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1© 2017 VMG Holdings LLC. All Rights Reserved.

October 12, 2017

Hospital-Physician Pay-for-Performance Arrangements


Introduction – Alexandra Higgins, VMG Health

Biography

Alexandra Higgins is a Director in the Professional Services Agreement Division of VMG Health. She dedicates a large portion of herpractice to consulting and valuation services related to co-management, pay-for-performance payment models, and shared savingsdistributions for clinically integrated networks. She has valued hundreds of arrangements with pay-for-performance components.

Publications & Presentations

• Presentation: “Hospital JV Trends and Post-Transaction Arrangements” – Strafford Publications Webinar

• Article: “Key Insights on Hospital-Physician Pay-for-Performance Valuations” – Answers from the Advisors (April 2017)

• Presentation: “The Latest & Greatest in Hospital Pay-for-Performance” – 8th Annual Becker’s Hospital Review Meeting

• Book Chapter: “Pay for Performance (Quality and Cost Savings)” – The Healthcare Executive’s Simple Guide to FMV (published by The American Bar Association)

• Book Chapter: “Non-Clinical Administrative (Management and Billing Services)” – The Healthcare Executive’s Simple Guide to FMV (published by The American Bar Association)

• Presentation: “Maintaining Compliance While Compensating Physicians for Quality and Cost Savings” - 2016 HFMA National Payment Innovation Summit

• Presentation: “Hospital Joint Venture Trends and Post-Transaction Compensation Considerations” – 7th Annual Becker’s Hospital Review Meeting

• Article: “OIG Opinion 15-10: Fair Market Value Implications for Related-Party Services Agreements” - Becker’s Hospital Review

• Presentation: “Valuation of Clinical Co-Management Arrangements” – 2015 AICPA Health Care Industry Conference

• Presentation: “Co-Management Models: Trends & Issues” - Becker’s ASC 21st Annual Meeting – The Business and Operations of ASCs

• Article: “Evaluating the Fair Market Value of Pay for Performance” - HFM Magazine

• Presentation: “Is HOPD and Co Management Right for Your Center?” - Becker’s 20th Annual Ambulatory Surgery Centers Conference

• Article: “Assessing the Value of Radiologist Services with an Imaging Center Acquisition” - Becker’s Hospital Review

• Article: “Radiology Alignment: Common Structures and the Value of Radiologists’ Services” – ImagingBiz

• Article: “Five Guidelines for a Compliant Shared Savings Arrangement” - Compliance Today


Navigating P4P

Arrangement Types & Trends

Value Drivers

Compliance Guidelines

OVERVIEW


1 - Triple aim goals

2 - Transitions in reimbursement

Increased Focus on P4P

FFS FFS + P4P VBP

Cost of care

Patient Experience

Population Health


Evolution of P4P Arrangements

♦ Outcomes

♦ New dollars coming in from 3rd parties

♦ Understand service line, practice level or population

♦ What are other programs doing

♦ What CMS supports

VALUATION DRIVERS

♦ Lowering costs without sacrificing quality

♦ Quality outcomes payments– individual, services line level, entire population

♦ Use of technology

♦ Use of care coordinators

COMMON FRACTORS IN P4P ARRANGEMENTS

♦ Payments for Reporting (i.e.: PQRI)

♦ Pay for Process

♦ Pay for Outcomes

♦ At risk for sub-par quality

JUSTIFICATION FOR PAYMENTS CHANGING

♦ Recognized organization identifies quality metrics or average costs

♦ Reporting measures is required, or costs are tracked

♦ Benchmarking data is gathered

♦ Payments for outcomes or savings is observed in market

STANDARD PROCESS LEADING UP TO P4P PAYMENTS


Compensation Arrangements

Administrative Services Call CoverageCo-management

(fixed + variable)Subsidy

P4P, Bundled, HEIP, IDN, & ACO Payment

models

PSA Model

($/WRVU + expenses)

Professional/ technical splits

Clinical Services / Employment

Billing and Collection

Management/IT

Development

Medical Director Telemedicine

AMCs

Tier 1,2,3

(Sunshine Provision)

1 – Standard alignment strategies (historically)*2 – Alignment strategies using P4P to achieve Triple Aim and move toward VBP**3 - Other service agreement types

*Could include a portion of compensation at risk for quality**New challenges for determining FMV


Hospital-Physician P4P Arrangements

1 – Define program goal – individual, service line, or population

2 – Define services and metrics

3 – Define risk and responsibility of physician participants

4 – Define compensation structure

5 – Determine FMV of compensation to physician participants

*Most recent trend in P4P

Individual

• Employment (quality)

• Bundled payments (savings)

Service Line

• Co-management (quality)

• Cost savings (savings)

Population

• ACO-Type Model (savings)

• HEIPs* (savings based on quality-related initiatives


Value Drivers That Impact P4P Compensation

Source of Program Funding

Level of Responsibility of

Parties/Participants

Degree of Risk of Parties/Participants

Specific FMVConsiderations

Related to Arrangement Type


Key Value Drivers - Quality

*Quality Metric ConsiderationsSelection and Number of MeaningfulMetrics

Aggregate Physician Responsibility

Metric Type

Metric Source

Benchmark Source

Likelihood of Achieving Maximum Payout

Strength of

Metrics*

# of Physician Participants & Specialty

Size of service

line


10

Key Value Drivers – Cost Savings

*Program RequirementsFocus to reduce waste and increase efficiency

Physicians required to work with hospital(s) to evaluate and conduct clinical reviews of various processes

Clearly defined participation criteria

Processes include standardization measures and best practices

No savings paid unless quality criteria thresholds are met or exceeded

Certain safeguards are in place to ensure patient safety and quality are not negatively affected

Objective and credible support for cost reductionsare considered, as well as, historical performance related to the subject cost reduction benchmarks

Metrics/benchmarks/initiatives will be reassessed and/or rebased annually

Potential savings opportunity

Physician responsibility

Minimum savings threshold

Quality gates

Program requirements*


♦ Metrics outlined

♦ Primarily outcomes metrics (versus process or reporting)

♦ Be careful with low hanging fruit metrics

♦ Benchmark performance against medical credible evidence

♦ Ensure physician(s) will have demonstrable impact on quality

♦ Check for overlap of payments from co-management, bundled payments, etc…

♦ No cherry picking or lemon dropping

♦ Identify separate identifiable cost savings opportunities in advance

♦ Ensure physician(s) will have demonstrable impact on cost savings

♦ Consider cap methodology applied in CMS models

Understand the flow of funds, risk and responsibility of parties prior to

determining split of quality or savings payments

Compliance Checklist – P4P Arrangements


QUESTIONS?

Contact Information:Alex Higgins

Director, PSA DivisionVMG Health

[email protected]

hospital-physician pay-for-performance arrangements...hospital-physician p4p arrangements 1...

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