Compliance Checklist: Compensating Physicians for Quality Care

Published by Compliance Today

Because hospitals’ critical success factors are shifting towards quality performance benchmarked to national standards, many health systems are involving physicians in various types of service arrangements to assist in the effort to improve quality outcomes. It is important to understand that compensating physicians for assisting in the attainment of high quality care must be set at fair market value (FMV) and that the terms of the arrangement must be consistent with regulatory guidelines. Failure to do so could result in criminal and/or civil penalties based on health care fraud and abuse laws. Numerous pay-for-performance (P4P) programs indicate that compensating hospitals and physicians for quality care is becoming more common. Currently, there are a growing number of governmental and private payor P4P programs. In 2003, the Centers for Medicare and Medicaid Services (CMS) started financially incentivizing hospitals for quality through a P4P program launched by CMS and Premier Inc., the Hospital Quality Incentive Demonstration (HQID) program. HQID includes more than 250 hospitals and is based on 30 nationally standardized and widely accepted care measures to patients in five clinical areas.1 Similarly, there are governmental pilot P4P programs specifically related to physicians’ quality outcomes.

Although there is not yet a nation-wide CMS P4P program, a national Value Based Purchasing (VBP) program is expected. On January 7, 2011, CMS released a proposed rule establishing the VBP program. This program would be mandated under Section 3001 of the Affordable Care Act and is expected to provide value-based incentive payments to hospitals beginning in Fiscal Year 2013, based on their achievement or improvement related to quality care measures.2 Meanwhile, the commercial payor landscape shows the number of P4P programs continues to experience rapid growth for both hospitals and physicians.

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