To Heal. To Teach. To Discover. Dec 9, 2015 UHMG Compensation Plan Year 2 Updates – January 2016

Be the Difference. Update # 1: Methodological Change for Clinical Base Calc In Year 1: Faculty received 1/3 rd of the Clinical Base Variance In Year 2: Faculty receive ½ of the Clinical Base Variance 2 Year 1 Calculation Example: Current Clinical Comp = $101k Calculated Clinical Comp = $200k Variance = $ 99k Divided by 3 = $ 33k Current Clinical + 1/3 Variance = $134k Year 2 Calculation Example: Current Clinical Comp = $134k Calculated Clinical Comp = $200k Variance = $ 66k Divided by 2 = $ 33k Current Clinical + 1/2 Variance = $167k

Be the Difference. Update # 2: Methodological Change for Productivity Tier Faculty > 75 th in Both Prod & Comp: Will Not Keep Current Comp Faculty > 75 th in Prod but < 75 th in Comp: Continue to Climb to the 75 th 3 In Year 1: Faculty producing above the 75 th %ile were split into two groups with the following effect on comp: If Currently Paid Above the 75 th : No increase or decrease to current clinical compensation If Currently Paid Below the 75 th : Current clinical compensation raised to the 75 th (1/3 rd adjustment in 1 st Yr) In Year 2: Faculty producing above the 75 th %ile are split into two groups with the following effect on comp: If Currently Paid Above the 75 th : Comp adjusted Bi-Directionally to ½ of the variance of RVU %ile – Comp %ile (see both examples below) If Currently Paid Below the 75 th : Current clinical compensation raised to the 75 th (1/2 adjustment in 2 nd Yr) Positive Adjustment to Clinical Base: wRVU %Ile = 90 th & Comp %ile = 80 th Clinical Base will be set at the 85 th – ((90 th – 80 th ) / 2) + 80 th = 85 th Negative Adjustment to Clinical Base: wRVU %Ile = 84 th & Comp %ile = 92 nd Clinical Base will be set at the 88 th – ((84 th – 92 nd ) / 2) + 92 nd = 88 th Maximum %ile can be set at is 99 th %ile

Be the Difference. Update # 3: Benchmarking Change In Year 1 UHMG Used the 2014 Survey Only (MGMA, AAAP, AAARAD) Going Forward UHMG Will Utilize the 5 Most Recently Published Surveys (from MGMA, AAAP, & AARAD) 4 The UH Comp Plan benchmarks will be calculated annually and based entirely off the most recent 5 Published Surveys for both Comp & Prod This captures the trend taking place in the market while also smoothing out large year to year swings often found in benchmarking data Methodology: Fluctuate the 2014 Benchmarks (Used in Year 1) by the Average of the Annual % Change over a 5 Year Period (Survey Yrs ) See following 3 slides for examples around productivity benchmark calculations for several surgical divisions

Be the Difference. Update # 3: Benchmarking Change (cont’d) Example 1: 2011 – 2015 Surgical Division wRVU Benchmarks: 5

Be the Difference. Update # 3: Benchmarking Change (cont’d) Example 1 (cont’d) : Surgical Division 5 Yr Annual % Change & Yr 2 Calculated wRVU Benchmarks: 6

Be the Difference. Update # 3: Benchmarking Change (cont’d) Example 1 (cont’d) : Surgical Division Year 1 & Year 2 UH Comp Plan wRVU Benchmarks: 7

Be the Difference. Update # 4: 2016 Incentive Template Draft CMS MIPS – Merit Based Incentive Payment System: Final Weights and Metrics TBD 8