Optimizing Provider Compensation: Real-Life Strategies and How-To Guide for Community Based Not-for-Profit Hospitals (131H)

Conway Regional Health System, a 180-bed not-for-profit healthcare system in Conway, Ark., has a primary care network where advanced practice providers (APPs) constitute 70% of the provider base. Historically, APPs operated under a fixed threshold model with an excess bonus opportunity, differing from physicians whose total compensation was directly tied to work RVU (wRVU) production and included quality incentive metrics. In 2020, significant changes to the CMS fee schedule impacted providers compensated based on wRVU production, particularly those focused on outpatient E/M work. Consequently, Conway Regional adjusted the per-wRVU compensation rates for all PCPs without altering the underlying structure of existing models. As APP practices grew in volume and the fee schedule changes made thresholds easier to attain, a compensation model incongruity emerged, necessitating the following actions: aligning compensation with practice structure, overall production and reimbursement; leveraging the incentive model to more effectively support enterprise quality targets; and implementing a single, scalable compensation model for all primary care providers. A new contract was presented to APPs, featuring a tiered wRVU rate scale directly tied to wRVU production and incorporating incentive compensation linked to three quality metrics. These changes resulted in five key areas of focus and practical application:

• Directly tying total compensation to wRVU production to more accurately compensate individual providers based on practice maturity, panel size and personal preferences.
• Incorporating quality-based measures into the incentive structure, aligning provider incentives with the organization's goal of enhancing value-based programs.
• Valuing all wRVU production equally, achieving annual savings of over $515,000 and increasing visits by more than 4,000.
• Addressing potential reductions by limiting the impact to no more than a 10% reduction in the first year for two providers at risk of a potential 15% reduction.
• Retaining all providers within the health system despite the changes.

These modifications ensure a more equitable and performance-driven compensation model, ultimately benefiting both providers and the health system.