April 17, 2014 PHYSICIAN COMPENSATION PLAN DESIGN STRATEGY Mark Blessing, CPA, FHFMA Partner mblessing@bkd.cm Randy Biernat, CPA, ABV Directr rbiernat@bkd.cm TO RECEIVE CPE CREDIT Individual Attendee Participate in entire webinar Answer plls when they are prvided Grup Attendees Cmplete grup attendance frm with Title & date f live webinar Yur cmpany name Yur printed name, signature & email address All grup attendance sheets must be submitted t training@bkd.cm within 24 hurs f live webinar Answer plls when they are prvided If all eligibility requirements are met, each participant will be emailed a CPE certificate within 15 business days f live webinar 2 1
INTRODUCTION Framewrk fr change Cmparisn f cmmn cmpensatin arrangements Cmpensatin as a tl t drive change 3 PHYSICIAN COMPENSATION IN THE HEALTH REFORM ERA COPING WITH CONSTANT CHANGE 4 2
NAVIGATING HEALTH REFORM Next Generatin Cmpensatin Plans Generally matches the financial realities f tday (fee fr service) fr majrity f cmpensatin Encurages skills needed fr tmrrw, including prviding sme rewards fr managing patient care, imprving safety, patient satisfactin, etc. 5 FINANCIAL ALIGNMENT Next Generatin Cmpensatin Plans We are bserving that new cmpensatin plans link 60% - 80% f cmpensatin t traditinal wrk effrt measures, linked as clsely as pssible t hw services are actually reimbursed by insurers Reality is that prviders tend t relate well t actual payment mechanisms f verall grup Prviders als are typically nt pleased t hear they are a net drain n financials 6 3
MISSION ALIGNMENT Next Generatin Cmpensatin Plans We are bserving that new cmpensatin plans link 20% - 40% f cmpensatin cnnected t nntraditinal prductivity measures f physician wrk effrts Cnsider items Patient safety Patient satisfactin Adherence t standard f care prtcls Management participatin Miscellaneus citizenship items 7 PATHWAY TO CHANGE (WHY CHANGE?) Intent is rted in missin/visin/values Designed t create enduring sustainability Guided by need t adapt t health care refrm 8 4
MAJOR PLAN DESIGN OPTIONS THERE ARE MANY WAYS 9 COMPENSATION PLANS COMPARED Key Factrs Incentivizes Prvider Prductivity Prvider Bears Payr Mix Risk Has N Inherent Fee Setting Cnstraint Rewards Keeping Practice Csts Lw Easy fr Management t Administer Matches Practice Incme Methd Incentivizes Prviding Access t Care Incentivizes Practice Prfitability Rewards Patient Visit Efficiency Rewards Quality Outcmes Rewards Patient Safety Rewards High Patient Satisfactin Salary % Charges % Cllectins Rev. - Exp. WRVUs Per Encunter PMPM Star Rating Key Pr Fair Gd Excellent 10 5
KEY FACTORS DEFINED (1/4) Incentivizes Prvider Prductivity methd f cmpensatin has a direct crrelatin t prvider prductivity Payr Mix Risk Matches Practice s cmpensatin methdlgy des nt insulate prvider frm payr mix risk Has N Inherent Fee Setting Cnstraint cmpensatin mechanism is nt designed such that changes in fee structure will drive a crrespnding change in prvider cmpensatin 11 KEY FACTORS DEFINED (2/4) Rewards Keeping Practice Csts Lw sme element f cst (&, therefre, prfit) is a fundamental feature f cmpensatin plan Easy fr Management t Administer rates actual expected pain t manage & administer cmpensatin plan Matches Practice Incme Methd this gets t matching principle f aligning prvider cmpensatin t practice reimbursement mechanisms 12 6
KEY FACTORS DEFINED (3/4) Incentivizes Prviding Access t Care prvider cmpensatin plan has an inherent incentive fr prviders t see mre patients/be mre available fr care Incentivizes Practice Prfitability direct link in plan exists between verall success f practice & prvider cmpensatin Rewards Patient Visit Efficiency elements that create an incentive t make patient visits quick & efficient 13 KEY FACTORS DEFINED (4/4) Rewards Quality Outcmes plan has incentives arund measurable quality factrs Rewards Patient Safety plan elements that create incentives t create r maintain high level f patient safety Rewards High Patient Satisfactin cmpensatin mechanisms that pay prviders fr achievement arund patient safety measures 14 7
EIGHT STEPS TO SUCCESS COMMITTED TO PROCESS & NO SURPRISES 15 STEP 1: BENCHMARKING Fr each prvider, benchmark charges, cllectins, WRVUs, cmpensatin & net incme, as well as sme key relatinships between these pints (i.e., cmpensatin t cllectins rati) Dcument results f a benchmarking exercise This creates a baseline fr cmparing & cntrasting impact f ptential new plans 16 8
