Value Based Payments for Physicians

A3124Color300By: Valerie Shahriari

H.R.2 – Medicare Access and CHIP Reauthorization Act of 2015 was passed by the House on March 26, 2015 and the Senate on April 14, 2015.  While the title of the law indicates one of the topics of the bill (removing the sustainable growth rate (SGR) methodology from the determination of annual conversion factors in the formula for payment for physician services), the title is not representative of a major change that could affect all physicians.  Under the Medicare Access and CHIP Reauthorization Act of 2015, the Secretary of Health and Human Services is directed to consolidate components of the three specified existing performance incentive programs into a new Merit-based Incentive Payment (MIP) system under which physicians, physician assistants, nurse practitioners, clinical nurse specialists, and certified registered nurse anesthetists, would receive annual payment increases or decreases based upon their performance as measured by standards the Secretary shall establish according to specified criteria. Continue reading

Eye on the Regulations: The Argument Against ACO Exclusivity

photo 3By: Jackie Bain

In an ACO, participating physicians, hospitals and other healthcare providers use a coordinated approach to provide improved care to beneficiaries. As an incentive to participate in ACOs, Medicare shares its savings when participating providers coordinate to provide quality care while spending Medicare dollars more wisely.

The Centers for Medicare & Medicaid Services (“CMS”) have determined that a certain amount of exclusivity is necessary for an ACO beneficiary to be accurately assigned to an ACO.  Exactly how much exclusivity is necessary has been the topic of much debate.  Initially, lawmakers envisioned that only primary care physicians were required to be exclusive to their ACOs.  After the public had the opportunity comment on the proposed law, the rule was changed.  Now, it is generally accepted that if CMS assigns an ACO beneficiary to an ACO because of primary care services previously supplied by the physician, then the physician must be exclusive to the ACO.  This is true whether the physician is a primary care physician or a specialist who provides primary care services to a patient with no primary care physician.Continue reading

ACO Challenges Are Formidable

Final-ACO-RulesHanging this nation’s cost cutting/quality enhancing hopes on Accountable Care Organizations (ACOs) is bound to be frustrating and disappointing.  The ACO model seriously lacks sufficient real world grounding and is no magic pill.  Things like resources, operational capability and alignment (of financial incentives and direction) seem to have been overlooked or undervalued.

The ACO model is based on one fundamental assumption:  an expanded role of primary care physicians can slow cost increases and ensure better coordination of care.  That assumption is flawed for two reasons:  first, there is a large and growing primary care shortage; and second, the financial incentives in healthcare have driven a system based on acute, episodic interactions, leading to enormously fragmented clinical training and care.

We not only have inadequate resources to drive change away from acute, fee for services based care, but rather we lack resources that drive wellness. As one physician with a large hospital system recently said:  “We physicians are not trained to provide healthcare.  We’re trained to intervene when things go bad.”  Asking healthcare professionals and facilities to drive a model based on outcomes and resource consumption is theoretically possible, but a remarkable leap of faith (and training) is required, given they have made their livings off of sick people for so long.  That’s not to say that changing financial incentives from acuity to wellness and outcomes won’t work.  It’s just going to require training and proof that the players can make money with the new mandates.

As far as operations go, those with the greatest access to management, capital, IT and such are also the most expensive—hospitals.  It makes sense that the core objective of healthcare reform is to “squeeze the toothpaste tube” backwards from hospital to specialist to primary care physicians, but it’s a great leap of faith to expect that hospitals will or even can control costs.  In a healthcare system where providers admittedly are rewarded for doing more with more expensive things, the sharp turn required by the new law will require more than just a new law.  With all the current hospital-driven physician acquisitions, the increasing role of hospitals on the ACO issue looks at times more like turf guarding than any real cost-saving, quality enhancing move.

At the end of the day, all players have to answer the question “Did they reduce cost and enhance quality?”  It seems convincing that moving away from the fee for service model will change behavior.  We just need to make sure (1) there are sufficient resources to implement the change, and (2) financial and clinical issues are well balanced.  Time will tell, but meanwhile the current irony is that the most expensive link in the chain is best situated to actually operationalize the ACO concept.

Alignment is critical.  Financial alignment will require the players to believe they can all thrive in the new ACO model, yet physicians are historically leery of any hospital driven system.  In fact, given that hospitals are driving the ACO bus at the moment, the biggest fear among physicians is that they will be left out.  Even among physician-driven ACOs, the tension between primary care physicians and specialists is intense.  How much of any savings will go to primaries vs. specialists is no less divisive than the issue of the hospital/physician split of the shared savings.

