A small but growing group of lawmakers is pressing for state constitutional amendments that would outlaw any health reform requirements that nearly everyone buy insurance or pay a penalty. Approval of the measures, the lawmakers suggest, would set off a legal battle over the rights of states versus the reach of federal power. So far, the notion has been presented in at least 10 states, and lawmakers in four other states have said they will soon offer similar measures in what has grown into a coordinated effort at resistance.
Public support for universal health insurance is declining, according the latest New York Times/CBS News Poll. About half (51%) said the federal government should guarantee health insurance for all Americans, down slightly from 55% in July and 64% in June. Support for universal health insurance drops to 38% if it is suggested that the cost of health insurance would increase, and to 36% if taxes went up. In addition, only 33% said the United States should guarantee health insurance for all its citizens if the federal budget deficit would increase as a result.
About 50 patients affected by the planned closing of Atlanta-based Grady Memorial Hospital's outpatient dialysis clinic will receive three months of treatment at Fresenius Medical Care at no cost to them. The costs will be picked up by the Grady Memorial Hospital Corporation while other arrangements are worked out. The outpatient clinic is expected to close at the end of business on Oct. 3. The clinic is outdated, and loses between $2 million and $4 million a year, Grady officials have said.
In the latest Wall Street Journal/NBC News poll, half of 18- to 34-year-olds said they support a public insurance option, with 43% opposed. It was the only age group in which more respondents supported than opposed a public option. But the poll suggested many young adults didn't know what was in the legislation, with 48% saying they didn't understand or understood only somewhat what was being debated.
Not so long ago, determining how much to pay physicians required some educated guesswork.
Because doctors were mostly independent, private practitioners who paid themselves, there was a limited amount of data available on physician compensation. As physicians increasingly became employees, hospitals, medical groups, and other organizations developed greater interest in knowing what to pay them. A growing number of professional associations, benefits consulting firms, and physician recruiting companies now track physician compensation trends. It is now possible to get a fairly clear handle on what physicians are making nationally.
However, how much physicians should be paid is no longer the only salient question when it comes to creating physician compensation packages. How physician compensation should be structured is an equally important issue. When it comes to physician recruiting financial packages, one size does not necessarily fit all. Certain types of income structures may be more strategically advantageous than others, depending on the nature and objectives of the organization doing the recruiting.
For example, some healthcare facilities may choose to offer physicians a straight salary. In this option, the physician is listed as a W-2 employee on a hospital's payroll and benefits are included. The straight salary formula is not widely used in today's market, but it can make strategic sense in academic settings or in searches where relatively low income-producing physicians are being sought (pediatric sub-specialists and psychiatrists often fall into this category).
These and other types of doctors, though needed in a community, may not collect enough revenue to cover their respective overhead, benefits, and salary. A competitive salary offers candidates in these specialties the security of a fixed bottom line and can be considered a loss leader by the hospital to secure needed services and to support service lines that produce positive revenue. In the last year, 14% of Merritt Hawkins & Associates' recruiting assignments featured straight salaries.
More typical is the salary with production bonus model (in the last year, 65% of Merritt Hawkins' search assignments featured this model). This financial structure offers physician candidates both a clearly delineated income base and a mechanism for earning additional income predicated on their personal production. There are four primary ways that production can be arranged depending on the type of physician behaviors hospitals and medical groups wish to reward.
Some compensation models are based on gross billings generated in the practice. The intent of the gross billings formula is to alleviate candidate concerns over whether or not the hospital has a robust collection rate for the candidate's medical specialty. However, the hospital should monitor what candidates have established as their billable rate per CPT code with local payers, to ensure charge amounts do not exceed the probable reimbursement amount.
A second way to structure production bonuses is through net collections. In the net collections formula, income is based on all collections associated with the physician's provider number, and is relatively easy to track. There are two general ways in which physicians receive remuneration through net collections: a 100% of collections, minus overhead model, and a collections threshold model.
With 100% of collections (sometimes referred to as "eat what you treat"), physicians keep whatever they collect after their salary and overhead are paid for. Production is generally defined as collections for the professional component, but technical fees and revenue generated by non-physician providers can be used in the formula if the physician has these in the office and the associated expenses are factored in as overhead. In the collections threshold formula, a threshold is set high enough to cover the candidates' salary, benefits, and expenses. The candidate then receives a percentage of collections exceeding the threshold amount (usually 50%).
Production can also be based on practice volume measures, such as Relative Value Units, generated by physicians or on patient encounters. Finally, there is a growing movement to reward physicians not only on volume measures but on qualitative measures, such as outcomes data and patient satisfaction scores. These factors may be combined with volume measures to create a hybrid volume/outcomes based incentive model.
Though many hospitals are moving toward employing physicians, there are still circumstances in which hospitals may wish to recruit doctors into traditional, solo private practice settings. The solo practice model can be particularly appealing to established physicians with a strong entrepreneurial bent who value practice autonomy.
