Primary Care Compensation Redesign. PPEC, June 26, 2016

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1 Primary Care Compensation Redesign PPEC, June 26, 2016 subtitle A Catholic healthcare ministry serving Ohio and Kentucky 1

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3 Mercy Health Physicians - Who are we! 795 FTE physicians and 348 APP FTE s ( 308 PCP s and 128 Primary Care APP s) PCP Net patient Revenue per WRVU = $72 and Physician Comp per WRVU = $44 Average production per PCP is 6,200 WRVU s Clinical hours per week vary between

4 MHP Current Model Largely WRVU driven but some Regions still on flat salary plus bonus Most contracts are term specific (3-5 years) which takes significant resources to negotiate renewals Quality bonuses are included in most contracts. 4

5 MHP Rationale to change Align PCP compensation model to how we are paid largely WRVU. Quality results largely drive the shared savings success Physicians believe quality should be an expectation. Need to re-engage physicians in practice performance 5

6 MHP Redesign Experiences Worked for over a year on various models and at the end they were too ambitious, unmanageable and did not garner physician support/trust! Set new goal to align model with how MHP is paid for physician services 6

7 Guiding Principles The compensation model must: Reflect Mercy Health s Mission, values, and promise. Be simple to administer. Be economically sustainable, fair to physicians, regulatory compliant, and market competitive. Be as consistent as possible across all markets. Include an employment value proposition that will attract and retain high quality physicians through means not directly tied to monetary compensation. Incorporate a governance structure that fosters physician engagement and trust. Include an auto-renewal provision. Be based on data that is available, actionable, and accurate. Mirror the manner in which Mercy Health Physicians is reimbursed by payers. 7

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10 Principle: To compensate physicians in a manner that reflects the way in which Mercy Health is reimbursed, thereby eliminating any incongruity and creating sustainability. Any compensation currently tied to patient satisfaction or clinical quality will be re-purposed and standardized to 10% to incentive access by adding an additional $ per wrvu to their compensation. All clinical quality and value-based incentives will be aligned with shared savings through the ACO and CIN o Initially shared savings, distributed as a flat $ per wrvu, will be a small fraction of their total compensation. As shared savings grows over time the $/wrvu for traditional volume productivity with the shifting reimbursement models by CMS and private payers. 10

11 Partnership Agreement Employment at will arrangement tied to MHP-Primary Care Physician Compensation Policy ( Policy ) Compensation policy will be reviewed and updated by the Compensation Advisory Committee ( CAC ) CAC will include frontline physicians, administrative physicians, and functional leaders (e.g. finance, legal) Policy can be updated at any time but it will be formally reviewed at a minimum of once a year Policy will provide the system with flexibility to modify compensation components without having to amend individual employment contracts Will eliminate the bureaucratic drag created by contract negotiations, renewals, amendments, etc. Non-compete will be utilized at the individual market s discretion on a case by case basis 11

12 Model Structure I. RVU- Based Productivity II. Strategic Care Initiatives Tied to system strategic initiatives that can change year to year (year 1 tied to access ) III. Value Based Bonus Administered on $/wrvu basis up to cap of $10K in year 1 VBB only shared if MHP meets both budget* and Press Ganey Access target At practice level, only eligible for distribution if practice is within a minimum of -5% of budget for first year (must meet budget in year 2 and beyond) Will replace portions of Productivity & SCI compensation over time *The Value Based Bonus may replace Population Health wrvus in the future 12

13 Governance Structure 13

14 MHP Value Based Bonus Distribution Methodology 14

15 Current Value Based Contracts MSSP Track 3 ACO with 75,000 members 4 Full Risk Medicare Advantage contracts with approximately 35,000 members Risk share agreement with Mercy Health to manage employee health spend (45,000 lives) Numerous P4P contracts 15

16 Comparison to Benchmarks $/wrvu Conversion Factor I (Cincinnati, Defiance, Lima, Springfield, & Youngstown) Productivity Strategic Care Initiatives Total XX.XX XX.XX XX.XX % of I.H.S. MEDIAN Compensation per wrvu Core Model 97% Core Model + 457(F) 102% Core Model + 457(F) + APP Supervision* 104% Core Model + 457(F) + VBB** 106% Core Model + 457(F) + VBB**+ APP Supervision* 108% *Assumed supervising 50% of a median producing APP **Value Based Bonus estimated using 2014 MSSP distribution for modeling purposes at $2/wRVU 16

17 Efficiencies of New Plan Increased productivity through increased schedulable hours and open access scheduling (reference next slide) Reduced bureaucratic drag created by contract negotiations, renewals, amendments, etc. Reduction in the number of outside opinions and valuations Elimination of renewal bonuses Potential reduced turnover due to 457f vesting period and attractive total benefits package 17

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