Physician Compensation Directions and Health Reform. July 2017

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1 Physician Compensation Directions and Health Reform July 2017

2 Speaker Introduction Wayne Hartley Vice President, AMGA Consulting Over 20 Years of Medical Group & Consulting Experience Allina Health, Minneapolis, MN HealthEast, St. Paul, MN University of Vermont (Fletcher Allen Health Care) Provider compensation and FMV, revenue cycle and healthcare reform/value-based care (MACRA, risk) MHA, University of Minnesota; BS, Cornell University Contact: 2

3 Roadmap AMGA Survey 2017 Report Elements of Compensation Issues Driving Physician Compensation Redesign Nurse Practitioners and Physician Assistants (APCs) Questions? 3

4 AMGA Survey 2017 Report 4

5 2017 Report 30th Annual AMGA Medical Group Compensation and Productivity Survey The report includes data on: 140 physician specialties, 28 other provider specialties Total clinical compensation, work RVU, net collections, gross productivity, comp to productivity ratios, visits, benefits New physician salaries Department chair salaries Academic facility breakouts NP and PA data Regional and group size breakouts 5

6 2017 Report - Demographics % of Group % of Prov. By Group Size Groups Total Providers Total Fewer than % 2, % 51 to % 10, % % of Group % of Prov. By Group Size Groups Total Providers Total Fewer than % 1, % 51 to % 9, % 151 to % 17, % More than % 63, % By Geographic Region Eastern % 14, % Northern % 43, % Southern % 19, % Western % 15, % By Type of Clinic Single Specialty % % Multispecialty % 92, % 151 to % 21, % More than % 68, % By Geographic Region Eastern % 18, % Northern % 45, % Southern % 21, % Western % 16, % By Type of Clinic Single Specialty 8 3.0% % Total ,621 Multispecialty % 102, % Total ,261 Thank You for 100,

7 2017 Report - Participants 7

8 Elements of Compensation 8

9 Base Salary 9

10 Production Models 10

11 Compensation vs. Work RVU Slope of the market data indicates which specialties tend to be productionbased and which specialties tend to be salary- or shiftbased. 11

12 Value-Based Incentives In 2009, about 41% of groups responded that some amount of their physicians compensation was based on the achievement of value-based measures. In 2017, about 61% of groups responded that some amount of their physicians compensation was based on the achievement of value-based measures. 12

13 Prevalence of Value-Based Incentives If aggregated, quality is likely the most common category 13

14 Value-Based Incentive Amounts *Average only includes groups that reported quality or discretionary compensation represented some amount of total compensation. 14

15 But At-Risk Pay Does Not Mean Reduction... Can organizations sustain compensation increases >> productivity increases? 15

16 Primary Care by Region At current growth rates, IM in the West could exceed $300K at median in 3 years 16

17 APC Supervision (included in reported compensation) As states reduce supervision requirements, we are seeing decreases in APC supervision stipends, especially in primary care 17

18 Sign-On Bonuses (excluded from reported compensation) 18

19 Issues Driving Physician Compensation Redesign 19

20 Issues Driving Physician Compensation Redesign Healthcare reform and the focus on value-based metrics: Less focus on work RVUs with an eye towards panel size or salary models More dynamic incentive compensation design Transition from efficiency to cost metrics Re-evaluation of stacking compensation Alignment of compensation within medical groups Compensation out-pacing collections 20

21 Compensation Redesign: How It s Happening Production Models - Known quantity - Easy to administer - MD can influence wrvu - Not value-based Early Incremental Models - Shift to VBM - WRVUs matter - Transitional - Require physician and leadership education Intermediate Models - More salary-like - Still link to wrvu - Require more data for metrics - Not yet proven in some cases Advanced Models - Meet conceptual objectives - High discretion - Elicit concerns about production - Can raise questions on regulatory side 21

