Intermountain Healthcare Case Analysis
MEMO
To: Dr. Laura MacLeod
From: Nicholas Hill
Date: February 24, 2013
Subject: PHYSICIAN COMPENSATION
Enclosed is a formal report on physician compensation. Intermountain Healthcare is in the process of deciding if changing how physicians are compensated is pertinent to improving Intermountain Healthcare’s motto of, “extraordinary care” and financial wellbeing.
This report describes how Intermountain Healthcare is looking at using the government enacted Stark regulation system. This system uses RVUs (relative value units) in determining compensation for individual physicians. The report will go over why the Stark regulations were created and how RVU’s are utilized within the system. The report also includes a questionnaire …show more content…
provided to Grant Davis, the financial director of Intermountain Healthcare. Grant Davis is very knowledgeable, with regards to the Stark regulations, because he is a strong advocate for confiding with the Stark regulations. The report will conclude with findings of whether or not Intermountain Healthcare should adopt the Stark regulations.
This report should be very beneficial to Intermountain Healthcare in deciding whether or not to adopt the Stark regulations. I would like to meet with you to further discuss this topic. Please contact me at nyranhill23@yahoo.com.
PHYSICIAN COMPENSATION
Prepared for
Dr. Laura MacLeod
Weber State University
Prepared by
Nicholas Hill
February, 24 2013
EXECUTIVE SUMMARY
PHYSICIAN COMPENSATION
From a patient’s view point, going and seeing a doctor is a stressful time. Patients should not have to worry whether tests being performed are necessary or not. Physicians have the responsibility of providing exceptional care to their patients, with as little cost as possible to the patient. Physicians who don’t practice this way, and prescribe unnecessary treatments for their own financial gain, have made a mark on the name of all physicians.
Intermountain Healthcare has taken a strong stance in moving towards a new physician compensation system that will alleviate the burden of dealing with doctors that don’t strive to provide extraordinary care to each patient. This will be done by putting the accountability on each individual doctor. Each doctor will need to strive to live up to the extraordinary care that is expected from Intermountain Healthcare physicians, because a portion of their compensation will be based entirely on the care they provide.
Intermountain Healthcare’s best option to provide extraordinary care is by adopting the Stark regulations established by the federal government. The Stark regulations include:
1. Provisions to prevent self-referrals for Medicare and Medicaid patients, as well as deal with financial ownership, investment interests, and compensation agreements.
2. Provisions to prevent physician self-referrals that are in the best interest of the physician not the patient.
3. Using RVUs (Registered Value Units) to determine physician compensation.
TABLE OF CONTENTS
Executive Summary……………………………………………………………………………. i
Introduction……………………………………………………………………………………... 1 Problem and Research Questions………………………………………………….... 1 Procedures……………………………………………………………………………... 1
Presentation of Findings………………………………………………………………………. 2 Stark Background……………………………………………………………………… 2 Registered Value Units (RVUs)…………………………………………………….... 3 Questionnaire Results…………………………………………………………………. 4 Physician Compliance……………………………………………………………….... 7 Intermountain Healthcare’s Stance………………………………………………..… 8
Conclusion……………………………………………………………………………………....9
Recommendations………………………………………………………………………….…. 9
References…………………………………………………………………………………..... 10
List of Figures and Appendices
Figure 1: Physician Compliance with Stark Regulations…………………………………... 7
Appendix A: Primary Research Instrument (Questionnaire)…………………………..… 11
Appendix B: Secondary Research Instrument (Stark Regulation Table)…………...….. 13
PHYSICIAN COMPENSATION
Introduction
Intermountain Healthcare strives to fulfill its slogan, “Healing for Life” (“Healing for life”).
Intermountain Healthcare, now to be referred to as IHC, desires to provide extraordinary care to each patient who visits an IHC physician. Because of IHC’s goals as a company, it is only appropriate that they strive to employ physicians that practice extraordinary care for the patients gain, not the physicians own personal financial gain.
Problem and Research Questions
The purpose of this report is to determine whether adopting the federal government’s Stark regulations is beneficial to IHC’s goals as a company. Grant Davis, Financial Director of IHC, was provided a questionnaire regarding IHC’s stance on Stark regulations. The questionnaire questions are provided in (Appendix A).
