Shay Pratt, Marketing and Planning Leadership Council
A member health system executive recently asked us, “what percentage of the capital budget do other hospitals typically devote to strategic capital?” This question is not surprising in light of recent reports that capital spending this year will continue to be restricted.
Benchmarking strategic capital: How much should we spend?
Co-management is an increasingly popular model for partnerships between hospitals and physician-owned ambulatory surgery centers (ASC). Under co-management, hospitals maintain full ownership of the ASC and management services are contracted to the physician group. Hospitals should negotiate a two-level payment model for co-management compensation fees in order to mitigate risk and ensure quality.
The base fee is a fixed annual fee that reflects fair market value (FMV) for management responsibilities necessary to operate the ASC, while the incentive fee is a variable fee that reflects FMV for performance on quality and efficiency goals.
With little control over supervision and delivery of services, hospitals take a significant risk by investing in ASCs and handing over management to physicians. Incentive fees help shift some of that risk from the hospital to the physician group by making a portion of the total compensation contingent on how well physicians perform their clinical and management services.
Incentive fees mitigate risk to hospitals in co-managed ASCs
Last November, CMS announced an expansion to their Recovery Audit Contractor program called the Prepayment Review Demonstration Project. Unlike previous RAC efforts that retroactively reviewed claims for billing accuracy and appropriateness, the new demonstration would switch tactics to “prevent improper payments before they are made.”
CMS initially scheduled the demonstration, expected to more than double the amount of reviewable claims to 2.7 million, to launch on January 1, 2012, and targeted 15 inpatient DRGs, including spinal fusion and cardiac implant procedures.
Medicare’s Prepayment Review Demonstration: Everything we know so far