The desire for increased access to care and the evolving focus on health outcomes management create opportunities to find better ways to efficiently provide quality clinical healthcare. As a result, more than ever, health systems, hospitals, physician practices, and post-acute and long-term care facilities are increasingly employing advanced practice providers (APPs)—qualified healthcare professionals providing care and treatment while often working under close supervision of a physician. APPs, which may include nurse practitioners and physician assistants, among others, help alleviate growing physician shortages and may be key contributors to value-based care initiatives.
Benchmark survey data continues to support the realization of increased APP use within clinical practice. Specifically, in 2015, 66% of respondents to an independent survey reported having physicians who supervise APPs; but by 2019, this percentage had increased to 71%.[1] It is likely no coincidence, then, that many healthcare organizations are realizing the benefits of utilizing APPs.
However, in some cases, APP supervision may increase physician burden (i.e., due to following specific regulations regarding APP scope of practice, abiding by chart review/documentation requirements, and maintaining appropriate levels of supervision and staffing ratios) and may warrant additional compensation. As with other forms of remuneration, hospitals and health systems must ensure compensation paid to physicians for APP supervision is consistent with fair market value and is commercially reasonable.
One of the more common forms of compensation for physicians providing APP supervision services is a flat annual supervisory stipend. Given the prevalence of such stipends, PYA reviewed several hundred physician arrangements in 2019 and identified the top physician specialties compensating for APP supervision as follows.
PYA’s “Top 5” Physician Specialty APP Supervision Stipend List for 2019
- Psychiatry
- Family Medicine
- Internal Medicine
- Palliative Care
- Pulmonology
The prevalence of APP stipends for these specialties indicates a potential strong correlation with an increased use of APPs. Interestingly, it also appears consistent with the demand for physicians practicing in these specialties. As detailed in previous PYA findings, psychiatry and family medicine were also the top two requested specialties for which clients engaged PYA to determine fair market value and/or commercial reasonableness in 2019. These specialties also consistently appear on Merritt Hawkins’s list of most requested recruiting assignments, further demonstrating additional need in these fields.
For organizations that paid for APP supervision in 2019, PYA observed that the APP supervision stipend across all specialties ranged between $10,000 and $15,000 per 1.0 FTE APP supervised per year. PYA notes it is difficult to extrapolate among varying specialties and sample sizes; however, PYA’s APP supervision stipend trends are generally consistent with those of published compensation benchmark survey data. While these ranges are similar, the mitigating facts and circumstances of a particular arrangement may warrant consideration of compensation outside this range. Supervision stipend amounts may vary based on several factors including, but not limited to, the specialty of the supervising physician, the required time and effort by the physician when performing the supervisory services, the experience level of the APP under supervision, regulatory requirements associated with the supervisory services (e.g., staffing ratios), and the physician’s compensation model.
Further, integration of APPs into the care delivery system has become more prevalent as the nation faces a continued shortage of physicians, with the COVID-19 pandemic further exacerbating this shortage. Specifically, to help meet the physician shortage and provide continuity of care to patients impacted by COVID-19, several states have temporarily suspended or relaxed protocols for APPs. For example, in Tennessee, Executive Order No. 28 suspends the requirement that nurse practitioners who have been issued a certificate of fitness to write and sign prescriptions must collaborate with a physician. Further, Executive Order No. 15 waives several requirements during the pandemic—chart reviews and supervising physician remote site visits every 30 days. As physician shortages persist, APPs will remain integral to the provision of healthcare. Changes brought on by COVID-19, however, may result in an adjustment to APP supervisory duties, requiring further consideration when it comes to the reasonableness of compensation for physician oversight. While the integration of APPs into the care delivery system has become more prevalent as a result of the pandemic, the use of APPs by physicians post-COVID-19 remains uncertain; as such, organizations will need to continually monitor state-specific protocols for APP usage to ensure regulatory compliance.
Financial relationships between healthcare providers and physicians must be fair market value and commercially reasonable to meet certain regulatory requirements (i.e., the Stark Law and Anti-Kickback Statute). To ensure compliance with these regulations, healthcare providers should have a thorough understanding of not only a physician’s supervisory responsibilities, but also his or her use of an APP in practice in order to determine appropriate compensation.
With a team of dedicated professionals who focus on fair market value and commercial reasonableness, PYA has deep expertise in designing compensation plans that help meet both hospital and provider goals. PYA also has experience in helping hospitals and health systems develop economic alignment models in all specialties. If you would like information about APP supervision stipends, economic alignment models, fair market value and commercial reasonableness opinions, or physician compensation, or for assistance with any matter involving valuation, strategy and integration, or compliance, contact one of our PYA executives below at (800) 270-9629.
[1] SullivanCotter, Inc. “Physician Compensation and Productivity Survey Report.” 2015-2019.