Procedures
Information collected will be gathered from secondary sources such as scholarly articles, and government research documents. A questionnaire will be given to Grant Davis, the financial director of IHC. The research collected will help IHC determine whether or not to adopt the federal government’s Stark regulations. The findings from these sources are as follows:
Presentation of Findings
Stark Regulation …show more content…
Background
Stark regulation, named after the United States Congressman Pete Stark who first sponsored the bill, is three separate provisions that govern physician self-referral for Medicare and Medicaid patients, and also deals with financial relationships including ownership, investment interest, and compensation arrangements (“Stark law”). Physician self-referral is the practice of a physician referring a patient to a medical facility in which he has a financial interest, be it ownership, investment, or a structured compensation arrangement. Please reference (Appendix B) for information regarding physician referrals. Critics of the practice allege an inherent conflict of interest, given the physician 's position to benefit from the referral. They suggest that such arrangements may encourage over-utilization of services, in turn driving up health care costs. In addition, they believe that it would create a captive referral system, which limits competition by other providers. Congress included a provision in the Omnibus Budget Reconciliation Act of 1989 (OBRA 1989) which barred self-referrals for clinical laboratory services under the Medicare program, effective January 1, 1992. This provision is known as "Stark I". The law included a series of exceptions to the ban in order to accommodate legitimate business arrangements. A number of observers recommended extending the ban to other services and programs. The Omnibus Budget Reconciliation Act of 1993 (OBRA 1993) expanded the restriction to a range of additional health services and applied it to both Medicare and Medicaid; this legislation, known as "Stark II," also contained clarifications and modifications to the exceptions in the original law (“Stark law”).
Registered Value Units (RVUs)
Relative Value Units, or RVUs, are the foundation of the criteria used to measure any type of medical services offered by physicians in the United States. The Relative Value Unit serves as a means of determining the level of reimbursement that is awarded to a physician in exchange for services rendered. Most health insurance providers make use of RVUs to make payments on any claims involving their customers, based on the factors that go into the calculation of an applicable RVU (What are relative,2012).
There are three key factors that go into the determination of RVUs. The most important element has to do with the issue of work. This factor has to do with the services that were rendered to the patient by the physician, including time spent in active treatment as well as evaluation of test results and any other effort on the part of the physician to create an effective treatment (What are relative,2012)..
The second factor comprising RVUs has to do with the expenses of the doctor’s practice. This includes the maintenance of staff, equipment and facilities that are necessary in order for the medical group to provide quality medical services to patients. While not considered quite as important as the actual work of the physician, practice expenses account for a sizable share of the value of the final RVU.
Lastly, the structure of RVUs takes into account whether or not the medical professional carries physician liability insurance. While this is usually the least important factor in determining RVUs, the lack of insurance is enough to create a less agreeable scale for the physician, in comparison to a physician who practices in the same area but does carry the liability coverage (What are relative,2012).
After arriving at the basic RVU based on these three criteria, the final figure is modified based on the cost of living in a given geographic area. This helps to adjust RVUs so they are more compatible with the current costs of medical care in a particular location. Doing so helps to ensure that the compensation calculated with the use of RVUs is equitable for the area involved (What are relative,2012).
Questionnaire Results Grant Davis, finance director for IHC was gracious enough to answer a questionnaire regarding Stark regulations and IHC stance on this issue. Grant Davis’s responses are as followed: 1. What physician compensation practices is IHC currently using?
IHC is currently compensating physicians based on the number of employees that they see at their perspective clinics.
We have established a play scale for each individual doctor to determine their compensation based on their credentials and qualifications. 2. Would it be difficult for IHC to change their current compensation practices? Why or why not?
I feel that it is necessary for IHC to move towards a new form of physician compensation. The transition to a new form of physician compensation, such as the Stark regulations, will be difficult and costly initially. The main difficulty will be the amount of research involved in establishing a new pay scale conforming to Stark regulations. 3. What benefits would IHC reap from adopting Stark regulations?
IHC would reap many benefits by adopting Stark regulations. IHC’s reputation for extraordinary care would increase because the Stark regulations would encourage doctors to make decisions in the best interest of the patient, since the compensation factor will be influenced by the quality of care given. Doctors won’t prescribe unnecessary treatments or medications because their compensation won’t be affected by this. Also time used to calculate compensations will decrease once the pay scale is set up with Stark regulations and RVUs because of the formulas
involved. 4. What actions have you taken to influence IHC in adopting the Stark regulations?
