PYA Covid-19 Information Hub
Published October 6, 2020

2021 Preparedness for Healthcare Compensation Executives — 10 Actionable Items

The year 2020 introduced challenges never seen in the healthcare industry. As we prepare to end the year on a thoughtful and positive note, the following list provides insight into areas of current risk and reward with respect to provider compensation. Use the items on this list to plan and ensure that your organization is prepared to enter 2021 equipped to navigate continued changes in the healthcare landscape.

1. Prepare for the Open Payment Registry expansion.

The Open Payment Registry tracks payments that drug and medical device companies make to physicians. Effective January 1, 2021, the Registry will also extend to non-physicians, including physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists and anesthesiology assistants, and certified nurse midwives. As such, payments from drug and medical device companies will be reported to CMS in 2021, and will be made publicly available on CMS’ website in 2022 for all providers.


CMS Open Payments “Newly Added Covered Recipients”

PYA’s CMS Open Payment Registry Review Checklist

2. Prepare for the proposed 2021 Medicare Physician Fee Schedule (MPFS).

The proposed MPFS, which may become effective January 1, 2021, contains changes that would greatly impact physician compensation plans. Highlights include the increase of wRVUs for E/M services (up to 46% for certain codes), coupled with a proposed decrease in the Medicare conversion factor of 10.6%. These changes may increase physician compensation, particularly for employed physicians on productivity-based models.


PYA’s “10 Takeaways From the Proposed 2021 Medicare Physician Fee Schedule and Possible Implications for Physician Productivity-Based Compensation Models”

3. Consider the impact of COVID-19 on contract renewals.

Hospitals and health systems should consider the impact of COVID-19 on physician productivity (i.e., wRVUs and professional collections) and quality performance when evaluating physician contract renewals and determining performance bonus structure. Compensation models, particularly those dependent on productivity, may need to be reassessed. Also, benchmark data used to determine compensation models may require further scrutiny, as historical data may not be indicative of future performance, or may contain outliers due to COVID-19. Organizations may want to additionally consider contractual language allowing them to adjust or reassess compensation formulas on a temporary basis for events such as a pandemic.


PYA White Paper: COVID-19 and Employed Physician Compensation—Immediate and Long-Term Impacts

4. Ensure documentation for COVID-19 waivers is complete.

Stark blanket waivers, effective March 1, 2020, do not require the submission of specific documentation to CMS, but documentation must be made available upon request. Physician arrangements that help “maintain the availability of medical care and related services for patients and the community” during COVID-19 should be appropriately documented and tracked. Hospitals should know (and record) what arrangements and specialties have been impacted by COVID-19 and the size of that impact. Now is the time to ensure documentation surrounding the use of a COVID-19 Stark blanket waiver is complete or is being completed.


PYA’s Stark Law Blanket Waiver Documentation Checklist

5. Conduct a physician compensation risk assessment.

Physician compensation has undoubtedly been affected in 2020. For 2021 and in the future, compensation models should be designed to incentivize physicians for high performance and impact on the organization’s goals. Compensation plans based solely on productivity may increase risk for the organization. Physician employers may shift some of the risk by increasing value-based compensation and incorporating measurable outcomes into physician arrangements.


Podcast: Under the Radar—Physician Compensation With Angie Caldwell of PYA

6. Conduct a primary care gap analysis.

Primary care is a specialty (or group of specialties) that is embracing the move toward value-based reimbursement and redefining how patients access, and pay for, primary care services. Primary care practices can take advantage of shared savings and other quality payments in order to align clinical outcomes with reimbursement. Sharing downside and upside risk in patient health can encourage positive provider and organizational behaviors.


PYA Podcast: Population Health, Telehealth, and the Future of Primary Care

PYA White Paper: A Primer on the Direct Primary Care Model—Past, Present, and Future

7. Review physician compensation for telehealth.

CMS made several changes to telehealth regulations over the past six months, and many physicians have seen a boost from the virtual services they provide to patients. The agency issued waivers and exceptions for many of the previous regulations, allowing patients to be seen in any location, use an audio-only system, and receive care from an expanded list of providers. CMS made changes to reimbursement, including higher rates for telemedicine services, and reimbursement for communication technology-based services. It proposes extending these changes indefinitely, meaning that telemedicine isn’t going away, even after the pandemic. Such extension may require a review of current and future physician telehealth arrangements.


PYA’s “COVID-19 Pandemic—Expanded Medicare Coverage for Telehealth and Other Non-Face-to-Face Services”

8. Review anesthesiology professional services agreements.

The Medicare anesthesia conversion factor is proposed to decrease from $22.20 to $19.96 in 2021. This proposed decrease would impact physician collections, as well as hospital subsidies and financial assistance for anesthesia-based groups. The impact, which will be heavily influenced by a practice’s case volume and payer mix, may lead to requested changes in the structure of, and subsidies included in, anesthesia professional services agreements.


PYA Webinar: While You Were Sleeping…Proposed Rule Positioned to Significantly Impact Physician Compensation

9. Review changes to, and participation in, quality payment programs (QPPs).

CMS proposed many changes to the QPP as a result of COVID-19. One of these is the delay until 2022 of MIPS Value Pathways, a combined framework of quality and cost measures. CMS also proposed to double the complex patient bonus, and provided clarity on the submission of “extreme and uncontrollable circumstances,” to ease the burden of the pandemic. Many measures and guidelines have been reworked, so clinical and quality leaders should pay close attention to what is, and is not, effective.


CMS’ QPP COVID-19 Response

10. Conduct a medical director needs assessment.

Government regulation imposes continued scrutiny on medical director arrangements, ensuring that they are fair market value and commercially reasonable. Conducting a medical director needs assessment will help an organization evaluate and document need for an important position that assists with medical leadership, quality improvement, accreditation, and executive management. Hospitals should be able to answer questions about these positions such as the need (i.e., duties and hours), goals and deliverables, requirements and qualifications, and should always clearly track and document all medical directorships. Regulators continue to focus on the need for medical directors to ensure that the services provided result in tangible outcomes and do not overlap with others.


PYA in Compliance Today: A Compliance Framework for Evaluating Medical Directorship Need

As provider compensation executives review the effects of 2020 on their organizations, it will be important to apply this knowledge in planning for 2021. Adapting quickly will be key to future success as the landscape of provider compensation continues to evolve.

If you have questions about physician compensation planning or the impact of COVID-19 on physician compensation, visit PYA’s COVID-19 hub, or contact a PYA executive below at (800) 270-9629.

Author & Contributor

Aaron Newcomer

Executive Contacts

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