Navigating 2016's reimbursement challenges

Get paid what you are owed.

With so many changes taking place in healthcare reimbursement, including the transition to value-based payments, payer consolidation, the growing popularity of high-deductible insurance policies, and the expansion of telehealth, the start of the new year is a good time to evaluate what primary care physicians can expect financially.
Here is a look at what is coming your way in 2016 and how you can be ready.


While the Merit-based Incentive Payment System (MIPS) and Alternative Payment Models (APM) don’t go into effect until January 1, 2019, now is the time for physicians to become informed and start any necessary practice transformations, according to Wanda D. Filer, MD, FAAFP, a family physician in York, Pennsylvania, and president of the American Academy of Family Physicians (AAFP).

Advance your practice finances by improving claim rates

She notes that there are numerous moving parts in the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) and the specific rules that will be developed to implement it. “This is not a year to disconnect in terms of what’s going on out there,” she says. “AAFP is working to make sure the rules are primary-care-friendly, particularly that physicians who are practice owners are treated equitably.”
AAFP has recommended that its members become certified as patient-centered medical homes for many years, and she is encouraging them to continue in that work in 2016. “That would get them very quickly into the APM arm of this, which frankly we think most of them would prefer. It gives them a lot of upside potential financially with no downside,” she says.

Next: Major payer consolidations


Shari Erickson, MPH, vice president of governmental and medical practice for the American College of Physicians, agrees that physicians need to use 2016 to become educated about the new program. “It incorporates previously existing programs and we hope to see them improved as they come together,” she says.

Existing quality programs that are covered under MACRA include the Physician Quality Reporting System (PQRS), the Value-based Modifier Program, and Meaningful Use. Critical Practice Improvement Activities are a new component. “The intent of the MIPS legislation is to bring these together to streamline and simplify these different programs, which currently have different reporting periods and different feedback loops. But with anything new, it is confusing,” Erickson says.

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Because 2016 will be the last reporting year for the existing quality programs, Erickson says that paying attention to them in terms of feedback reports for the Value -based Modifier Program will be helpful, because they will give physicians a sense of where they stand. Erickson also encourages physicians to work on incorporating some of the newer billing codes, such as transitional care management, chronic care management, and advance care planning, into their practice, as well as the Welcome to Medicare and Annual Wellness Visit.
“If the practice can build in the capacity for these codes, it can bring in some extra funding and help them align their workflows and processes toward becoming a medical home. They also help you provide better patient care,” she says. “It’s not easy, and may require some staff training, but it is worth it.”


With Aetna’s proposed acquisition of Humana for $37 billion and Anthem’s $54 billion bid for Cigna, many markets could find themselves with fewer payers in the near future. “We are concerned about the consolidation,” Filer says. “It feels potentially anti-competitive. We are concerned about the impact on cost and the ability to give patients choice around their insurers.”

Next: AAFP board chair speaks out


AAFP Board Chair Robert Wergin, MD, a family physician in Nebraska, points out that with these mergers, some payer companies now have annual budgets comparable to some of the world’s 30 largest countries. “These organizations are immense, and their mergers are leaving patients with fewer choices,” Wergin says. It can be bad for physicians’ bottom lines too, he adds.

How physicians can prepare for their financial future

“I often use an analogy of the bully on a third-grade playground. They don’t pick on the biggest, toughest kid. They pick on the wimp, and you know who the wimp is? Small individual practices,” he says. He practices in a county with about 17,500 people, which isn’t a large enough population to give him any leverage with payers. Primary care physicians (PCPs) in such small communities are at risk of facing “take it or leave it” contracts, he notes.
“The insurers will say that the mergers lead to new-found efficiencies and lower costs, but in reality, if you look at the historical perspective of it, your premiums go up, not down,” he says.
 In 2015 the AAFP wrote to the U.S. Department of Justice’s Antitrust Division and leaders in the U.S. House of Representatives and Senate, warning of the consequences of consolidation among large insurers, including the potential impact on patient care. “The AAFP is profoundly concerned that these mergers, if allowed to be finalized, may result in decreased choice for consumers, higher costs for purchasers, and potentially establish mass disruptions in continuity of care due to changing and narrowing networks of physicians and hospitals,” the letter read.
The AAFP asked for a review of the proposed mergers to ensure that the health profession can continue to be innovative, deliver quality care and reduce costs. “If I go under because I can’t negotiate a good contract, my community loses access to a physician. Patients may have to drive 15 to 20 miles to another community. My hospital’s in a town of 5,000, and has 20 beds. Can my hospital stay open if insurers won’t negotiate with it?” Wergin asks.

Next: Finding a solution


One solution is for physicians to join forces, such as in an independent practice association or accountable care organization. Physicians in rural areas may need to partner with ones in a metropolitan healthcare system, Wergin says. He also suggests that PCPs look at their patient base. “Maybe there’s not enough patients in a certain plan that you can leave it rather than take a bad contract,” he points out.

J.B. Silvers, PhD, professor of banking and finance at the Weatherhead School of Management with a joint appointment in the School of Medicine at Case Western Reserve University in Cleveland, sees a somewhat better outcome from payer consolidations because the Affordable Care Act requires that insurers spend 80% to 85% of their premiums on medical costs.
“What benefit is it to them to raise the prices if they can’t keep it? They can’t just drive down what they pay providers and keep the difference,” he says. “Much of what they gain by bargaining is going to have to go back to the purchasers in lower premiums.
“The only way they can gain higher profits is by getting bigger, Silvers adds. “They can’t do it any more through risk selection, by excluding bad risks or preexisting conditions, or by just bargaining lower prices. They have to get larger, which means acquiring other insurance companies or getting much more active on the exchanges. That means mergers aren’t going to stop.”
Silvers doesn’t think physicians necessarily will see much of a squeeze in their reimbursements in the year ahead, but says that 2016 is “the year they have to make the decisions.” Independent PCPs either need to affiliate with a larger entity or sell their practice. They also need to decide which insurance networks to join.