22 Perspectives on Work RVU Production For many years, work relative value units (wrvu) have increased in popularity in physician compensation plans Work RVUs have several benefits: Payer/reimbursement neutral Measure work effort or intensity of various visits/procedures E&M/CPT codes are equally weighted across specialties National benchmarking is possible through provider compensation surveys At the same time, wrvu can bring some distinct disadvantages: May promote focus on productivity Place emphasis on volume over value (volume over patient satisfaction) 22

23 Additional Quality Incentive Current Formula 100% Production New Formula Production + 10% Quality Family Medicine* $48.00 / wrvu Quality/Incentive up to 10% If 5,000 wrvu: $240,000 $240,000 x.10 = $24,000 Up to $264,000 or $52.80 per wrvu This approach is additive; it is not a withhold May need to lower the per wrvu starting point if larger incentive % desired At $52.80 per wrvu, compensation per wrvu is ~64 th percentile *Approximately market median values 23

24 Less Focus on Work RVUs Some predict that production-based models will go away or be much less dominant So they are putting substantial dollars in non-productivity pay Blend (Family Medicine & Internal Medicine) Compensation Components Clinical Compensation Production Component Quality/Incentive Target Compensation Percent 70% 30% 100% Performance Tiers Tier Conversion Factor Prod. %tile Range 50%tile Mid Tier $50.38 Target Compensation Tier % 1,503 3,754 2,629 $132,443 Tier % 3,755 4,218 3,987 $200,864 Tier % 4,219 4,586 4,403 $221,827 Tier % 4,587 4,899 4,743 $238,981 Tier % 4,900 5,242 5,071 $255,501 Tier % 5,243 5,651 5,447 $274,438 Tier % 5,652 6,211 5,932 $298,856 Tier % 6,212 6,594 6,403 $322,595 Tier % 6,595 7,198 6,896 $347,437 Tier % 7,199 8,142 7,670 $386,447 Tier 11 >95% 8,143 8,143 $410,267? 70% Production 30% Incentive 24

25 Less Focus on Work RVUs: Tiered/Banded Model Guidelines Increase above Band, paid at additional wrvus over band multiplied by the specialty wrvu rate or move to next band the subsequent year. Decrease below Band, semi-annual review. If x% or more below bottom of band, then decrease to projected band at mid-year review (incentive paid at new band). 25

26 Incentive Compensation Design and Value-Based Metrics (MACRA) Source: CMS Regardless of which path you choose (MIPS, APMs or Advanced APMs), medical groups are focusing on alignment of provider incentives with program incentives The simplest change is an increase in emphasis placed on quality and efficiency or cost metrics More advanced groups have 30% of compensation at risk today 26

27 Incentive Compensation Design % % % % AMGA thanks Roper-St. Francis in Charleston, SC, for sharing this information. 27

28 Incentive Compensation Design Some groups have chosen to give physicians some control over incentive measures In these models, we recommend you set the range weights by specialty (not individual) Discretionary components are subject to Department Chair or CMO approval AMGA thanks Valley Medical Group in Paramus, NJ, for sharing this information. 28

29 Transition from Efficiency to Cost Metrics Efficiency Increase in new patients or consults % of same-day clinic appointments % of on-time O/R starts Care coordination protocol compliance (especially managing inpatient LOS) Cost (Utilization) Utilization protocol compliance for certain imaging or procedures (measures backed by professional societies) Clinic staffing cost/staffing model within benchmark Budget met = incentive funded True cost measures are being implemented slowly While there are some safe harbors, cost goals should be reviewed/approved by legal (concerns of withholding care) Legal interpretations and risk tolerances vary by organization 29

30 Transition from Efficiency to Cost Metrics You can also consider goals relative to your past performance If more groups report to this survey, we can develop a richer database to help you 30

31 Re-Evaluation of Stacking Compensation AMGA Survey Definition In the Survey, Production-Based compensation sources Pay: are aggregated based on the definition Work RVUs x Median Conversion Factor Compensation per wrvu statistics are then calculated by AMGA For many types of compensation, it s already in there 31

