In an essential development, the U.S. Department of Health and Human Services Office of Inspector General (OIG) recently issued an Advisory Opinion (23-07) that endorses a bonus plan proposed by a multispecialty physician practice. The approved plan pertains to compensation for the practice’s employed physicians based on net profits from the facility fee produced by the physician’s procedures at the practice’s ambulatory surgery center (ASC).
The decision was made public on October 13, 2023, marking a noteworthy shift in the handling of compensation plans for Health and Human Services employees. The underlined practice structure is no alien to the sector, however, earning validation from the Advisory Opinion signifies an evolution in policy outlook, that could possibly prompt other practices to adopt similar compensation schemes.
A careful appraisal of Advisory Opinion 23-07, brings clarity on specific factors that convinced the OIG to give its seal of approval to the proposal:
- The plan is applicable solely to bona fide employees of the practice, i.e., physicians who have substantial day-to-day responsibilities and aren’t merely contracted for periodic services.
- The compensation is dependent on net profits realized from facility fees. This involves the intrinsic relationship between a physician’s performance and the financial successes of the practice, which potentially promotes quality healthcare while ensuring fair remuneration for the medical staff.
- The anticipated lucrative nature of the model doesn’t pose a potential risk of driving unnecessary patient referrals. Profits are tied to personally performed procedures, thus reducing the risk of considering patient volumes or services not necessarily required.
Given these considerations, it’s reasonable to explore how the approval of such a plan might impact internal policies within the healthcare sector. It is, however, crucial to remember that the OIG’s endorsement is driven more by the specifics of this particular proposal rather than a generic approval for all profit-based incentive schemes. Thus, corporations and law firms must exercise due diligence before implementing similar models, and ensure that the plan aligns with the broader legal parameters.