I have taken many actions to influence IHC to adopt Stark regulations. I have put together a rough draft of the pay scale that will be used. Also I have put together a presentation showing the advantages of moving towards the new pay scale. I have recently presented this information to IHC’s board of representatives to hopefully get approval to move forward. 5. Do you feel physicians would welcome the new regulations? If yes, what would physicians like?
I think the majority of physicians will welcome the new regulations. Unless a doctor is practicing poor patient care, their salary will not be affected dramatically. With the influence of RVUs, physicians with great patient care should expect an increase in their salary. If no, what would physicians disagree with?
In my opinion I think the physicians who would disagree with the new regulations are ones that aren’t practicing good health care in the first place. If their compensation is being affected by the quality of care provide, doctors whose quality of care is lacking are obviously going to opt for less stringent regulations. 6. Do you think physicians would change the way they practice medicine if they had to follow the new Stark regulations? Why or why not?
I think most physicians would change the way they practice medicine with the influence of RVUs. If a physician’s pay is being affected by the quality of care they are providing, most physicians will want to increase their quality of care so they can get paid more. 7. Is IHC’s current compensation practice affecting patient care in a good or bad way?
I think the quality of physicians that IHC hires is exceptional. Our physicians want to provide the best care for their patients. I believe that with the incentive of RVUs affecting their compensation, doctors will increase the degree of patient care provided. I think at this point patient care has the potential to increase. 8. Would the new Stark regulations increase patient satisfaction? Why or why not?
I think patient satisfaction would increase because the patients will physically be able to see that their physician is looking out for the best interests of the patient. Patients aren’t going to feel like the physician is preforming unnecessary tests because the physician isn’t going to receive additional compensation for preforming the unnecessary tests. 9. Are RVU’s an effective way to base physician compensation? Why or why not?
Like I said before, I think RVU’s are an excellent way to base physician compensation. Physician compensation won’t just be based on the number of patients the physician sees. Other factors, such as patient care, will go into influencing how much the physician will get paid. 10. What new internal jobs would be created if IHC adopted the Stark regulations?
Yes, I think several jobs will be created to help manage the new formula that goes into managing the RVU pay scale from the Stark regulations. There would have to be several analysts to budget and determine compensation, along with specialists to help implement the compensation practice.
Physician Compliance
IHC needs to verify that their currently employed physicians are in compliance with the new Stark regulations. Figure 1 below shows a random survey taken by 20 random physicians in different specialties within IHC. The survey was provided by Grant Davis along with the questionnaire he participated in. The table shows an overwhelming compliance of physicians who agree to abide by the new Stark Regulations. The few physicians that felt they don’t want to participate in the new Stark regulations are creating a large drawback for IHC because IHC needs to have all of its physicians willing to participate in the new system. IHC will have to educate the non-compliant physicians to hopefully change their mind or the physicians will have to be terminated.
Figure 1: Physician Compliance with Stark Regulations
Intermountain Healthcare’s Stance
As stated previously IHC is adamant about providing extraordinary care toward each and every patient. IHC feels that there does need to be a change in the way physicians are compensated. There are many factors that will influence whether or not IHC will be willing to change its compensation system. Initially, there will be a substantial cost in changing to a new compensation system. As stated in the questionnaire, changing will require extensive research in order to formulate a compensation system involving RVUs on a new pay scale. The fact is that IHC needs to convert to this new system, regardless the cost, because it will force physicians to provide extraordinary care to maintain their salaries, putting accountability on the physicians.
Conclusion Stark regulations provide a way for IHC to improve the way they compensate their physicians. IHC takes pride in the fact that they provide extraordinary care towards every patient. Stark regulations provide a way for IHC to put accountability on each physician to provide the expectation of extraordinary care. This is done by utilizing the Stark regulations to affect a portion of the physicians pay based on the quality of care given. Physicians will want to provide the best care they can because they will be compensated more. Physicians won’t be tempted to prescribe unnecessary tests or treatment because they won’t be compensated anything extra. Also physicians won’t be tempted to scheme additional profits by partnering up with another physician to perform self-referrals. A fine upward of $15,000 per claim and repayment of fraudulent claims due to self-referrals are the possible consequence because of Stark regulations. Please refer to (Appendix B) for additional information.
