Transcript Physician Hospital Integration Strategies

Paying Physicians for
Leadership and Quality at the
Hospital/System
HFMA Georgia Chapter
Fall Institute – November 11, 2011
Darcy Devine, AVA, AIBA
[email protected]
Emma Miller, AM, AVA
[email protected]
Relationships in healthcare are changing.
Physicians are adapting
The government uses the “Honor System” when paying for healthcare.
Payments to the wrong person, of the wrong amount, or for the wrong reason cost Americans an
estimated $98 billion in 2009, with $54 billion coming from Medicare and Medicaid. The Obama
Administration has pledged a crackdown on healthcare fraud.
Hospital-Physician Integration
Independence
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Services Agreements
Co-Management
Joint Venture
Employment
Stark Law
Prohibits a physician from making a referral to an entity with which
she or her immediate family has a financial relationship if the
referral is for the furnishing of designated health services, unless
the financial relationship fits into an exception set forth in the
statute or impending regulations.
Anti-Kickback Law
Provides for criminal penalties for certain acts impacting Medicare
and state health care (e.g., Medicaid) reimbursable services. Of
primary concern is the section of the statute which prohibits the
offer or receipt of certain remuneration in return for referrals for or
recommending purchase of supplies and services reimbursable
under government health care programs.
Employment Safe Harbors
Stark exception to the referral prohibition related to compensation
arrangements for bona fide employment relationships with physicians (or an
immediate family member of the physician)
• The employment is for identifiable services.
• The employment is a bona fide employment relationship with the
employer.
• The amount of the remuneration under the employment is:
• consistent with the fair market value of the services; and
• is not determined in a manner that takes into account (directly or
indirectly) the volume or value of any referrals by the referring
physician. This does not prohibit payment of remuneration in the
form of a productivity bonus based on services performed personally
by the physician (or immediate family member of the physician.
• The remuneration is provided under an agreement that would be
commercially reasonable even if no referrals were made to the employer.
Anti-Kickback Safe Harbor for employment relationships
45% of Physicians Expect Higher
Salaries with Physician Employment
Level of income decrease and increase that physicians
considering hospital employment would expect
percentage of physicians who would accept a decrease in salary
percentage of physicians expecting no change in salary
percentage of physicians expecting an increase in salary
45%
17%
38%
PWC, From Courtship to Marriage, April 2011
http://www.pwc.com/us/en/health-industries/publications/fromcourtship-to-marriage-series.jhtml
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Employment
When money is exchanged between a hospital and a physician –
the payment should reflect the fair market value of the goods or service received.
Fair Market Value in Healthcare
The value in arm’s-length transactions, consistent with the general
market value. “General market value” means the price than an
asset would bring as a result of bona fide bargaining between wellinformed parties to the agreement who are not otherwise in a
position to generate business for the other party, on the date of
acquisition of the asset or at the time of the service agreement.
Usually, the fair market price is the price at which bona fide sales
have been consummated for assets of like type, quality, and
quantity in a particular market at the time of acquisition, or the
compensation that has been included in bona fide service
agreements with comparable terms at the time of the agreement,
where the price or compensation has not been determined in any
manner that takes into account the volume or value of anticipated
referrals.
42 CFR 411.351
Fair market value requires an arm’s length transaction.
Fair market value buyers and sellers are interested … but not desperate.
FMV in healthcare does not consider the value of “down-stream referrals”.
Commercial Reasonableness
in Healthcare
STARK LAW:
• we are interpreting “commercially reasonable” to mean that an arrangement
appears to be a sensible, prudent business agreement from the perspective of
the particular parties involved, even in the absence of any potential referrals.
(Federal Register / Vol. 63, No. 6 / Friday, January 9, 1998 / Proposed Rules)
• with respect to determining what is “commercially reasonable,” any reasonable
method of valuation is acceptable, and the determination should be based upon
the specific business in which the parties are involved, not business in general.
(Federal Register / Vol. 66, No. 3 / Thursday, January 4, 2001 / Rules and
Regulations)
• in the absence of referrals, an arrangement will be considered “commercially
reasonable” if the arrangement would make commercial sense if entered into by
a reasonable entity of similar type and size and a reasonable physician (or family
member or group practice) of similar scope and specialty, even if there were no
potential DHS referrals. (Federal Register / Vol. 69, No. 59 / Friday, March 26,
2004 / Rules and Regulations)
How Does Physician Pay
Increase Post Transaction?
1.
Do more of the same work
• See more patients
2.
Get paid more per unit for the same work
• Better contracts ( pay)
• Improve efficiency ( cost)
3.
Do different and/or more valuable work
• Quality
• Leadership
Quality Compensation
“Quality” Compensation
1. What is the physician’s scope
of influence?
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Medical Practice
Service Line
Hospital
System
How Do We Measure and
Track Quality?
