












American Medical Group Association Otolaryngology - Head and Neck Surgery 2 42 43.30% 42 64.20% 42 78.80% 42 95.30%

Sullivan Cotter & Associates Otolaryngology – Head and Neck 3






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American Medical Group Association Otolaryngology - Head and Neck Surgery 2 42 5,760 42 6,881 42 8,477 42 9,754

Sullivan Cotter & Associates Otolaryngology – Head and Neck 3 10 5,338 10 7,333 10 8,942 10 11,022





wRVUs-per-FTE








American Medical Group Association Otolaryngology - Head and Neck Surgery 2 42 $50.88 42 $67.43 42 $96.37 42 $110.44

Sullivan Cotter & Associates Otolaryngology – Head and Neck 3 10 $44.72 10 $59.32 10 $65.28









Pediatrics: Otorhinolaryngology


Selected Benchmark Surveys Special ty Designation N ot e n n n n

Medical Group Management Association Pediatrics: Otorhinolaryngology 1 40 $363,396 40 $440,170 40 $558,287 40 $731,341

American Medical Group Association Otolaryngology - Pediatrics 2 34 $331,839 34 $415,186 34 $536,957 34 $685,719

Sullivan Cotter & Associates Pediatrics – Otolaryngology 3 92 $322,202 92 $387,618 92 $529,686 92 $713,395

166


Medical Group Management Association Pediatrics: Otorhinolaryngology 1 40 $363,396 40 $440,170 40 $558,287 40 $731,341

American Medical Group Association Otolaryngology - Pediatrics 2 2.125% 34 $338,891 34 $424,009 34 $548,367 34 $700,291

Sullivan Cotter & Associates Pediatrics – Otolaryngology 3 2.125% 92 $329,049 92 $395,855 92 $540,942 92 $728,555




Medical Group Management Association Pediatrics: Otorhinolaryngology 4 2.125% 40 $371,118 40 $449,524 40 $570,151 40 $746,882

American Medical Group Association Otolaryngology - Pediatrics 4 2.125% 34 $346,092 34 $433,019 34 $560,020 34 $715,172

Sullivan Cotter & Associates Pediatrics – Otolaryngology 4 2.125% 92 $336,042 92 $404,267 92 $552,437 92 $744,036









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OVERVIEW OF AAMC - ACADEMIC COMPENSATION BENCHMARKS


Allergy/Immunology

Instructor 25th %tile Median 75th %tile 90th %tile

Selected Benchmark Surveys Specialty Designation N ot e n n n n

Association of American Medical Colleges Allergy/Immunology-Med. 1 26 $106,000 26 $153,000 26 $203,000

CPI Adj to 2016

Association of American Medical Colleges Allergy/Immunology-Med. 2 2.125% 26 $108,253 26 $156,251 26 $207,314

CPI Adj to 2017


Resulting Selected Survey/Blended and CPI Adjusted Compensation Range $110,553 $159,572 $211,719

Calculated Selected Survey/Blended and CPI Adjusted Hourly Rates 3 2000 $55.28 $79.79 $105.86

Note 1: Source: Association of American Medical Colleges (AAMC) Report on Medical School Faculty Salaries 2015-2016, January 2017 Report, Table 11: Total Compensation, All Schools

Note 2: Source: U.S. Department of Labor, Bureau of Labor Statistics, 2012-2016 Average Rate of Changes for CPI (Consumer Price Index): Medical Care - Physicians' Services;






Allergy/Immunology

Assistant Professor 25th %tile Median 75th %tile 90th %tile



CPI Adj to 2016


CPI Adj to 2017











Allergy/Immunology

Associate Professor 25th %tile Median 75th %tile 90th %tile



CPI Adj to 2016


CPI Adj to 2017








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Allergy/Immunology

Professor 25th %tile Median 75th %tile 90th %tile



CPI Adj to 2016


CPI Adj to 2017











Allergy/Immunology

Chief 25th %tile Median 75th %tile 90th %tile



CPI Adj to 2016


CPI Adj to 2017











Otorhinolaryngology

Instructor 25th %tile Median 75th %tile 90th %tile


Association of American Medical Colleges Otolaryngology 1 44 $62,000 44 $69,000 44 $193,000

CPI Adj to 2016

Association of American Medical Colleges Otolaryngology 2 2.125% 44 $63,318 44 $70,466 44 $197,101

CPI Adj to 2017








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Otorhinolaryngology

Assistant Professor 25th %tile Median 75th %tile 90th %tile



CPI Adj to 2016


CPI Adj to 2017











Otorhinolaryngology

Associate Professor 25th %tile Median 75th %tile 90th %tile



CPI Adj to 2016


CPI Adj to 2017











Otorhinolaryngology

Professor 25th %tile Median 75th %tile 90th %tile



CPI Adj to 2016


CPI Adj to 2017








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Otorhinolaryngology

Chief 25th %tile Median 75th %tile 90th %tile



CPI Adj to 2016


CPI Adj to 2017











Otorhinolaryngology

Chair 25th %tile Median 75th %tile 90th %tile



CPI Adj to 2016


CPI Adj to 2017








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