Making sense of evolving models for advanced practice provider compensation

The Ask MGMA program has received several member questions about advanced practice provider (APP) and nurse practitioner (NP) compensation structures. Historically, NPs and APPs were salaried employees, but with the increased utilization of APPs in practice models and change in physician compensation models, medical practices have made many changes in compensation structures.

An Aug. 1, 2023, MGMA Stat poll asked medical group leaders how they compensate their APPs. The majority (51%) said salary and incentives, while 39% reported either a straightforward salary or hourly rate. Another 6% responded that APP compensation is RVU based, 2% said it’s volume based, and another 2% responded “other.” The poll had 553 applicable responses.

While nearly four out of 10 practice leaders noted they relied solely on a set salary or hourly wage for their APPs, that share might be shrinking: About 42% of those respondents said their organizations are considering an update to their APP compensation methodologies as their APP utilization and staffing models evolve, with many of them citing the potential addition of work RVU (wRVU) productivity and various other incentives in conjunction with a set salary.

Among the medical groups that offer some form of incentive on top of a salary, those models often involved:

• A percentage of collections for services provided or cash receipts after overhead
• Quarterly or year-end bonuses based on a measure of productivity
• Incentives tied to quality measures, patient experience scores, note closure and/or citizenship
• A per-wRVU incentive based on average RVUs in a rolling 12-month period.

Compensation models for NPs and APPs in medical practices can vary depending on many factors, such as education and experience, scope of practice, geographic location, practice setting, patient volume, performance, market demand and specialty.

New for MGMA members

• Access MGMA's member-benefit tool, APP Compensation Model Contract Outline.
• Listen below to our recent Ask MGMA podcast on the topic of APP compensation.

Some of the most common compensation models for NPs and APPs in medical practices:

1. Fixed salary: Typically based on factors such as experience, education and the scope of the NP's responsibilities and provides a predictable income and can help ensure that they are fairly compensated for their work.
2. Hourly rate: This compensation model can be useful for practices that have fluctuating patient volumes or that require NPs to work irregular hours.
3. Production-based pay: Based on the amount of revenue APPs and NPs generate for the practice. This can be calculated using a variety of metrics, such as the number of patients seen, the complexity of the cases or the number of procedures performed.
4. RVU-based model: This model uses relative value units (RVUs) to determine compensation. RVUs are a measure of the complexity and resource utilization of medical services. The APP's compensation is calculated based on the number of RVUs they generate through patient visits and procedures.
5. Salary plus RVU or productivity bonus: In this model, the APP receives a base salary, but they may also earn additional compensation based on productivity metrics such as RVUs or the number of patients seen.
6. Incentive-based pay: Some medical practices offer NPs bonuses or incentives based on their performance, such as meeting certain quality metrics or achieving patient satisfaction goals.
7. Partnership or profit-sharing: In some cases, NPs may be offered a partnership or the ability to share in the profits of the practice. This can be a more complex compensation model, but it can provide NPs with a greater sense of ownership and investment in the practice's success.

We have seen some emerging trends that are still a work in progress:

1. Value-based pay: With the shift towards value-based care, some medical practices are starting to offer NPs compensation based on the quality of care they provide, rather than just the quantity of services they deliver. This can include metrics such as patient outcomes, patient satisfaction, and adherence to evidence-based guidelines.
2. Team-based care: There are some practices that have moved toward team-based care models, in which compensation is tied to the performance of the whole care team, rather than just individual providers. This can incentivize NPs to work collaboratively with other providers and staff to improve patient outcomes.
3. Loan repayment: This option offers loan repayment as part of the compensation package.
4. Bonuses for meeting specific goals: Some medical practices are offering bonuses to NPs who meet specific goals related to patient care, such as reducing hospital readmissions or improving patient satisfaction scores and other quality improvement initiatives.

MGMA members can review sample physician compensation model tables in a toolkit that includes work RVU (wRVU), tiered wRVU, net revenue and partnership compensation. These can be used for APP compensation modeling as well.

Additionally, MGMA just released the 2023 MGMA DataDive Provider Compensation data report, available to members and non-members, and a condensed version is in the July issue of MGMA Connection. The report highlights a May 16, 2023, MGMA Stat poll that revealed that 47% of medical groups tie quality performance metrics to physician compensation. Overall, trends show there has been an increase in quality metrics as a determinant of compensation over the years.

The surveyed items within the MGMA DataDive Provider Compensation data set are valuable resources for comparing their compensation rates to national, regional and specialty-specific benchmarks to determine how competitive they are.

The Association of American Medical Colleges (AAMC) estimates that physician shortages across the United States could reach as high as 124,000 physicians by 2034, so it is important that practices have a good compensation plan in place and keep up to date with new trends and compensation data. Competition for physicians, APPs and NPs will continue to grow, and a practice needs to make sure it is competitive in the marketplace.

Additional MGMA resources:

• Sample Physician Compensation Model Tables
• RVUs: Applications for Medical Practice Success, 3^rd ed
• Physician Contract Guidebook
• Transitioning to Alternative Payment Models: A Guide to Next Generation Managed Care Contracting

Roadmaps to Value-Based Profitability: A Practice Transformation Guide