Recommendations
It is a fact that IHC needs to improve their physician compensation practice. Utilizing Stark regulations is a perfect way for IHC to better improve their physician compensation practice. By using RVUs, personal accountability for each physician will increase because their compensation will depend on how they each practice medicine. IHC needs to invest in adopting Stark regulations and RVUs.
REFERENCES 1. Healing for life magazine. (n.d.). Retrieved from http://intermountainhealthcare.org/services/medicalgroup/magazine/Pages/home.aspx 2. Scheinfeld, M.D., N. (2005). Understanding stark law. 13(6), Retrieved from http://www.the-dermatologist.com/article/4243 3. Stark law. (n.d.). Retrieved from http://starklaw.org/stark_law.htm 4. What are relative value units (rvus)?. (2012). (University of Michigan), Available from Revenue Cylce. Retrieved from http://revcycle.med.umich.edu/pbts/reporting/rvus
Appendix A
Primary Research Instrument
Questionnaire
List of Interview Questions
Physician Compensation Questionnaire 1. What physician compensation practice is IHC currently using? 2. Would it be difficult for IHC to change their current compensation practices? Why or why not? 3. What benefits would IHC reap from adopting Stark regulations? 4. What actions have you taken to influence IHC in adopting the Stark regulations? 5. Do you feel physicians would welcome the new regulations? If yes, what would physicians like? If no, what would physicians disagree with? 6. Do you think physicians would change the way they practice medicine if they had to follow the new Stark regulations? Why or why not? 7. Is IHC’s current compensation practice affecting patient care in a good or bad way? 8. Would the new Stark regulations increase patient satisfaction? Why or why not? 9. Are RVU’s an effective way to base physician compensation? Why or why not? 10. What new internal jobs would be created if IHC adopted the Stark regulations?
Appendix B
Secondary Research Instrument
Stark Regulation Table
(Scheinfeld, M.D., 2005)
To: Dr. Laura MacLeod
From: Nicholas Hill
Date: February 24, 2013
Subject: PHYSICIAN COMPENSATION
Enclosed is a formal report on physician compensation. Intermountain Healthcare is in the process of deciding if changing how physicians are compensated is pertinent to improving Intermountain Healthcare’s motto of, “extraordinary care” and financial wellbeing.
This report describes how Intermountain Healthcare is looking at using the government enacted Stark regulation system. This system uses RVUs (relative value units) in determining compensation for individual physicians. The report will go over why the Stark regulations were created and how RVU’s are utilized within the system. The report also includes a questionnaire …show more content…
provided to Grant Davis, the financial director of Intermountain Healthcare. Grant Davis is very knowledgeable, with regards to the Stark regulations, because he is a strong advocate for confiding with the Stark regulations. The report will conclude with findings of whether or not Intermountain Healthcare should adopt the Stark regulations.
This report should be very beneficial to Intermountain Healthcare in deciding whether or not to adopt the Stark regulations. I would like to meet with you to further discuss this topic. Please contact me at nyranhill23@yahoo.com.
PHYSICIAN COMPENSATION
Prepared for
Dr. Laura MacLeod
Weber State University
Prepared by
Nicholas Hill
February, 24 2013
EXECUTIVE SUMMARY
PHYSICIAN COMPENSATION
From a patient’s view point, going and seeing a doctor is a stressful time. Patients should not have to worry whether tests being performed are necessary or not. Physicians have the responsibility of providing exceptional care to their patients, with as little cost as possible to the patient. Physicians who don’t practice this way, and prescribe unnecessary treatments for their own financial gain, have made a mark on the name of all physicians.
Intermountain Healthcare has taken a strong stance in moving towards a new physician compensation system that will alleviate the burden of dealing with doctors that don’t strive to provide extraordinary care to each patient. This will be done by putting the accountability on each individual doctor. Each doctor will need to strive to live up to the extraordinary care that is expected from Intermountain Healthcare physicians, because a portion of their compensation will be based entirely on the care they provide.