32 Re-Evaluation of Stacking Compensation Effective Comp/wRVU Percentile APC Supervision Call Pay (Standard Call) 65 th? 62 nd? Quality / Patient Satisfaction / Efficiency 57 th? Production-Based Pay: Work RVUs x Median Conversion Factor 50 th Many groups start with median conversion factors and add on top, but that s not how the survey data works. 32

33 Alignment of Compensation within Medical Groups Some groups are still addressing variations in pay practices within the same specialty At a minimum, the goal is to address internal equity In other cases, there is a broader goal around setting minimum production standards After initial ramp-up, for how long can production below P20 be supported? 33

34 Compensation Out-Pacing Collections We also have the ability to benchmark based on collections Due to the popularity of wrvu, fewer groups report collections You should consider factors like schedules, access and new hires There could be millions of opportunity across specialties for a large group (improved efficiency, addressing those with production below P25) 34

35 Nurse Practitioners and Physician Assistants (APCs) 35

36 Base Salary: APCs 36

37 Prevalence of Value-Based Incentives: APCs 37

38 Subspecialty Level Data: Nurse Practitioner Primary Care and Surgical Number of Number of Group Provider 90th 80th 20th Standard Specialty Responses Responses Percentile Percentile Median Percentile Mean Deviation Nurse Practitioner Primary Care 159 3, , , ,520 93, ,250 28,462 Family Medicine 86 1, , , ,962 92, ,915 31,709 Family Medicine Branch , , ,982 94, ,097 18,103 Internal Medicine , , ,966 92, ,160 27,517 Pediatrics and Adolescent General , , ,176 87, ,874 30,211 Nurse Practitioner Surgical Specialty 121 1, , , ,650 96, ,860 26,165 Anesthesiology , ,293 92,889 85,384 99,759 22,771 Anesthesiology Pain Clinic , , , , ,898 19,413 Cardiac/Thoracic Surgery , , , , ,922 31,440 Cardiovascular Surgery , , , , ,825 25,766 Emergency Medicine , , , , ,670 27,409 General Surgery , , ,697 92, ,570 29,724 Neurological Surgery , , ,569 94, ,327 29,139 OB/GYN General , , ,596 91, ,049 29,193 OB/GYN Gynecology Only , , ,494 93, ,933 16,057 OB/GYN Maternal Fetal Medicine/Perinatolog , ,244 98,883 89, ,151 10,898 Orthopedic Surgery , , , , ,364 22,880 Otolaryngology , , ,627 98, ,067 18,455 Pediatric Surgery , , , , ,119 17,145 Trauma Surgery , , , , ,516 35,294 Urology , , ,653 93, ,917 24,447 Vascular Surgery , , , , ,631 21,366 38

39 Subspecialty Level Data: Nurse Practitioner Medical Subspecialty Number of Number of Group Provider 90th 80th 20th Standard Specialty Responses Responses Percentile Percentile Median Percentile Mean Deviation Nurse Practitioner Medical Specialty 143 3, , , ,098 95, ,013 26,826 Allergy/Immunology , ,797 89,527 83, ,911 69,880 Cardiology Cath Lab (Invasive Interventiona , , , , ,021 12,258 Cardiology General , , ,752 95, ,505 22,656 Critical Care/Intensivist , , , , ,338 37,147 Dermatology , , , , ,957 41,382 Endocrinology , , ,387 92, ,221 25,999 Gastroenterology , , ,579 89, ,941 20,446 Hematology and Medical Oncology , , ,778 92, ,976 24,766 Hospitalist Family Medicine , , ,480 91, ,793 23,792 Hospitalist Internal Medicine , , ,287 98, ,567 28,903 Hypertension and Nephrology , , ,928 99, ,072 13,740 Infectious Disease , , ,019 94, ,371 17,564 Medical Oncology , , ,791 92, ,767 15,596 Nephrology Only , , ,318 92, ,408 12,844 Neurology , , ,854 89, ,970 25,856 Occupational/Environmental Medicine , , ,172 99, ,828 15,543 Orthopedic Medical , , ,742 99, ,734 27,395 Pain Management Non-Anesthesiology , , , , ,166 18,438 Palliative Care , , ,262 90, ,734 28,801 Pediatrics and Adolescent Cardiology , , ,328 97, ,710 17,499 Pediatrics and Adolescent Gastroenterology , , ,345 94, ,690 24,812 Pediatrics and Adolescent Hematology and , , ,545 91, ,327 26,537 Pediatrics and Adolescent Neonatology , , , , ,979 31,281 Physical Medicine and Rehabilitation , , ,248 90, ,305 25,101 Psychiatry , , ,159 92, ,801 30,600 Pulmonary Disease (With Critical Care) , , ,419 95, ,485 19,091 Pulmonary Disease (Without Critical Care) , , ,530 91, ,462 27,963 Rheumatologic Disease , , , , ,764 9,128 Skilled Nursing Facility Physician , , ,613 99, ,226 23,416 Sleep Lab , , ,049 97, ,915 9,513 Urgent Care , , ,096 94, ,949 33,941 Wound Care/Hyperbaric , , ,308 95, ,775 27,880 39

