Key issues to consider for a solid compensation plan
Key issues to consider for a solid compensation plan
Incentives can be a tricky area
(This is the second of two articles on successful physician reimbursement plans. The March Physician’s Payment Update covered the basics. This month, we look at the role of incentives in a well-designed plan.)
Proceed carefully when deciding what kind of physician compensation program is right for your practice, suggests Kent J. Moore, a reimbursement expert with the Ameri can Academy of Family Physicians. "First off, you need to realize there is no universally accepted formula when it comes to incentives and physician compensation," he says. "However, there are several factors that will determine which kinds of incentives are better suited for certain practices." They include:
• Market trends. The amount of managed care penetration within a given market has a major influence on which incentives to use. Under fee-for-service, for instance, traditional incentive systems rewarded productivity and little else. The more patients doctors saw and the more services they performed, the more money they made.
"Managed care has changed all that," Moore observes. "Physicians still need to be productive, but they also need to pay close attention to issues such as utilization, efficiency, quality outcomes, and patient satisfaction. As managed care penetration grows, these incentives become more crucial considerations in deciding what kind of behavior and results to reward and encourage."
• Group characteristics. Incentive plans will vary depending on the kind of organization involved. For example, a small group practice is unlikely to have the same incentives as a large multispecialty group practice. Even for similar types of employers, incentives will vary depending on the characteristics of that group or organization. The group’s current and expected payer mix as well as the level of sophistication of its information systems, medical direction, and governance may influence incentives.
Finally, as much as possible, incentive systems should be tailored to the personality of the group and its individual physicians, he says. For instance, is the group a "risk taker," or is it "risk averse?" "If you are the former, a substantial incentive system may be more effective for you."
• Physician characteristics. What career stage physicians are in can play a major role in deciding which incentives they find most attractive. "You may want to consider offering slightly different incentives to those younger docs new to the practice, as well as the physicians at the mid-stage or end of their careers," says Moore. Remember that physicians are not a homogenous group; they have different motivations, specialties, and needs for security. An effective incentive and bonus system takes those differences into consideration.
• Legal limits. Be aware of legal and regulatory limits that govern incentive and bonus plans. For example, with respect to Medicare and Medicaid patients, the federal anti-kickback statute prohibits remuneration "directly or indirectly, overtly or covertly, in cash or in kind to any person to induce such person to refer an individual."
Translated, that means "the Stark self-referral laws prohibit physicians from making referrals for designated health services to any entity with which they have a financial relationship," Moore explains. Any productivity formula that provides incentives for the volume of patient procedures or referrals may violate anti-kickback or physician self-referral laws, he warns, unless the formulas meet one of the myriad exceptions in those laws.
• Ethical limits. The traditional ethical obligation of physicians includes a fiduciary responsibility to act in their patients’ best interests. Unfor- tun ately, some incentives may compromise that fiduciary responsibility, he says. For example, an incentive plan that encourages physicians to consider costs when making individual treatment decisions may not appear to be in patients’ best interests. "This raises the question of whether you can truly divorce financial and treatment decisions in a system that integrates finance and delivery. Regardless, the fiduciary duty to the patient should be paramount," he stresses.
• Practical limits. Beyond the legal and ethical issues, there also are practical limitations on what you can do in the way of incentives and bonuses. For example, the growing use of quality as a basis for incentives raises questions about the ability to identify consistent, objective measures of quality. Some quality measures are process measures; they measure what or how care is provided, not the quality of the care itself.
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