Our subscribers frequently ask us where the majority of their physician contracts should fall within the market ranges. When setting standards and procedures, which rates are compliant with Stark and which ones aren’t?
While Stark doesn’t explicitly outline what market range is off limits, it is an industry-wide standard to avoid entering into a contract above the 75th percentile. Generally speaking, if you are compensating a physician at or below that level, you have little cause for concern in justifying the rates at which you pay her. Allow that payment to creep over the 75th, and you may have cause for concern if you haven’t properly justified and documented your reasons for compensating more.
However, consider the situation of your hospital. While all health care providers in the US have important things in common, each and every facility is unique in some way. Is there are aspect of your organization, community, or region that might affect physician recruitment or compensation? Are you attempting to reduce costs, therefore setting compensation no higher than the 50th percentile?
We’re curious: what is your standard for contracts?
All hospitals have at least one incredibly challenging, contentious relationship with a physician or a physician group. How does your organization keep track of these hot-button contracts, ensuring that there is plenty of time to negotiate before the contract expires? How do you make sure that their compensation is compliant with Stark and within fair market value?
It’s important to get your physician contracting team organized. Straightforward policies and procedures guide operations, as well as provide consistency that’s important for compliance. Set alerts in your contract management tool, or task one person on your team to stay on top of expiring contracts at least six to eight months before their anniversary date.
Analyze your physician contracts and segment by type. A straightforward way is by service (emergency call, administrative, hospital-based service, hospital-based clinics, etc). If your organization is a large health system, classifying by region or by state could be helpful. Classify the dollar amount (high value or low), as well as the quality of the relationship with the physician or group. Don’t be afraid to create a grading system to rate the security of the contract and the quality of the relationship with the hospital. Segmenting your contracts by relationship strength can help you quickly determine the number of physicians and number of contracts that might need TLC. Segmentation helps as you analyze the market rate for the contracts, and helps prioritize the most important contracts your organization holds.
Need more help with contract management and organization? Download our compliance checklist here: https://go.pardot.com/complianceriskchecklist
MD Ranger has discovered that more and more hospitals are incorporating incentives into physician contracts. While only 11% of the hospital based service contracts include incentive components, they have the potential to comprise a significant portion of contract payments. The most common metrics for incentive measurement include quality (86%), patient satisfaction (60%), and cost (31%). Incentives based on quality metrics have grown, while those for cost metrics have decreased.
The MD Ranger database has over 9,000 contracts across dozens of specialties and positions. Our data is from over 300 facilities across 27 states. Below are some interesting statistics from our database:
- Nearly 1 in 5 hospital-based service contracts include payments for uncompensated care.
- 19.6% of hospitalist contracts have incentive components, which is one of the most likely specialties to have incentives.
- Emergency, Anesthesia, and Hospitalist contracts are the most likely to include incentives.
- Quality is the most likely metric for incentives (94%), followed by patient satisfaction (65%) and cost (39%).
- Cost incentive components have decreased over time, while incenting for quality has increased.
- Most hospital based service agreements include medical direction. The specialties most likely to include medical direction or administrative payments are perinatology, pediatric intensive care, emergency, and pathology.
- All hospitalist and emergency contracts that have incentives are tied to quality.
- 36% of hospital-based contracts pay annually or monthly; 20% pay daily (per diem)
- Only 7% of contracts have collection guarantees.
- More contracts include medical direction (78%) than call coverage (59%).
- 20% of hospital contracts are unpaid.