The move to value-based payment models means that physicians will soon, in some form or another, assume more financial risk for the outcomes of their patients. That means physicians need to begin exploring their options now to ensure their practices are ready and protected when they make the leap.
Among the consequences of Congress’ decision earlier this year to eliminate Medicare’s sustainable growth rate (SGR) formula, experts say, will be an almost certain increase in the number of accountable care organizations (ACOs.) That’s because the legislation ending the SGR contains a provision that will result in higher reimbursement levels for doctors in an ACO than doctors who are not.
Thus the question for doctors becomes less whether to join an ACO or other type of risk-sharing model and more how soon to make that first foray, and how best to protect one’s practice in the process, says Terry McGeeney, MD, president of Care Accountability, a Kansas City-based firm that works with doctors on that transition.
“My personal bias is they need to get on the train pretty quickly because they need to learn how to do this while there is only upside risk,” says McGeeney, a family physician and the founder of TransforMED, a subsidiary of the American Academy of Family Physicians. “If they don’t get any money, but they don’t lose any money, they are still learning. But if they jump in when there is starting to be down side risk, it could be a very difficult journey for them.”
McGeeney is not alone in outlining such a stark scenario for doctors still weighing whether to participate in an alphabet soup of ACOs, CINs (clinically integrated networks), and other reimbursement models.
Related:ACO or PCMH: Making a crucial decision for your practice
To maximize their opportunities, doctors need to prepare by, for example, looking for ways to improve patient care coordination and using data analysis to identify patterns in their practices, say healthcare consultants and physicians already operating under risk-sharing arrangements.
Meanwhile, they should be looking for like-minded practices with whom to partner before rapidly-consolidating networks leave them on the outside looking in, says Susan Quirk, a healthcare consultant in Colorado Springs, Colorado. “They have to move fast,” she says.
The legislation ending the SGR gives practices a choice for how they wish to be reimbursed in the future: One choice is to use a new formula called the Merit-Based Incentive Payment System (MIPS), which is essentially a fee-for-service plan containing an increasing financial risk for quality. The other choice is to join an ACO or other risk-sharing model.
In both cases, physicians will see their Medicare reimbursements increase by 0.5% from 2016 through 2019. After 2019, providers operating under a risk-sharing model (which in most cases means an ACO), have the potential to earn substantially more than those under MIPS, although they will also face greater downside risk if they don’t meet certain quality metrics.
ACOs already provide care to as many as 56 million Americans, or at least 15% of the U.S. population, according to an April 2015 analysis from management consulting firm Oliver Wyman. Sylvia Burwell, secretary of the U.S. Department of Health and Human Services, has announced that the department’s goal is to tie 50% of Medicare payments to value-based care by 2018. New Medicare-initiated models, such as the Next Generation ACO with higher potential levels of risk and reward, are on the near horizon.
Certainly not all doctors are convinced. An analysis of approximately 1,200 physician practices based on data from the National Survey of Physician Organizations, found that nearly 40% of those practices either had joined an ACO or planned to do so. But the remaining 60% reported no such intention, according to the findings published in 2014 in Health Services Research, based on survey data from January 2012 through May 2013.
Steven Dukes, MD, a central Florida obstetrician/gynecologist counts himself among those physicians who have decided that they can’t stall any longer. “We are still in a situation that if we make the right choices going forward, that there’s still benefit to be had by all,” he says.
“I’m certainly not a medical economist-that’s not my forte,” Dukes says. “But what I read and what I see, if you listen to those powers that be, there is a lot of waste in the system.” Dukes is among the physician leaders helping to launch the Florida Hospital Physician Network. The clinically integrated network, which is still in development and plans to start treating patients in 2016, is combining the resources of the non-profit Florida Hospital system with a targeted goal of at least 2,700 doctors, according to Dukes.
Initially, any risk-based compensation will be tied primarily to performance metrics, but with the longer term plan that the more closely knit hospital-physician team can pursue risk-sharing contracts, Dukes says. He’s part of a Winter Park, Florida-based group of seven OB/GYNs that has already committed to joining the network, but he remains sympathetic to the concerns of doctors contemplating the pros and cons of a similar move.
They’re not happy, he says, about the loss of the entrepreneurial autonomy that drew them to medical practice in the first place. Another worry, which Dukes tries to assuage, is that the practice data that will be collected could be used punitively. “There are certainly concerns that physicians think that they may get pushed out of the network if their costs are running higher than others and they’re not able to adjust for whatever reason,” he says.
NEXT: Boosting cost sensitivity
Even if a doctor hasn’t joined a risk-sharing model, he or she can start preparing for that reimbursement environment by scrutinizing his or her own practice procedures, such as working with third-party payers to get a better handle on the cost profile of specialists to whom they routinely refer patients, McGeeney says. “For example, a lot of primary care doctors really don’t know if the cardiologist they’re referring to is a high-cost specialist that caths everybody or is a low-cost specialist,” he says.
Along with adjusting referral patterns if needed, says Quirk, doctors in multi-practitioner practices should ask questions such as, to what extent have we standardized treatment approaches? Have we agreed on the optimal drugs and medical supplies for our practice? What kind of patient care support are we providing for patients newly discharged from the hospital?
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“And can we demonstrate that this consistent approach affects cost, quality and outcomes?” Quirk says. “Everyone likes to put a little bit of their special sauce into their approach to patient care. Let’s remove the special sauce and make sure that we are consistent throughout.”