Intermountain Healthcare’s best option to provide extraordinary care is by adopting the Stark regulations established by the federal government. The Stark regulations include:
1. Provisions to prevent self-referrals for Medicare and Medicaid patients, as well as deal with financial ownership, investment interests, and compensation agreements.
2. Provisions to prevent physician self-referrals that are in the best interest of the physician not the patient.
3. Using RVUs (Registered Value Units) to determine physician compensation.
TABLE OF CONTENTS
Executive Summary……………………………………………………………………………. i
Introduction……………………………………………………………………………………... 1 Problem and Research Questions………………………………………………….... 1 Procedures……………………………………………………………………………... 1
Presentation of Findings………………………………………………………………………. 2 Stark Background……………………………………………………………………… 2 Registered Value Units (RVUs)…………………………………………………….... 3 Questionnaire Results…………………………………………………………………. 4 Physician Compliance……………………………………………………………….... 7 Intermountain Healthcare’s Stance………………………………………………..… 8
Conclusion……………………………………………………………………………………....9
Recommendations………………………………………………………………………….…. 9
References…………………………………………………………………………………..... 10
List of Figures and Appendices
Figure 1: Physician Compliance with Stark Regulations…………………………………... 7
Appendix A: Primary Research Instrument (Questionnaire)…………………………..… 11
Appendix B: Secondary Research Instrument (Stark Regulation Table)…………...….. 13
PHYSICIAN COMPENSATION
Introduction
Intermountain Healthcare strives to fulfill its slogan, “Healing for Life” (“Healing for life”).
Intermountain Healthcare, now to be referred to as IHC, desires to provide extraordinary care to each patient who visits an IHC physician. Because of IHC’s goals as a company, it is only appropriate that they strive to employ physicians that practice extraordinary care for the patients gain, not the physicians own personal financial gain.
Problem and Research Questions
The purpose of this report is to determine whether adopting the federal government’s Stark regulations is beneficial to IHC’s goals as a company. Grant Davis, Financial Director of IHC, was provided a questionnaire regarding IHC’s stance on Stark regulations. The questionnaire questions are provided in (Appendix A).
Procedures
Information collected will be gathered from secondary sources such as scholarly articles, and government research documents. A questionnaire will be given to Grant Davis, the financial director of IHC. The research collected will help IHC determine whether or not to adopt the federal government’s Stark regulations. The findings from these sources are as follows:
Presentation of Findings
Stark Regulation …show more content…
Background
Stark regulation, named after the United States Congressman Pete Stark who first sponsored the bill, is three separate provisions that govern physician self-referral for Medicare and Medicaid patients, and also deals with financial relationships including ownership, investment interest, and compensation arrangements (“Stark law”). Physician self-referral is the practice of a physician referring a patient to a medical facility in which he has a financial interest, be it ownership, investment, or a structured compensation arrangement. Please reference (Appendix B) for information regarding physician referrals. Critics of the practice allege an inherent conflict of interest, given the physician 's position to benefit from the referral. They suggest that such arrangements may encourage over-utilization of services, in turn driving up health care costs. In addition, they believe that it would create a captive referral system, which limits competition by other providers. Congress included a provision in the Omnibus Budget Reconciliation Act of 1989 (OBRA 1989) which barred self-referrals for clinical laboratory services under the Medicare program, effective January 1, 1992. This provision is known as "Stark I". The law included a series of exceptions to the ban in order to accommodate legitimate business arrangements. A number of observers recommended extending the ban to other services and programs. The Omnibus Budget Reconciliation Act of 1993 (OBRA 1993) expanded the restriction to a range of additional health services and applied it to both Medicare and Medicaid; this legislation, known as "Stark II," also contained clarifications and modifications to the exceptions in the original law (“Stark law”).
Registered Value Units (RVUs)
Relative Value Units, or RVUs, are the foundation of the criteria used to measure any type of medical services offered by physicians in the United States. The Relative Value Unit serves as a means of determining the level of reimbursement that is awarded to a physician in exchange for services rendered. Most health insurance providers make use of RVUs to make payments on any claims involving their customers, based on the factors that go into the calculation of an applicable RVU (What are relative,2012).
