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Health Care Economics

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The ASCRS Textbook of Colon and Rectal Surgery

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Abstract

Health Care Economics has become Health Care Reform, and reforming the American Delivery of Care has become a cultural and political movement. Historical presentation of the evolution of the current “Fee-For-Service” reimbursement methodology that is based on Resource-Based Relative Value Scale (RBRVS), and the impact it has had on the economics of care. An analysis of “key” areas of the Patient Protection and Affordable Care Act of 2010 and the impact it has had on “Physician Reimbursement Reform.” The focus on “Alternative Payment Models” has led to the current trend toward “Clinical Integration” of physician’s in to Health Care Networks. A section on “Alternative Payment Models” that are evolving in the market place today. Finally a section on contracting for surgeons who have finished residencies/fellowship programs or surgeons who are moving toward “integration” in to a health care network. An analysis of these compensation models offered by these integrated networks in order to assist surgeons with insight in to evaluating these contracts during negotiations.

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Abbreviations

ACA:

Patient Protection and Affordable Care Act 2010

ACO:

Accountable Care Organizations

ACS:

American College of Surgeons

AMA:

American Medical Association

APM:

Alternate payment models

BBA:

Budget Balanced Act 1997

BPCI:

Bundled Payment for Care Improvement

CEA:

Council of Economic Advisers

CER:

Comparative effectiveness research

CF:

Conversion factor

CMMI:

Center for Medicare and Medicaid Innovation

CMS:

Center for Medicare and Medicaid

COBRA:

The Consolidated Omnibus Budget Reconciliation Act 1985

COBRA:

The Consolidated Omnibus Budget Reconciliation Act 1986

CPR:

Customary, prevailing, reasonable charges

CPT:

Current Procedural Terminology

DSH:

Disproportionate Share Hospitals/Safety Net Hospitals

FFS:

Fee-for-service

FFV:

Fee-For-Value Model

GCP:

Geisinger compensation plan

GDP:

Gross domestic product

GHS:

Geisinger Health System of Pennsylvania

HCFA:

The Health Care Financing Administration

HHS:

The Department of Health and Human Services

HMO:

Health Maintenance Organization

MGPO:

Massachusetts General Physicians Organization

MVPS:

Medicare volume performance standards

NHI:

National health insurance

NHR:

National healthcare reform

NQS:

National strategy for quality improvement in health care

OBRA:

The Omnibus Budget Reconciliation Act 1989

Part A:

Medicare Part A hospital payment

Part B:

Medicare Part B physician payment

PCHI:

Partners Community Healthcare Inc.

PEAC:

Practice Expense Advisory Committee

PERVUs:

Practice expense relative value units

PFS:

Medicare physician fee schedule

PLI:

Practice liability insurance

PPRC:

Physician Payment Review Commission

RBRVS:

Resourced-based relative value scale

RUC:

American Medical Association Speciality Society Relative Value Scale Update Committee

RVS:

Relative value scale

SGR:

Sustainable Growth Rate

SSTA:

Social Security Tax Act of 1935

TPC:

Total physician compensation

UAF:

Updated adjustment factor

UCR:

Usual customary, reasonable charges

VBM:

Value-based modifier

wRVU:

Work-relative value unit

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Author information

Authors and Affiliations

  1. Division of Colon and Rectal Surgery, Department of Surgery, Louisiana State University, 1542 Tulane Avenue, Suite 750, New Orleans, LA, 70112, USA

    Guy R. Orangio MD, FACS, FASCRS

Authors
  1. Guy R. Orangio MD, FACS, FASCRS
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Corresponding author

Correspondence to Guy R. Orangio MD, FACS, FASCRS .

Editor information

Editors and Affiliations

  1. Division of Colorectal Surgery, University Hospitals Case Medical Center Case Western Reserve University, Cleveland, OH, USA

    Scott R. Steele

  2. Cleveland Clinic, Cleveland, OH, USA

    Tracy L. Hull

  3. Tufts University School of Medicine, Lahey Hospital & Medical Center, Burlington, MA, USA

    Thomas E. Read

  4. Ambrose and Gladys Bowyer, Loyola University, Chicago, IL, USA

    Theodore J. Saclarides

  5. University of Texas Medical Branch at Galveston, Galveston, TX, USA

    Anthony J. Senagore

  6. Ochsner Medical Center, New Orleans, LA, USA

    Charles B. Whitlow

Appendices

Appendix 1: Physician Compensation: Model 1 Guaranteed Salary

One-year contract:

$20,000 signing bonus

Base salary:

$280.000/26 payments/40-hour workweek

Additional on call per diem:

$500–750/day

Appendix 2: Physician Compensation Model 2

Work-RVU Based Compensation

Utilizing a dollar conversion factor: that is defined as the numeric factor which physicians multiply wRVUs to calculate physician compensation

  • Year 1: $40.00/wRVU

  • Year 2–5: $47/wRVU

  • Bi-weekly draws—approximately: $7000.00 (Year 1)

  • Reconciliations of draw: quarterly, semiannually “True Up Date”

These updates can mean an augmentation for increased production or a “reduction” at the next update for not covering overhead.

Appendix 3: Physician Compensation Model 3

Work-RVU Compensation with a Base Salary (Guaranteed)

Five-year contract:

$20,000 signing bonus (returned if terminate employment before 24 months)

Base salary years 1–2:

$300,000 which is approximately 6500 wRVUs at $45/wRVU

Base salary years 3–5:

$300,000 but is subject to adjustment (calculated for a set time period) in advance of the first day of the next employment year and is based on a wRVU, over a period of time the preceding years.

Incentive bonus years 1–3

Work-RVU

Incentive compensation/wRVU

6501–7500

$51

7501–9000

$53

9001–10,500

$55

10,501 or >

$57

Incentive bonus years 4–5:

is based on wRVUs generated by physician in excess of tier one baseline, which is multiplied by a “conversion factor” per wRVU which will be adjusted/based on an independent variable

Salary cap:

approximately $600,000

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© 2016 ASCRS (American Society of Colon and Rectal Surgeons)

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Orangio, G.R. (2016). Health Care Economics. In: Steele, S.R., Hull, T.L., Read, T.E., Saclarides, T.J., Senagore, A.J., Whitlow, C.B. (eds) The ASCRS Textbook of Colon and Rectal Surgery. Springer, Cham. https://doi.org/10.1007/978-3-319-25970-3_66

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  • DOI: https://doi.org/10.1007/978-3-319-25970-3_66

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  • Publisher Name: Springer, Cham

  • Print ISBN: 978-3-319-25968-0

  • Online ISBN: 978-3-319-25970-3

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