Even more critical is the apparent lack of consideration given to the need for patient participation.  Where is the financial incentive for healthy patient choices and the disincentive for unhealthy patient choices?  Moreover, in a culture where more is more, why would anyone want to receive care from an organization that gets more by giving less?  Given further the ability of patients to wander in and out of ACOs and yet charge their ACO with the costs of non-ACO providers (who arguably have no stake at all in reducing expenses), the forecast for patient alignment is gloomy, but their buy in is critical.  It is difficult to see where patients have any stake in this change and would even be inclined to choose to be served by an ACO.  Many noted theorists have drilled on the glaring lack of patient alignment.  Rama Juturu and recent Wall Street Journal editorialists/economist Clayton Christensen have been outspoken about the need to enlist patients in the drive from intervention to prevention.  Patients that flock to ACOs (or whatever) will only do so if they see what’s in it for them.  The only thing an ACO can sell is results, outcomes.  And that’s gonna take time to measure and to sell.

At the end of the day, the threat of ACOs (and any vehicle to control healthcare costs more effectively) isn’t that they won’t work.  It’s that cost concerns will outstrip clinical ones.  While it can be argued that the employment of physicians by traditionally adverse players (like hospitals) will likely reduce the tension between them, it is precisely that tension that has always held the threat of “money over quality” at bay.  What will happen as hospitals and other healthcare players employ more and more physicians?  One can only hope that it is not silence and that, as found in some well established systems in the Midwest and West, respect for the different and necessary roles of ensuring both quality and economic survival will balance out, regardless of the healthcare delivery model that emerges.

From Intervention to Prevention

“Healthcare Reform,” “PPACA” and “ACOs” all have one certain thing in common:  cost-saving change.  Though debate swirls about politics, timing and the particulars of change, it seems clear that the changing demographics of our country (aging baby boomers) in our economic climate is not sustainable as is.  And it’s no surprise that a compensation system based on how much is done and how much it costs leads to greater expense.  An economic reward system that drives costs up as more and more people are set to join the ranks of the insured (through mandated health insurance and expanded Medicaid) simply underscores the timing of the change.  What does that mean for physicians?

Physicians are asking three key questions:

  1. Is there a future for small or solo practices?
  2. Is fee for service really gonna change?
  3. What can I do right now to adapt?

The Future of the Small Practice

The only solid answer is “less.”  It really depends on complex things like the demographics of where the doctor practices and the number of competitors close by.  That said, as change happens, the hardest hit will likely be the smaller practices, since they lack the personnel and financial resources to weather the change and to invest in adaptation.  Many small practices will likely experience change in such a way that the best they can hope for is to survive, rather than thrive.  Even worse, solo practitioners already know what it’s like to handle all the duties as a physician, keep track of business operations and keep the patients flowing into the practice.  Exhausting.  Without substantial support and resources, it’s just not realistic for most solos to expect to keep up.

Even larger practices are not often run like a business.  The professionals that generate the revenue often manage as well.  Moreover, most medical practices do not market or do any serious “back office” magic (revenue cycle management).  As such, change hits small practices especially hard.  Implementing even new EHR requirements can be consuming for a small practice.  How will it be as changes are made to reduce cost and improve quality?  How will it be when practices begin to see there is opportunity in change, that they may actually make more money in a risk based compensation environment?  Rougher.  Like a herd of buffalo when attacked, circling together is a good strategy.

That said, the vision has to be clear.  Why circle together?  Most medical practices are combining and growing to guard market share, not to manage costs or measure and demonstrate quality.  This is probably the biggest reason why we see larger practices in single specialties, not multi-specialty or primary/specialty based practices.  Most physicians that are adapting by joining larger practices are doing so for the same reason why buffalos circle together—the threat of change.  Though size alone is no panacea, larger practices are definitely in a better position to adapt.

Let’s face it:  few are running after change in healthcare right now.  Few see the opportunity and are leading the charge.  Most are waiting or are just setting the stage.  And most large practices are, at best, a good platform where change can be implemented and costs can be shared and spread among a larger pool.

Will There be a Change to Fee for Service Payment?

Yep.  Simple as that.  It’s already happening.  Bundled payments are in place, even in Florida.  Capitation is old hat for many now.

When?  Over time…  Not right away.  Even ACOs aspirants are selecting just one sided risk, testing the water as they see how well they do to reduce costs, improve quality and “earn” their right to bonus money.  Physicians that think fee for service will thrive for decades are kidding themselves, at least in the insured market.  Is there a basis for it in a “second tier” or concierge sort of environment?  Probably.

What Can I Do Right Now?

First, accept that we are approaching a new paradigm of healthcare delivery.  The current model of disease/injury crisis management has prepared no one for the move from intervention to prevention.  And yet, systems that are solidly based in wellness and prevention stand to profit most from the change we all face.

Second, look to shore up you business model.  That means:

  1. Look to join a larger practice that is committed to thriving in the future risk-based compensation scenario.  If the practice is there just to thrive in a fee for service environment and has no commitment to thriving in a risk based compensation model, keep looking;
  2. Market.  Most practices do not market at all, and yet consumers are selecting medical care in the most unlikely environment—the internet;
  3. Look at anything concierge-like.  Most of the public conversation centers around the insured market, mostly the Medicare Shared Savings Program (which has spawned the ACO concept).  What about the rest of the consumers?  As the insured market gets squeezed (remember that consumers are feeling the pressure too with heightened copays, deductibles and benefit limits), you can expect growth of the “second tier,” those who want more and are willing to pay for it;
  4. Build in wellness and prevention.  Not all practices lend themselves to wellness related services that can reduce healthcare costs, but those that do must look at ways to offer cost-saving, wellness and prevention-oriented services;
  5. Enlist the patients.  The concept of “partnering” with patients is strange, but consider the amount of savings and the enhancement of outcomes if physicians could incentivize healthy patient behavior.  Though absent from the public policy conversation, health care businesses that build in patient accountability stand to win big in a payment system that rewards clinical outcomes and cost savings.