40 Subspecialty Level Data: Physician Assistant Primary Care and Surgical Number of Number of Group Provider 90th 80th 20th Standard Specialty Responses Responses Percentile Percentile Median Percentile Mean Deviation Physician Assistant Primary Care 138 1, , , ,845 97, ,496 29,914 Family Medicine , , ,912 97, ,078 32,454 Family Medicine Branch , , ,918 99, ,412 25,895 Internal Medicine , , ,986 99, ,670 28,529 Pediatrics and Adolescent General , , ,306 99, ,903 27,224 Physician Assistant Surgical 133 1, , , , , ,299 29,620 Breast Surgery , , ,181 99, ,156 11,653 Cardiac/Thoracic Surgery , , , , ,013 34,570 Cardiovascular Surgery , , , , ,205 30,992 Diagnostic Radiology (MD Interventional) , , , , ,245 22,939 Emergency Medicine , , , , ,065 31,681 General Surgery , , , , ,331 28,161 Neurological Surgery , , , , ,181 37,717 OB/GYN General , , ,000 98, ,392 25,049 Orthopedic Surgery , , , , ,059 29,619 Otolaryngology , , ,129 99, ,497 31,380 Plastic and Reconstruction , , ,450 93, ,912 16,737 Trauma Surgery , , , , ,127 34,841 Urology , , , , ,205 20,188 Vascular Surgery , , ,000 97, ,408 40,815 40

41 Subspecialty Level Data: Physician Assistant Medical Subspecialties Number of Number of Group Provider 90th 80th 20th Standard Specialty Responses Responses Percentile Percentile Median Percentile Mean Deviation Physician Assistant Medical 128 1, , , ,281 98, ,246 33,185 Cardiology General , , ,737 99, ,414 34,084 Critical Care/Intensivist , , , , ,614 38,754 Dermatology , , , , ,441 67,047 Endocrinology , , ,917 93, ,789 11,466 Gastroenterology , , ,590 96, ,941 23,441 Hematology and Medical Oncology , , , , ,226 23,394 Hospitalist Internal Medicine , , ,406 99, ,420 24,592 Neurology , , ,092 91, ,160 30,299 Occupational/Environmental Medicine , , , , ,500 19,455 Orthopedic Medical , , ,302 98, ,272 36,689 Physical Medicine and Rehabilitation , , ,653 98, ,336 10,838 Psychiatry , , , , ,561 12,500 Pulmonary Disease (With Critical Care) , , , , ,719 29,866 Pulmonary Disease (Without Critical Care) , , ,283 88, ,755 20,611 Sleep Lab , , , , ,882 5,384 Urgent Care , , , , ,309 38,185 41

42 Nurse Practitioners and Physician Assistants In the current environment, tend to focus on having a model that is complementary to the physician compensation model May have multiple APC models: Providers who manage their own panel Those with more care coordination/navigation responsibilities Market movement towards adding value-based incentives, but at a slower rate than for physicians 42

43 Questions?

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