STEP 2: INTRODUCE NEW PLAN DESIGN CONCEPTS TO PROVIDERS Kick-ff meeting with prviders Intrduce prviders t general cncepts t be explred in develping a new physician cmpensatin plan Establish a cnnectin t utcme & lay fundatin fr general gals & principles t be fllwed in redesign prcess Key items t include General update n state f health care General results f benchmarking exercise Prs & cns f three r fur pssible plan philsphies Overview f general design & implementatin prcess Materials & delivery shuld fcus bth n a cllabrative prcess as well as a cmpliant mdel/utcme 17 STEP 3: WRITTEN PROCESS COMMITMENT Dcument & share prcess t be fllwed Imprtant prcess elements include Key milestnes Cmmitments made in the kick-ff meeting (such as data sharing, nnstarters, key elements agreed t) Meeting dates Key respnsible parties Pints f general feedback This will be memrializatin f mutual cmmitments made in kick-ff meeting & is imprtant in establishing expectatins & accuntability 18 9
STEP 4: PHYSICIAN INTERVIEWS Slicit individualized feedback (bth psitive & negative) Educate prviders by answering specific questins & cncerns Prvides a real sense f what will & will nt wrk fr a particular grup f prviders 19 STEP 5: SCENARIO ANALYSIS Mdel ut a baseline scenari cmpared t histrical Mdeling is recmmended t be dne after there is buy in t the cnceptual changes 20 10
STEP 6: PRESENTATION OF RESULTS TO DATE Dcument & present key wrk perfrmed, including Final cncepts Befre & after scenari results Cmpensatin calculatin & payment mechanics Next steps & timing This is 80% cmplete marker 21 STEP 7: WORKING GROUP FINALIZATION Select key leaders & technical experts t finalize pen details Reslve pen items/issues raised at general presentatin f results t date T accept change, prviders will need t Understand data elements utilized Trust data t be cmplete & accurate Becme cmfrtable with nging internal cntrls related t all cmpensatin data elements Intended utcme f this step is t dcument Key plan principles (in writing) Surces f infrmatin used in mdel Updated sample cmpensatin calculatin Implementatin timeline details 22 11
STEP 8: IMPLEMENTATION New cntracts need t be drafted, apprved & signed Cmpensatin plan details will need t be cmmunicated with finance staff New r revised cmmunicatins abut physician results will need t be develped & deplyed Updates shuld be made t written internal cntrls plicies 23 PRO-TIPS FIVE INSIGHTS ON MAKING IT WORK 24 12
PRO-TIP #1 When cnsidering utilizatin f nnprductivity measures, cnsider utcme versus prcess rewards Outcmes riented prvider is held accuntable (& cmpensated) based n an actual tangible, measureable result Prcess riented prvider is held accuntable (& cmpensated) based n cmplying with an agreed-upn prcess that is integral in achieving desired utcme Fr example, cnsider Smking cessatin Patient satisfactin 25 PRO-TIP #2 Cnsider a better f adjustment perid There will be kinks t wrk ut with mst new systems. This creates uncertainty in prviders &, therefre, a hesitancy t adpt a new system T cmbat uncertainty, utilizing a grace perid f three t nine mnths prvides management & physicians an pprtunity t ease int new plan with sme understanding that pain f change will be blunted by design 26 13
PRO-TIP #3 Utilize a sliding scale fr nnprductivity incentives Helps with frustratins frm falling behind early Rewards effrt, even shrt f ideal utcmes 27 PRO-TIP #4 Build emplyment cntract fr change By structuring emplyment cntract t refer t a cmpensatin plan set at management s discretin, emplyers avid needing t frequently rewrite & resign emplyment cntracts Especially if nnprductivity elements are included in cmpensatin plan, plan shuld really be built t change & be updated & recalibrated based n success r failure f certain initiatives 28 14
PRO-TIP #5 T cmbat physician turnver, create and fund retentin bnus pls Bringing this element int the annual review prcess can help with a frank dialgue n happiness, career intentins, and verall expectatins An advanced retentin fund can be creatively structured and payments can be made fr a variety f achievements r milestnes 29 QUESTIONS? 30 15
CONTINUING PROFESSIONAL EDUCATION (CPE) CREDITS BKD, LLP is registered with the Natinal Assciatin f State Bards f Accuntancy (NASBA) as a spnsr f cntinuing prfessinal educatin n the Natinal Registry f CPE Spnsrs. State bards f accuntancy have final authrity n the acceptance f individual curses fr CPE credit. Cmplaints regarding registered spnsrs may be submitted t the Natinal Registry f CPE Spnsrs thrugh its website: www.learningmarket.rg. The infrmatin in BKD webinars is presented by BKD prfessinals, but applying specific infrmatin t yur situatin requires careful cnsideratin f facts & circumstances. Cnsult yur BKD advisr befre acting n any matters cvered in these webinars. 31 CPE CREDIT 1 CPE credit may be awarded upn verificatin f participant attendance Fr questins, cncerns r cmments regarding CPE credit, please email the BKD Learning & Develpment Department at training@bkd.cm 32 16
THANK YOU Mark Blessing, CPA, FHFMA Partner 260.460.4063 mblessing@bkd.cm Randy Biernat, CPA, ABV Directr 317.383.4000 rbiernat@bkd.cm 17