Incentive Models by Specialty

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1 Incentive Compensation Models by Specialty Deborah Winn-Horvitz MS Administrator, Department of Medicine University of Pittsburgh Incentive Models by Specialty Outline for Today s Presentation: Why Pay for Performance? Why Pay for Performance? About our Organization Elements of Compensation - Clinical Incentives Basic structure Variation by/among specialties - Low/high volume - Procedural-based - Office-based - Community vs. Academic Recommendations & Outcomes 1

2 Why Pay for Performance? MD satisfaction Linked to common goal Clearly communicates expectations & outcomes Encourages retention About Our Organization University of Pittsburgh UPMC School of Medicine Physician Services Division Department of Medicine 2

3 Department of Medicine Divisions: Cardiology Clinical i l Pharmacology Endocrinology Gastroenterology Internal Medicine Geriatrics Hematology/Oncology Infectious Disease Pulmonary Renal Rheumatology Department of Medicine FY 09 Statistics Admissions: 16,260 Patient Days: 108,089 Outpatient Visits: 266,996 wrvus: 1,461,710, Clinical Revenue: $85 million Research Revenue: $97.5 million 3

4 Department of Medicine FY 09 Statistics (cont d.) Faculty: 593 Fellows: 145 Residents: specialties ranked by US News & World Report Elements of Compensation Base Pay Supplemental Pay Incentive Pay Research Clinical 4

5 Base Pay Considerations External survey data by specialty and region MGMA AAMC % effort of activities Clinical Research/Academic Faculty Rank Supplemental Pay Defined Administrative Roles Moonlighting 5

6 Research Incentives % of indirect grant expenditures Threshold of salary coverage No differentiation between basic science and clinical departments Clinical Incentives OPTIONS: Individual Group-based Combination of individual & group P&L-based wrvu-based Not one size fits all 6

7 Clinical Incentives wrvu-based plan - Easiest to understand - No subjectivity - Not impacted by external factors (ex: collection rate) - Encourages billing Clinical Incentives wrvu Target: Every eligible clinical faculty member has a wrvu target based on % Clinical Effort and specialty Clinical Effort based on schedules: 10% for every outpatient session 2% for every week of IP service 7

8 Clinical Incentives Pay for performance above target: - $/wrvu assigned based on benchmarks for compensation and wrvus Example: Benchmark Compensation $235,000 Benchmark wrvus 4,500 $/RVU $52 Other Considerations Non-clinical time - Are they covering their research time with grant funding? - Are they covering their other non-clinical time with other activities? (administrative, teaching) Off-set for Physician Extenders Timing of payments 8

9 Clinical Incentives Basic Formula: A = $/wrvu x # wrvus > target B = Total Base Clinical Base C = B minus non-clinical support (grants, teaching, other admin or support) A - C = paid incentive Clinical Incentives Basic Formula: STEP 1 Target: 5600 Actual: 5900 Variance: $40/wRVU: $12,000 9

10 Clinical Incentives Basic Formula: STEP 2 Total Base: $210,000 Clinical Base: $120,000 Non-Clinical: $ 90, Clinical Incentives Basic Formula: STEP 3 Non-Clinical: $ 90,000 Teaching: ($8,000) Research: ($80,000) 000) Remaining Uncovered:$2,000 10

11 Clinical Incentives Basic Formula: STEP 4 Over-target: $12,000 Remaining Uncovered: ($2,000) Paid Clinical Incentive: $10, Variations by Specialty Accounting for inequities in/among services: - Low wrvu activities w/ High time commitment - High wrvus with low time commitment - Balance Procedural with outpatient - Community based vs. Academic - High Performers 11

12 Variations by Specialty Example #1: Low wrvu activities w/ high time commitment Renal Transplant Patients Average volume Specialty Clinic: 10 patients/session Average volume Transplant Clinic : 4 patients/session Weight factor applied to Transplant clinic wrvu:1.46% Variations by Specialty Example #1 (cont d) Dr. Smith annual wrvus: 5890 Smith wrvus for transplant clinic: 189 Add transplant weight factor(1.46%): 276 Smith revised annual wrvus:

13 Variations by Specialty Example #2: High wrvus with low time commitment Pulmonary Sleep Study Interpretation Weight Factor Applied to Sleep Study wrvus:.75% Variations by Specialty Example #2 (cont d) Dr. Smith annual wrvus: 5890 Smith wrvus for Sleep Studies: 189 Sleep Study weight factor(.75%): 142 Smith revised annual wrvus:

14 Variations by Specialty Example #3: Balance Procedural with Outpatient Gastroenterology Practice Portion of $/wrvu allocated for outpatient visit pool; paid out according to proportion of total outpatient visits Variations by Specialty Example #3 (cont d) Total incentive $/wrvu = $47 25% of $47 ($11.75) to create outpatient visit pool Paid as part of total clinical incentive 14

15 Variations by Specialty Example #3 (cont d) Total Group Office wrvus: 16,215 Total Office Visit Incentive pool: $190,526 Total Individual Office wrvus: 1067 Individual % of total: 6.58% Individual Office Visits Incentive:$12,537 Variations by Specialty Example #3 (cont d.) Same model can be applied to inpatient service if not all members in the group want to do inpatient coverage. % of $/wrvu allocated to create inpatient pool 15

16 Variations by Specialty Example #4 Community-based versus academic Cardiology Community-based P&L model Interventional Academic group wrvu model Variations by Specialty Example #5 High performers Impute base salary & wrvu target based on 3 prior years historical data 16

17 Variations by Specialty Example #5 (cont d) Market Salary: $153,000 Market wrvu target: 4035 Actual wrvus: 6019 (3 year avg.) New Target: 4815 (80% actual) New Target as % Market: 1.19% New Base: $182,070 Outcomes Success for the Department of Medicine Most recent Fiscal Year: 4% increase/year in volumes (after adjusting for growth factors) Cumulative impact since 2005 implementation: 20 25% overall increase; average of 4-5%/year 17

18 Quality as a Component of Incentives Linking Quality to Incentive Compensation - 10% of incentive is at risk - Quality indicators should be specialty-specific - Quality targets may be group or individual-based - Use of Clinical Scorecards Quality as a Component of Incentives Examples of specialty-specific quality indicators: Endocrinology: documentation in record of A1c for diabetes patients Infectious Disease: Pneumococcal vaccination rates Gastro: Polyp detection rates Rheumatology: Pharmacologic pathways followed for newly identified Osteoarthritis patients 18

19 Quality as a Component of Incentives Other General Indicators - Attendance at Grand Rounds - Timely closing of encounters - Accurate billing & documentation The Future of Physician Compensation CMS Proposed Payment Changes: Elimination of Consult Codes Revision of weights for certain specialties Projected Impact on Compensation: $/wrvu increase for General Internal Medicine & Geriatrics $/wrvu decrease for Gastroenterology & Hematology/Oncology 19

20 The Future of Physician Compensation Obama Plan Impact on compensation How will this change our plans? Will incentive pay be 100% based on quality? Is anyone modeling this now? Bottom Line: Lessons Learned Fair Compensation Models Aid in Recruitment Retention Rewards Regression (compensation can now predict revenue and budgets) 20

21 Questions and Discussion 21

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