Next: Considering high deductibles and copays


“You’re going to see some churning of patients as doctors make these choices. That is a very uncomfortable place to be for a doctor,” he says. Patients are having to make the same decisions, he adds, and many physicians who do join a group will have to sign a non-compete clause, limiting what they can do if they leave.
“A doctor needs to understand that when they sign such a clause, it may be the last decision they get to make,” he says. “Once you are part of an organization, it can be really hard to get out of it, so decide carefully.”


As a result of the Affordable Care Act, more Americans have healthcare insurance today, but the drawback is that many also now  have high annual deductibles-$5,000 a year is not uncommon. This will make patients more likely to question the necessity of tests a physician may want to order.
AAFP President-Elect John Meigs, Jr., MD, FAAFP, who practices in Centreville, Alabama, says that for patients with routine problems whose bills never reach $5,000, having insurance hasn’t changed their economics a lot. “They end up paying cash for most all of their healthcare. If something catastrophic happens, it’s great to have that coverage, but people in a rural area like ours do not have $5,000 of discretionary funds to spend,” he notes.
Meigs advises PCPs to have their office staff explain to these patients what their coverage entails. People who have not had insurance before may expect that it will cover everything. They may have made their decision about which policy to buy based on the premiums rather than on the benefits.
“Most plans cover one annual wellness visit, which is good but can lead to patients coming in once a year wanting many things done in one visit,” Meigs says. “They don’t want the preventative stuff, they want what they want and want to call it an annual wellness visit. We have to explain to them what an annual wellness really is.”
However, working with high-deductible patients to order only tests that they truly need dovetails well with the basic premise of primary care, he says. “We don’t order every test in the book right off the bat. That’s not primary care.”

Next: Telemedicine: Friend or foe?


However, even with cautious decision-making, practices still will have some patients who struggle to pay their bills. Silvers recommends that practices whose patient panels include large numbers of working poor plan for at least some bad debt in 2016. In general, lenders are not interested in financing primary care expenses, so allowing patients to make payments to you will be inevitable.
“That’s the way doctors used to get paid. People would bring in chickens and stuff from the farm to pay their bill. We’re going back to the future again,” Silvers says. In addition, if patients get very high bills for your services, they will start shopping around.
“Doctors live under the illusion that their patients are super loyal and would never go anyplace else. There’s not much data to show that is true. It doesn’t take very much to get somebody to move to another doctor when there is money involved,” he says.

Telemedicine: Friend or foe?

Another trend that will affect primary care reimbursements in 2016 and beyond is telemedicine. Steven Waldren, MD, director of the AAFP’s Alliance for eHealth Innovation, calls telemedicine a double-edged sword for small independent practices. “We are seeing a fair number of startups that are providing telemedicine as a service, which means you are going to have competition at some level in your area,” he says. “Patients seeking care for routine problems may be cherry-picked out of your practice because it’s more convenient for them to call somebody up on a video conference and talk about their problem.”
This trend means that the notions of service and a strong physician-patient relationship is going to be more important than ever, Waldren says, because even if you offer some weekend and evening hours, there will always be times you aren’t available to see your patients. “You need to educate your patients about how they should use outside providers when absolutely necessary and how they should make sure you get information back about it, because many of those providers do not offer good continuity,” he says.

Next: Two road to payment


However, the emerging dynamic of telemedicine competition should motivate practices to make sure they are providing the services their patients need. For example, it is possible to increase access by having a nurse or a care coordinator stay in touch with people with chronic diseases? “This type of care can help improve your quality metrics as well as patient satisfaction,” Waldren says.
Waldren has seen some physicians sign up to work for telemedicine providers as a way to earn extra income. Some of those companies will allow doctors to see only their own patients. That way, if your patients want to go online, they can see if you are available. If you are not available, they can see a different provider but one you are connected with through the company.

Next: Issues that remain unresolved


Patient convenience isn’t the only factor pushing telemedicine, notes David N. Gans, FACMPE, senior fellow for industry affairs with the Medical Group Management Association. As more employers self-insure, they are incentivized to spend more on employee health, such as offering on-site healthcare clinics or telemedicine options that keep their employees out of the emergency department.

“This shifts services to new providers and changes the relationship some PCPs have with their patients. Practices need to consider how they are responding,” Gans says. “Are they offering telehealth or flexible hours, for example? If not, 2016 is the year to get started. Don’t get left behind.”
Elizabeth Pector, MD, a family practitioner in Naperville, Illinois and member of the Medical Economics advisory board, shared some of her practice’s early experiences offering telemedicine through a program in which patients describe their problem via text and a non-physician practitioner screens it to see if the problem can be handled via texting. If so, the patient is charged a fee for the virtual visit.

The practice hasn’t publicized the program much yet so the numbers aren’t large, but so far they have found that patients appreciate the option of getting healthcare after hours. “We are able to help many of them but some definitely needed to be deferred in favor of a face-to-face visits, which of course is not going away,” Pector says. “Telehealth will never completely replace hands-on exams.”

She adds that the key to making it work is having good protocols for which conditions can and cannot be treated remotely. Having a good “front door” web page that lists the range of problems that can be managed via text is important.
One issue that remains unresolved is if the practice expands the service and physicians are assigned to  call times, how will they be reimbursed? Will they be paid even if no one uses the service during their call time? “A lot needs to be worked out,” she says.

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