A physician in a co-management agreement can find the perfect balance between the relative financial security of working for a hospital and controlling their practice environment. Physicians assume low financial risk, do not have the overhead costs of facilities and equipment, and receive fair market value for their services and expertise. They work with a well-defined set of measures and can earn large incentive payments if they meet or exceed them. The limited duration of these agreements requires doctors to achieve maximum quality improvements in a relatively short period of time, but also gives them a way out if the agreement does not work. Second, agreements often include a set of specific measurable annual targets for quality and efficiency (e.g. B, reduce the re-approval rate of procedures X by Y%). The manager earns a remuneration/bonus for each goal he achieves. The fees for each goal are “at risk” because the manager receives nothing if it is not met (or a lower amount for partial success). Well structured, this type of agreement can align incentives between the hospital and the doctor to achieve the “Holy Grail” of improving patient outcomes with greater efficiency/lower cost. A bad co-management agreement can conflict with federal and state laws that prohibit bribes and other types of rewards between hospitals and doctors. An important thing to remember when developing a co-management agreement is the need for base fees and incentive fees to be based on “fair market value.” In addition, compensation cannot vary based on the number or volume of patients seen by the group of physicians or the number of referrals from the group to the hospital for services. The objective of the co-management agreement must clearly be to improve quality.
After all, by necessity, these agreements are often of limited duration. Objectives and quality benchmarks are constantly changing and evolving; Therefore, measures and results need to be constantly revised. Many organizations refer to HHS Inspector General`s Advisory Opinion No. 12-22 as a model for developing a law-abiding agreement. Under a typical co-management agreement, a hospital will contract with specialists such as anesthesiologists to monitor and manage a range of hospital services. The co-management agreement usually consists of two parts. There is a “base fee”, which is a fixed payment made at regular intervals and compensates the medical group for the basic day-to-day efforts of managing, monitoring and improving the service line. In addition to the basic fee, there are incentive fees. These fees are not guaranteed, but are only granted if the pre-established quality objectives for that particular service line are met. This is the incentive for the group of doctors to perform. If the physician group achieves the outcome targets, it receives the incentive fees in addition to the base fee.
In this way, the co-management agreement encourages physicians to adhere to quality standards and patient outcome markers, rather than promoting volume-based practice. Clinical co-management agreements are still relatively new in the field of medical management, so industry standards continue to evolve. This poses a challenge in tracking agreements and validating their justification, according to Jen Johnson, a health services expert at the American Bar Association. The hospital and the doctors concerned must comply with the regulatory guidelines when drawing up a legally justifiable co-management contract. Their quality parameters must be adapted to the region and the patient population of the hospital. Ideally, they are based on national benchmarks. Both parties must ensure that payment is based solely on measured improvements in quality or service and not on the quantity of patients admitted or Medicare payments received. A third type of agreement is a direct agreement between a hospital and an independent group.
This allows a hospital to connect with an independent group and benefit from the management skills of an independent group without bearing the mutual cost or risks of employment. When a hospital hires more than one independent group to manage a single service line, the groups often form a joint venture to organize their resources. Previously, co-management services were generally administrative in nature. As a result, fees were generally set in dollars per hour for these monitoring services. Business relationships between doctors and hospitals or clinics range from affiliation contracts to the full acquisition of a doctor`s private practice by the hospital. A relatively new group of agreements is finding common ground. Agreements, known as clinical co-management agreements, provide a higher level of integration between a hospital and physicians, with a focus on improving the quality of care. While some regulatory and legal grey areas remain in this still-developing business relationship, early signs suggest that both sides could benefit significantly.
Co-management agreements will continue to gain momentum as they achieve the noble goals that currently seem achievable (and as long as COAs remain on the horizon). Hospitals benefit significantly from this type of agreement, although they retain the lion`s share of financial and underwriting responsibility. Co-management allows the hospital to focus on a single area of patient care, with a focus on measuring improvements related to intangible assets – for example, patient satisfaction or quality of care. .