Jen Johnson, managing director, chief commercial officer and head of compensation arrangements, and Anthony Domanico, director of compensation design and consulting at VMG Health, outlined how organizations should think about physician pay in a Feb. 24 article.
Four takeaways:
1. CMS unveiled three definitions for fair market value in the new rule, focused on general services, equipment rental and office space.
2. The final rule defines general market value of compensation as “compensation that would be paid at the time the parties enter into the service agreement as a result of bona fide bargaining between well-informed parties that are not otherwise in a position to generate business for each other.”
3. Previously, the definition of general market value mandated physician pay be set prior to the transaction and not take into account the volume or value of referrals generated. In the new rule, CMS removed the “volume or value” standard.
“Organizations must continue to demonstrate that compensation is not set in a way that accounts for the volume or value of referrals or other business generated, however CMS affirmed that is a separate test and is not related to the fair market value of an arrangement,” according to the article.
4. The final rule also addresses physician pay under value-based payments, noting organizations should base payments for outcomes on objective and measurable data. It also suggests updating payments for cost savings and quality improvement annually.
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