There are three key factors that go into the determination of RVUs. The most important element has to do with the issue of work. This factor has to do with the services that were rendered to the patient by the physician, including time spent in active treatment as well as evaluation of test results and any other effort on the part of the physician to create an effective treatment (What are relative,2012)..
The second factor comprising RVUs has to do with the expenses of the doctor’s practice. This includes the maintenance of staff, equipment and facilities that are necessary in order for the medical group to provide quality medical services to patients. While not considered quite as important as the actual work of the physician, practice expenses account for a sizable share of the value of the final RVU.
Lastly, the structure of RVUs takes into account whether or not the medical professional carries physician liability insurance. While this is usually the least important factor in determining RVUs, the lack of insurance is enough to create a less agreeable scale for the physician, in comparison to a physician who practices in the same area but does carry the liability coverage (What are relative,2012).
After arriving at the basic RVU based on these three criteria, the final figure is modified based on the cost of living in a given geographic area. This helps to adjust RVUs so they are more compatible with the current costs of medical care in a particular location. Doing so helps to ensure that the compensation calculated with the use of RVUs is equitable for the area involved (What are relative,2012).
Questionnaire Results Grant Davis, finance director for IHC was gracious enough to answer a questionnaire regarding Stark regulations and IHC stance on this issue. Grant Davis’s responses are as followed: 1. What physician compensation practices is IHC currently using?
IHC is currently compensating physicians based on the number of employees that they see at their perspective clinics.
We have established a play scale for each individual doctor to determine their compensation based on their credentials and qualifications. 2. Would it be difficult for IHC to change their current compensation practices? Why or why not?
I feel that it is necessary for IHC to move towards a new form of physician compensation. The transition to a new form of physician compensation, such as the Stark regulations, will be difficult and costly initially. The main difficulty will be the amount of research involved in establishing a new pay scale conforming to Stark regulations. 3. What benefits would IHC reap from adopting Stark regulations?
IHC would reap many benefits by adopting Stark regulations. IHC’s reputation for extraordinary care would increase because the Stark regulations would encourage doctors to make decisions in the best interest of the patient, since the compensation factor will be influenced by the quality of care given. Doctors won’t prescribe unnecessary treatments or medications because their compensation won’t be affected by this. Also time used to calculate compensations will decrease once the pay scale is set up with Stark regulations and RVUs because of the formulas
involved. 4. What actions have you taken to influence IHC in adopting the Stark regulations?
I have taken many actions to influence IHC to adopt Stark regulations. I have put together a rough draft of the pay scale that will be used. Also I have put together a presentation showing the advantages of moving towards the new pay scale. I have recently presented this information to IHC’s board of representatives to hopefully get approval to move forward. 5. Do you feel physicians would welcome the new regulations? If yes, what would physicians like?
I think the majority of physicians will welcome the new regulations. Unless a doctor is practicing poor patient care, their salary will not be affected dramatically. With the influence of RVUs, physicians with great patient care should expect an increase in their salary. If no, what would physicians disagree with?
In my opinion I think the physicians who would disagree with the new regulations are ones that aren’t practicing good health care in the first place. If their compensation is being affected by the quality of care provide, doctors whose quality of care is lacking are obviously going to opt for less stringent regulations. 6. Do you think physicians would change the way they practice medicine if they had to follow the new Stark regulations? Why or why not?
I think most physicians would change the way they practice medicine with the influence of RVUs. If a physician’s pay is being affected by the quality of care they are providing, most physicians will want to increase their quality of care so they can get paid more. 7. Is IHC’s current compensation practice affecting patient care in a good or bad way?
I think the quality of physicians that IHC hires is exceptional. Our physicians want to provide the best care for their patients. I believe that with the incentive of RVUs affecting their compensation, doctors will increase the degree of patient care provided. I think at this point patient care has the potential to increase. 8. Would the new Stark regulations increase patient satisfaction? Why or why not?
I think patient satisfaction would increase because the patients will physically be able to see that their physician is looking out for the best interests of the patient. Patients aren’t going to feel like the physician is preforming unnecessary tests because the physician isn’t going to receive additional compensation for preforming the unnecessary tests. 9. Are RVU’s an effective way to base physician compensation? Why or why not?