Compensation in this setting usually is structured in the form of an income guarantee provided by the hospital to the physician. The income guarantee acts as a subsidy for the first 12 to 24 months a physician is in practice, ensuring the doctor of a base of monthly earnings. The subsidy must be repaid to the hospital, but outstanding amounts the physician may owe on the subsidy can be "forgiven" provided the physician remains in the community for a stipulated period of time. In the last year, 16% of Merritt Hawkins & Associates' search assignments featured income guarantees.
Knowledge of these and other physician incentive structures will become increasingly important as physician practice models continue to evolve and as healthcare reform ushers in new physician payment systems.
Peter Cebulka and Tommy Bohannon are senior executives with Merritt Hawkins & Associates, a national physician search and consulting firm and an AMN Healthcare company. They can be reached at peter.cebulka@merritthawkins.com andtommy.bohannon@merritthawkins.com.For information on how you can contribute to HealthLeaders Media online, please read our Editorial Guidelines.
While much of the recent media attention on healthcare reform is focused on making changes at the point of care, the changes being discussed by the administration and large employer groups will also have an impact on how health plans operate. For example, they will affect how health plans construct their provider networks, contract with providers and reimburse providers.
There is mounting pressure from the government and employers to fundamentally change our healthcare system to focus on improving outcomes, lowering healthcare costs, and increasing overall access to medical care, while moving away from a pay-for-service model. Central to these changes is the request by the government and employers for a healthcare system that aligns incentives with behaviors from health plans, providers, and patients that focus on improving the continuum of care.
Definition of Value is Changing
Important to payment reform are the methods by which the meaning of value has changed in terms of the healthcare environment. There is movement toward payment models for episode-based care and population-based care, both of which focus on the longitudinal performance of the care plan delivered to the patient. The performance of these new models focuses on quality, which is based on improved outcomes and prevention. This is a shift away from the traditional payment model, which rewarded the volume of services provided rather than quality and outcomes provided.
Additionally, there is more emphasis on incentives for the proper collaboration, coordination, and patient satisfaction of the care delivery experience. As many of us know, the management and prevention of disease does not take place in just one office visit or with just one provider. The care experience should be a coordinated effort between primary-care and specialty providers to achieve the best results for the patient. In conjunction with the coordinated experience, there is emphasis on enabling patients to take an active role within their care plan and to be more satisfied with the care they are receiving.
This is a big change in the way that the traditional provider to patient to health plan relationship has been established. In the past, payments and incentives would be rewarded based on individual performance. The change in the reimbursement models will now reflect the quality within the continuity of the care program received by the patient.
Care Model is Evolving
We are moving away from a silo-based care experience system to a system that will use a form of team-based care, where each action of that team will be measured. Initiatives such as Patient Centered Medical Homes are good examples of this team-based model.
The PCMH model changes the role of the primary care provider to be more of an overall healthcare services coordinator and disease prevention entity, which helps the patient utilize other healthcare services more effectively. The PCMH model also provides additional incentives for actions once thought to be outside of the point care experience, such as secure provider-to-patient electronic communication, e-Visits and proactive patient involvement. While the PCMH model is not new, it is clear why it is gaining attention with the healthcare market; as we move away from a service-based care model, the PCMH has the right foundation in a team approach to the measurement of utilization, performance and quality of care.
Pressure to Transform the Contracting Process
All of these changes will have an impact on how insurers, either public or private, contract with their provider networks. The provider contract is the document that governs the relationship between a health plan, the provider, the services rendered and the fees agreed to for service. The contract is also the place where incentive measures for quality outcomes and medical best practice adherence will be recorded and operationalized.
Health plans realize that provider contracts and the information within them are critical to claims processing and correct provider service payments. Mistakes or errors within the health plans provider contracting process negatively affects their medical loss ratio, administration costs, and their provider and patient satisfaction.
With the growing complexity of provider contracts and the new requirements being driven by reform, it means that in order to have value-based provider contracts, the system and processes have to comprehend the performance and quality that will drive reimbursement methodologies. For example, health plans should have provider contract management systems and processes that allow for:
Codified data to drive analytics and automated contract claims translation.
Flexible contract definitions to drive standardization and reporting.
Transparency to show the intent of the contract and strong audit capability.
Codified performance criteria and measurement methods.
Multi-stakeholder contracts that embody episodes of care.
Automated workflow capabilities to support internal review and approval.
Access to actual provider performance and real-time network intelligence to dynamical adjust payment models to align with actions taking place in the care environment.
The government and employers' continued pressure regarding payment and healthcare system reform will drive health plans to change how they operate. It will no longer be sufficient for a contracting system to simply manage documents; it will need to evolve into a system that incorporates intelligence from the network, provides transparency to providers and members, and integrates performance metrics from the field.
Vik Anantha is general manager and vice president of Portico Systems Contracting Solutions, Portico Systems. Anantha can be contacted atvanantha@porticosys.com. For more information, visitwww.porticosys.com.For information on how you can contribute to HealthLeaders Media online, please read ourEditorial Guidelines.