• Internal systems
• Government reporting
• Outsource
2. How Do We Define Quality?
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Data collection
Patient satisfaction
Guideline adherence
Safety
Timeliness
Outcomes
Prevention
Efficiency
4. How Do We Evaluate
Performance?
• Develop a baseline
• Define the benchmark
• Benchmark level and/or
improvement against baseline
5. How Much Do We Pay for Quality?
• Look at how payors compensate physicians under P4P plans
• Medicare PQRS – has paid up to a 2% premium on reimbursement
to physicians reporting data
• Med-Vantage survey of 45 health plans, physician P4P incentives
were just over 7% of total physician reimbursement.
• Look at how physician employers pay
• 5-10% and up to 20% of physician salary
• Look outside of the healthcare industry
• For example, AICPA survey showed CFO bonuses at 15% of salary;
non-financial targets were more than half of bonus
http://www.imshealth.com/deployedfiles/ims/Global/Content/Solutions/Healthcare%20Analytics%20and%20Services/Payer%20Solutions/Survey_Exec_Sum.pdf
http://www.aicpa.org/InterestAreas/BusinessIndustryAndGovernment/Resources/OperationalFinanceAccounting/HumanResourcesandRelatedIssues/DownloadableDocuments/2011_CFO_Comp_Survey.pdf
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5. How Much Do We Pay for Quality?
• Paying for quality is paying for a result
• Higher level of pay for clinical work performed
• Some payors/employers moving away from
bonuses and towards a higher per unit rate
CMP Restrictions
• The federal Civil Money Penalties statute (the “CMP”)
generally prohibits compensation to physicians to induce
them to reduce or limit services to Medicare or Medicaid
beneficiaries. 42 U.S.C. §1320a-7a
• In Advisory Opinion 08-16, the OIG did not impose
administrative sanctions for the bonus program under the
CMP because:
• quality targets based on credible medical evidence
• quality targets reasonably related to practice and patient
population of hospital
• performance measures underlying compensation to
physicians clearly and separately identified
• written disclosure to patients
• transparency
Summary of Proposed Stark Exception
• Allows for incentive payments and shared savings programs by hospitals to a physician on the
hospital’s medical staff or to a qualified physician organization
• The program must be designed to achieve:
• improvement in quality through changes in physician clinical or administrative practices; or
actual cost savings for the hospital resulting from the reduction of waste or changes in physician
clinical or administrative practices, without an adverse effect on or diminution in the quality of
hospital patient care services
• Program methodology must be:
• Objective
• Verifiable
• Supported by credible medical evidence
• Individually tracked
• Reasonably related to the hospital’s patient population
• Patient care quality measures must be:
• Listed in CMS’ Specification Manual for National Hospital Quality Measures
• Monitored to protect against inappropriate reductions or limitations in patient care services.
• The incentive payment or shared savings program must establish:
• Baseline levels for performance measures using the hospital’s historical and clinical data; and
• Target levels for the performance measures that are developed by comparing historical data for
the hospital’s practices and patient population to national or regional data for comparable
hospitals’ practices and patient populations; and
• Thresholds above or below which no payments will accrue to physicians.
Quality Bonus: Example
• The maximum Total Bonus Opportunity (TBO) available is equal to
10% of the Physician's annual base salary. Bonus amounts will be
paid based on the physician’s achievement relative to two main
quality metrics. Each metric includes multiple tiers, providing for
increased incentive pay for higher scores.
• The first metric is patient satisfaction. The Patient Satisfaction
Opportunity (PSO) comprises 33% of the TBO. The PSO considers
both the Hospital and the Physician's scores as reported in the Press
Ganey Inpatient Patient Satisfaction Survey for the most recent 12month period.
• The second metric relates to quality of care, or more specifically,
compliance with interventional cardiology treatment guidelines.
The Quality Metrics Opportunity (QMO) comprises 67% of the TBO.
The QMO is based on the Hospital's compliance relative to national
compliance with selected American College of Cardiology/American
Heart Association treatment guidelines, as reported in The ACTION
Registry - GWTG, the leading national coronary artery disease
database.
