To understand how organizations are coping with the effects of both COVID‑19 and MPFS changes on provider compensation arrangements, ECG recently surveyed 66 provider organizations.
The COVID‐19 pandemic has ushered in a nearly two-year period of ambiguity. The healthcare industry has often been at the forefront of this uncertainty, and provider organizations have had to manage the fallout from each new COVID‑19 outbreak.
Although the impacts on patient care are the most visible, the pandemic’s ramifications are much broader. Changes to the Medicare Physician Fee Schedule (MPFS) in 2021 compounded the impact of COVID‑19 and affected reimbursement, physician and advanced practice provider (APP) compensation, and contractual arrangements.
2021 MPFS Adoption
As of December 2021, only 37% of the surveyed organizations have adopted the 2021 MPFS. Many of these organizations did so to seek budget neutrality through payout rate decreases, threshold increases, or temporary compensation guarantees. Others did so to reward evaluation and management–heavy specialties through a discounted increase relative to the MPFS.
Of the organizations that have adopted the 2021 MPFS, almost 70% have adjusted the compensation plan methodology to conform, at least partially, with the update. For the approximately 30% of organizations that haven’t adjusted their compensation plan methodology, the lack of changes was typically due to a fixed funding pool.
Most survey participants (63%) indicated that they haven’t yet adopted the 2021 MPFS in their provider WRVU calculations, and almost half of these organizations are unsure when they will do so. This is another example of the ongoing uncertainty in the industry, resource constraints due to the pandemic, and overall hesitancy to make the change at this time. Many other respondents indicated they plan to adopt the updated MPFS in their provider contracts in 2022 (22%) or 2023 (27%).
Many of our clients have taken this wait-and-see approach, but it is important to note that the MPFS changes are here to stay. Transitioning to the most recent fee schedule is inevitable in order to ease administrative burdens and enhance compensation transparency.
2021 Survey Benchmark Data
Only 22% of respondents have adopted 2021 provider compensation survey benchmarks. This hesitation to use COVID‐19-impacted data speaks to the challenges created by the pandemic and its effect on the data. Organizations are using a variety of workarounds, including:
- Using both 2020 and 2021 survey benchmarks.
- Relying on 2021 benchmarks for total cash compensation only, not for productivity or productivity ratios.
- Applying their own inflation or lag adjustments to the 2020 market data.
- Providing increases only to specific provider segments (e.g., primary care, APPs).
Follow-Up Questions
Survey participants had a variety of questions and comments regarding the impact of the 2021 MPFS update and COVID‐19 on the survey benchmarks. The most common question is how to use, interpret, or adjust the new benchmark data. Another common concern is how future benchmark data will be reported (i.e., the MPFS impact on WRVUs and survey collection and reporting methodologies) and whether organizations will have to adjust to any reporting changes.
ECG is here to help. Our team can host a complimentary education session to address MPFS or market survey questions.