Physician Compensation Considerations amid the COVID-19 Pandemic

AMGA COVID-19 Resources
 

By Fred Horton, President, and Wayne Hartley, Vice President, AMGA Consulting
March 27, 2020

The novel coronavirus has taken hold of the U.S. healthcare system in many parts of the country. Hospitals and medical groups have been advised to limit or eliminate elective services in order to alter the care process, provide a safe environment, and prepare for COVID-19-related patients. This action will result in deferred care for patients and lost productivity and revenue for physicians and other providers. Alternatively, providers are utilizing technology such as telehealth, which also results in decreased production in many cases. Fortunately, some regulations that historically limited telehealth coverage are being revised, even if temporarily (See updates on telehealth coverage by commercial payers and the Centers for Medicare and Medicaid Services).

At AMGA, we have received multiple inquiries from members regarding impacts on provider compensation in employed or contracted settings as well as on physician staffing. We provide this summary of practical operational responses to the issues. We also consider longer-term impacts, including maintenance of regulatory compliance during these times.

Operational and Compensation Impact

Physicians and other providers who are impacted by lower-than-typical production in a work relative value unit (wRVU) compensation model are a primary concern of administrators. We provide several scenarios where revisions to compensation models may be appropriate.

Operational/Staffing Issue

Compensation Options

(1) Providers who can be redeployed to a role that differs from their usual area of practice. Office-based internists, as an example, have a wide range of expertise that can provide support in hospitalist, urgent care, triage/assessment, and other functions.

If the provider is on a production model and productivity is maintained, continue that model to the extent feasible. If there are small to moderate changes in conversion factors across specialties, this issue may be immaterial.

If production is not maintained, consider a salary that correlates with work effort (FTE status) that would be temporary in nature.

(2) Providers working excessive hours due to demands of the pandemic.

If these providers are on production models, additional productivity will result in additional compensation. In some cases, though, wRVU production may not be adequate relative to total time worked. Consider a supplement based on an hours-worked model for the time when production was below typical levels. Avoid “double dipping” (paying twice for the same work) by considering aggregate compensation relative to aggregate work effort.

(3) Providers able to deliver services remotely via telehealth.

As telehealth services are not universally reimbursed (and wRVU may not be tracked), an alternative is to record the time spent (or scheduled) for telehealth services and to pay a reasonable hourly rate for the services rendered. If there is wRVU reimbursement, this amount needs to be considered to avoid double dipping.

(4) Providers who are working but not achieving historical wRVU levels and are, therefore, experiencing lost income. There may also be concerns about retention.

If the providers have a base salary-plus-production model, one option is to maintain the base salary for now as long as it is reasonable from a fair market value (FMV) perspective. If elective procedures will return in the future, the production component will likely be earned at that time. Organizations can decide on whether interim payments toward future production can be made and reconciled in the future, but contract terms should consider recoupment if future production does not materialize.

In cases where specialists may not be performing procedures/surgeries but are still needed for consultation, consider revisions for call pay (especially if call pay is not part of the current agreement). In some cases, retention incentive payments also may be appropriate.

(5) Providers in specialties currently experiencing low demand or physicians who are near retirement or otherwise in a position to take unpaid time off.

Certain physicians may be open to early retirement incentives or time off without pay (perhaps if benefits are maintained), subject to their personal circumstances. These options may be prudent for organizations concerned about cash flow. We advise a consistent policy, approved by legal, for these types of arrangements.

(6) Use of temporary/recently retired staff to fill urgent needs (resources on provider enrollment during COVID-19).

Contract terms will vary based on circumstances, though short-term salaried/hourly models may be common.

Long-Term Planning and Regulatory Compliance

The acute phase of the COVID-19 response will end. As such, it is important to consider the following when reevaluating compensation:

  • Time-Limited Revisions. COVID-19-linked changes to compensation arrangements should come with clear communication to physicians/providers that pay may revert to prior models when the virus subsides. Document any compensation changes, including any time limits, in writing and authenticate with signatures of the parties.
  • Fair Market Value (FMV) and Commercial Reasonableness. While current facts and circumstances may support some short-term compensation arrangements that are atypical, FMV and commercial reasonableness should still be considered. Even as the federal government waives some regulations due to COVID-19, the exceptions may be time limited. The compensation ideas shared above need to be analyzed relative to your circumstances and FMV guidelines to maintain compliance.
  • Engage Appropriate Advisors. Legal counsel and other advisors should be proactively involved in any changes to compensation arrangements. In many cases, there are provisions, including requirements that compensation terms be “set in advance,” to avoid issues with Stark/anti-kickback laws.

We send our appreciation to all of the hard-working clinicians, support staff, and administrators who are guiding us through these unprecedented times. Please contact one of us if we can be of assistance: fhorton@amgaconsulting.com or whartley@amgaconsulting.com.

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