Quality Bonus: Example
Physician Base Salary
$400,000
Total Bonus Opportunity - 10% of Base Salary
$40,000
Patient Satisfaction Opportunity (PSO)
Total Patient Satisfaction Bonus Opportunity (33% of Total Bonus Opportunity)
$13,200
11/06 to 11/08
Results
12-Month
Threshold
Tier 1 Goal: Overall Inpatient Satisfaction Score
and Overall Physician Score
94%
99%
≥ 95%
≥ 95%
$4,356
(33% of Total PSO)
Tier 2 Goal: Overall Inpatient Satisfaction Score
and Overall Physician Score
94%
99%
≥ 95%
≥ 98%
$8,844
(67% of Total PSO)
Tier 3 Goal: Overall Inpatient Satisfaction Score
and Overall Physician Score
94%
99%
≥ 98%
≥ 98%
$13,200
(100% of Total PSO)
Press Ganey Scores1:
Quality Bonus: Example
Quality Metrics Opportunity (QMO)
Total Quality Metric Opportunity (67% of Total Bonus Opportunity)
$26,800
Action Registry - GWTG Scores2:
Q308 Results
(12-Month)
Results
12-Month
Threshold
Tier 1 Goal: Hospital Total Guidelines Composite Adherence Score
89%
94%
$3,350
(12.5% of Total QMO)
Tier 2 Goal: Hospital Total Guidelines Composite Adherence Score
89%
95%
$6,700
(25% of Total QMO)
Total Guideline Composite Score - STEMI cases
Maximum: 25% of Total
QMO
Maximum: 25% of Total
QMO
Total Guideline Composite Score - NSTEMI cases
Tier 1 Goal: Hospital Total Guidelines Composite Adherence Score
75%
80%
$3,350
(12.5% of Total QMO)
Tier 2 Goal: Hospital Total Guidelines Composite Adherence Score
75%
86%
$6,700
(25% of Total QMO)
Quality Bonus: Example
Maximum: 25% of Total
QMO
Door to Needle Time Score - STEMI cases
Tier 1 Goal: Hospital's percentage of eligible patients receiving the
treatment within the 30-minute ACC-recommended timeframe
50%
≥ 50%
$3,350
(12.5% of Total QMO)
Tier 2 Goal: Hospital's percentage of eligible patients receiving the
treatment within the 30-minute ACC-recommended timeframe
50%
≥ 56%
$6,700
(25% of Total QMO)
Maximum: 25% of Total
QMO
Door to Balloon Time Score - STEMI cases
Tier 1 Goal: Hospital's percentage of patients receiving the treatment
within the 90-minute ACC-recommended timeframe
17%
≥ 77%
$3,350
(12.5% of Total QMO)
Tier 2 Goal: Hospital's percentage of patients receiving the treatment
within the 90-minute ACC-recommended timeframe
17%
≥ 82 %
$6,700
(25% of Total QMO)
Press Ganey Associates provides patient satisfaction reports, management reports, and other national comparative database data to over 7,000 health care client facilities. The
organization serves as the industry's leading source for patient satisfaction data, providing survey services to over 40% of U.S. inpatient hospitals. (Inpatient Report, Filter Definition =
Attending Pysician #555)
2 The ACTION Registry-GWTG provides the largest, most comprehensive cardiovascular patient database to the healthcare industry. Providing real-time, risk-adjusted benchmark data,
the Registry is intended to assist hospitals and healthcare organizations with their quality improvement efforts through the monitoring of adherence to the most current ACC/AHA
treatment guidelines.
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Leadership Compensation
ACPE – Identified Leadership
Roles
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Chair/Member, Board of Directors
Chief Executive Officer/ President
Chief Information Officer/Chief Medical Information Officer
Chief Medical Officer
Chief Quality and Patient Safety Officer
C-Suite, Other
Consultant, Full-time
Department Chair / Division Chief
Medical Affairs, Executive (EVPMA) ; Senior Vice President (SVPMA); Medical Affairs, Vice
President (VPMA)
Medical Director
92 medical director titles
Medical Director, Assistant
in IHS Medical Director
Medical Director, Service Line
Survey
Other Functional Areas, Vice President/ Senior VP / Executive VP
President of the Medical Staff
Professor
Professor, Associate/Assistant
Residency / Fellowship Program Director
Source: ACPE, 2011 Physician Executive
Compensation Survey, Positions
Leadership Compensation –
FMV Considerations
• The fair market value of administrative services may
differ from the fair market value of clinical services.
Stark III Preamble
• Generally speaking… Reliance on the Experience,
Training, and Credentials of Physician =  FMV
• American Medical Group Association 2011 Medical
Group Compensation and Financial Survey
• Non-physician CEOs: $330,200 - median; $593,306 - 90th
percentile.
• Physician CEO: $465,890 - median; $923,724 - 90th percentile.
Leadership Compensation
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Scope: Practice, Service Line, Hospital/System
Complexity: Manager versus Leader
Reliance on experience/training and specialty
Commercial Reasonableness
• Necessity
• Aggregate FTEs
• Compensation Structure
• How is it paid
• Base / Hourly / Stipend
• What is the benchmark?
• Impact on production incentive
• Reduce production thresholds to account for administrative FTE
Leadership Compensation
• Sources for Leadership Compensation Benchmarks
• Medical group associations: MGMA, AMGA
• Professional associations: ACPE, society publications
• Consulting firms: Sullivan Cotter, IHS, Towers Watson
• Public information: government data, Guidestar
• Proprietary studies
When There is An Asset Purchase
• FMV compensation limitations
• Post transaction compensation is tied to historical income / cash
flow production of practice
• “System” dollars vs. “Practice” dollars
• Commercial reasonableness of the overall arrangement