Change is frightening.  Even “good” change is frightening.  Just look at all the upset stomach meds sold at airport kiosk counters.  Physicians have a terrific burden at this time.  They not only hold our health in their hands.  They are expected to have skills and time to help create a new environment in which care will be delivered.  Denying change in the healthcare sector is a waste of time and energy.  Looking for ways to thrive in it and even drive it is wise.

Doctors: Beware Signing ACO Documents

There continues to be terrific interest in accountable care organizations (ACOs), which are of course a financially risk-based model of providing healthcare to patients who choose to enroll in the Medicare Shared Risk Program.  ACO organizations are often led by hospitals and hospital systems, though occasionally by physician organizations.  One of the key common threads among these provider led ACOs is the fear of being left out of “the game,” the fear of losing out financially.  This fear, however, can lead physicians to run headlong into danger if and when they sign ACO documents.

 

One of the key ways ACOs get formed involves a stack of contracts being created, then shoved under physicians’ noses.  Doctors afraid to lose out tend to just sign.  The organizations are really to blame here, when the documents fail to contain material terms to deal with things like:  credentialing criteria, disciplinary procedures, financial provisions, how the financial up side or down side can affect physician compensation.  The documents are simply slid under their noses and, in fear of being left out, they get signed!  Or, as my buddy Rodger says “Ready, shoot, aim.”

 

Regardless of a doctor’s view of ACOs, no document ought to be signed unless all the questions raised by them are addressed, very clearly and in writing.  Be at the table with ACO organizers and do your best to design a good system, but don’t be naïve to think that the unaddressed portions will magically get filled in somehow in a way that benefits you or that even makes sense.  At the very least, wait until the document is complete, then consider if you want to sign it.

Elephants in the Room

ACOs and other new acronyms have swamped the minds of physicians and healthcarebusiness people alike since the terms were coined. The still new healthcare reform law continues to worry many and challenge others to figure out ways to play the game and win. While we scurry around chasing the regs and the new words and government agencies, while politics keeps moving the ball and shaping the healthcare agenda, the most central issues in healthcare cost/quality debate are not even discussed. It’s as though policy makers and business is saying “Hey, if we keep throwing new regulations at them, maybe they’ll stop asking really tough questions we can’t answer.”

Back in the 80s, the state of Oregon enacted Medicaid reform that took the breath right out of the rest of the country. Remember? The idea that a state would not list ALL medical services to ALL Medicaid patients was considered to be cruel and impolitic at the time. And the national debate about (1) whether healthcare is a right of American citizens, and if so (2) what healthcare services are “in” and which are “out” has grown virtually silent.

Instead, it seems we have entered the area of political intransigence. It appears that getting and staying in political office requires as little change as possible. So, very little seems to be accomplished or even discussed.

So what are the “elephants in the room?” They are the issues of “how much” and “patient accountability.” Though it appears that the issue of whether we Americans are entitled to receive healthcare has been skirted, we are clearly missing any discussion on the issue of how much services. Oregon hit the issue head on, but nationally there appears to be no movement or even discussion of the issue. We don’t know who should get what. We just know we want to reduce the costs (ration).

Virtually every effort to reduce costs so far has involved the use of managed care organizations. The Florida Medicaid program pilot project that began in Broward County in 2006 has produced two clear results—reduced expenditures and huge criticism that managed care has reduced costs solely by reducing access and care itself. Managed care has become the “black hat” that politics won’t pick up. It’s ok for managed care to restrict access and care because it reduces costs, but it is politically impossible to directly address the issue of “how much.” We rely on managed care to do it for us, due to our political inability to tackle the issue, then blame the payers for their (wink wink) bad behavior. If managed care is profiting, it is only because they don’t mind profiting from our unwillingness to take responsibility for the issues they deal with on a daily basis—saying “no.”

The second elephant is the issue of patient accountability. There is none! What is the consequence of patient bad behavior? What consequence is there for refusal to exercise, quit smoking, etc.? None. We pay more. There isn’t a single provision in any federal law that punishes us for making expensive healthcare decisions or that rewards us for making cost saving healthcare decisions.

I liken it to having teenagers. Expectations with no consequences yields a predictable result of no change in behavior. Simple.

These are huge issues to tackle. So many different kinds of people, agendas and ways of seeing the issues. So, we don’t even try. Instead, we “hire” managed care to bear the burden of our failure to address and answer these issues. And we throw complex ideas like metrics and healthcare reform into the market, which only serves to distract us from addressing the root causes of our healthcare challenges.