Like I said before, I think RVU’s are an excellent way to base physician compensation. Physician compensation won’t just be based on the number of patients the physician sees. Other factors, such as patient care, will go into influencing how much the physician will get paid. 10. What new internal jobs would be created if IHC adopted the Stark regulations?
Yes, I think several jobs will be created to help manage the new formula that goes into managing the RVU pay scale from the Stark regulations. There would have to be several analysts to budget and determine compensation, along with specialists to help implement the compensation practice.
Physician Compliance
IHC needs to verify that their currently employed physicians are in compliance with the new Stark regulations. Figure 1 below shows a random survey taken by 20 random physicians in different specialties within IHC. The survey was provided by Grant Davis along with the questionnaire he participated in. The table shows an overwhelming compliance of physicians who agree to abide by the new Stark Regulations. The few physicians that felt they don’t want to participate in the new Stark regulations are creating a large drawback for IHC because IHC needs to have all of its physicians willing to participate in the new system. IHC will have to educate the non-compliant physicians to hopefully change their mind or the physicians will have to be terminated.
Figure 1: Physician Compliance with Stark Regulations
Intermountain Healthcare’s Stance
As stated previously IHC is adamant about providing extraordinary care toward each and every patient. IHC feels that there does need to be a change in the way physicians are compensated. There are many factors that will influence whether or not IHC will be willing to change its compensation system. Initially, there will be a substantial cost in changing to a new compensation system. As stated in the questionnaire, changing will require extensive research in order to formulate a compensation system involving RVUs on a new pay scale. The fact is that IHC needs to convert to this new system, regardless the cost, because it will force physicians to provide extraordinary care to maintain their salaries, putting accountability on the physicians.
Conclusion Stark regulations provide a way for IHC to improve the way they compensate their physicians. IHC takes pride in the fact that they provide extraordinary care towards every patient. Stark regulations provide a way for IHC to put accountability on each physician to provide the expectation of extraordinary care. This is done by utilizing the Stark regulations to affect a portion of the physicians pay based on the quality of care given. Physicians will want to provide the best care they can because they will be compensated more. Physicians won’t be tempted to prescribe unnecessary tests or treatment because they won’t be compensated anything extra. Also physicians won’t be tempted to scheme additional profits by partnering up with another physician to perform self-referrals. A fine upward of $15,000 per claim and repayment of fraudulent claims due to self-referrals are the possible consequence because of Stark regulations. Please refer to (Appendix B) for additional information.
Recommendations
It is a fact that IHC needs to improve their physician compensation practice. Utilizing Stark regulations is a perfect way for IHC to better improve their physician compensation practice. By using RVUs, personal accountability for each physician will increase because their compensation will depend on how they each practice medicine. IHC needs to invest in adopting Stark regulations and RVUs.
REFERENCES 1. Healing for life magazine. (n.d.). Retrieved from http://intermountainhealthcare.org/services/medicalgroup/magazine/Pages/home.aspx 2. Scheinfeld, M.D., N. (2005). Understanding stark law. 13(6), Retrieved from http://www.the-dermatologist.com/article/4243 3. Stark law. (n.d.). Retrieved from http://starklaw.org/stark_law.htm 4. What are relative value units (rvus)?. (2012). (University of Michigan), Available from Revenue Cylce. Retrieved from http://revcycle.med.umich.edu/pbts/reporting/rvus
Appendix A
Primary Research Instrument
Questionnaire
List of Interview Questions
Physician Compensation Questionnaire 1. What physician compensation practice is IHC currently using? 2. Would it be difficult for IHC to change their current compensation practices? Why or why not? 3. What benefits would IHC reap from adopting Stark regulations? 4. What actions have you taken to influence IHC in adopting the Stark regulations? 5. Do you feel physicians would welcome the new regulations? If yes, what would physicians like? If no, what would physicians disagree with? 6. Do you think physicians would change the way they practice medicine if they had to follow the new Stark regulations? Why or why not? 7. Is IHC’s current compensation practice affecting patient care in a good or bad way? 8. Would the new Stark regulations increase patient satisfaction? Why or why not? 9. Are RVU’s an effective way to base physician compensation? Why or why not? 10. What new internal jobs would be created if IHC adopted the Stark regulations?
Appendix B
Secondary Research Instrument
Stark Regulation Table
(Scheinfeld, M.D., 2005)