Doctors who don’t turn the spotlight on themselves may be affected in unexpected ways, Quirk says. Recently she conducted an analysis for a hospital chief executive officer who was deciding whether to renew the contract of a group of hospitalists or give it to others also practicing at the facility.
Quirk used case-mix adjusted data for pneumonia treatment and found that among the 10 hospitalists treating the most patients with that diagnosis, the number of specialist consults per patient ranged from 1.2 to five per hospitalist, with an average of two referrals.
“The hospitalists that had the five specialists were the ones who had the highest patient load, and a patient load that was beyond reasonable,” she says. “What they were doing is practicing fee-for-service medicine. So they are getting paid, but it’s costing the hospital money. Those are not the guys that these organizations want to affiliate with in the future.”
NEXT: Building value-based care
The good news for primary care practices attempting to focus more on value, McGeeney says, is that a new revenue stream is available to support that transformation: billing for chronic care management. Since the start of the year physicians and other qualified professionals have been able to bill for non-face-to-face care coordination services provided to Medicare beneficiaries with multiple chronic conditions, using CPT code 99490.
While providers must meet numerous detailed requirements to bill the code, the average reimbursement-about $40 per month per patient-can add up quickly, says McGeeney. He cites an analysis published by consulting firm Pershing Yoakley & Associates showing that a practice with about 500 Medicare patients that meets the chronic care billing requirements could gross nearly $238,000 annually in related revenue.
“It could be a game changer for primary care doctors,” McGeeney says. With that additional revenue, practices can hire care managers and purchase technology to identify gaps in care, among other measures to better position for risk-adjusted contracts.
Related:From quantity to quality: Meeting the new demands of value-based care
Currently, the available risk-based arrangements are primarily upside models, dependent on fee-for-service reimbursements with additional payments if the doctors meet quality benchmarks, says Graham Hughes, MD, chief medical officer for SAS Center for Health Analytics and Insights. “I think justifiably so, physicians are wary of getting into contracts where they are unsure whether the data accurately reflect their population, their case load, their practice patterns,” he says.
Along those lines, the Florida Hospital Physician Network plans to start with opportunities for upside risk, by setting quality benchmarks that are still being developed by related subcommittees, Dukes says. Along with meeting specific treatment goals, such as annual mammograms, some likely will be designed to help practices get a better handle on the types of patient conditions they are treating, such as the percentage with diabetes or a body mass index of 30 or higher, he says.
After practices in the network have developed a more nuanced portrait of their patients, then future metrics can work toward improving certain risk factors, such as achieving weight loss or better glucose levels. Stated another way, Dukes quips, “Before you go chasing the chickens, you’ve got to know how many are in the yard.”
NEXT: Scrutinizing the risk
Lloyd Van Winkle, MD, medical director and board chair of United Physicians of San Antonio ACO, believes that the
physician-led approach his ACO has adopted enables it to be nimble as it pursues cost-effective care. “The idea is to improve quality and discourage unnecessary procedures which actually put patients at risk,” he says.
This summer, the ACO’s leaders began meeting with podiatrists and cardiologists as it considers adding sub-specialists to its cadre of roughly 65 primary care doctors. Given the high incidence of diabetes among its patients, the ACO wants to team up with foot specialists who provide good patient care without automatically defaulting to “selling unnecessary equipment like special shoes and things like that,” says Van Winkle.
For cardiologists, the ACO is talking to those who could perform some procedures, such as vascular studies, in an outpatient surgery center rather than a more costly hospital setting, he says.
To hammer out the details of such risk-adjusted arrangements-from the design to the eventual distribution of any savings-a high degree of physician comfort with the underlying cost and treatment data is paramount. “It’s all coming down to the data at this stage of the game,” Dukes says. “That’s how we’re going to be judged whether we like it or not.”
Related:Understanding risk-based payer contracts
It’s also important that doctors understand upfront all of the underpinnings that drive any revenue sharing, McGeeney says. For example, if shared savings are distributed based on meeting certain quality metrics, does a doctor need to meet all of them to reap the payout? Or if they meet 70% of them, are they paid 70% of the shared savings? What are the benchmarks based on? If patient satisfaction is being tracked, are those numbers taken from a costly survey or a more informal email questionnaire, and what are the pros and con of each approach?
A similar line of questioning should be pursued when calculating the metrics for a physician’s treatment costs, McGeeney says. If a doctor is asked continually to match the cost savings achieved the prior year, “you can only squeeze the turnip so much.” A better approach would be to compare the practice against city or regional metrics that will better reflect health costs trends over time, he says.
In addition, make sure that the underlying data fairly reflect the morbidity levels of the practice’s patients, says Rick Hindmand, JD, an attorney specializing in healthcare, corporate and regulatory law at McDonald Hopkins. “If you have a physician who is very highly regarded in terms of being kind of a miracle worker, he or she may be getting a lot more of the patients with the terrible conditions.”
As they negotiate the agreement, physicians should also consider if they want to include a contractual escape hatch, such as a termination clause or a stipulation that the parties reevaluate the terms periodically, Hindmand says. “Particularly when you get into risk-based contracting, I think that there is a real potential that there could be unforeseen consequences here that maybe the practice hasn’t really thought through, or things that are just different from what they had expected,” he says.
NEXT: Moving beyond concept
As he talks to physician colleagues in central Florida, Dukes emphasizes that the process of building a hospital-physician network will be collaborative rather than punitive. If a doctor is a low-performing outlier, then there will be a conversation to determine what might be the reason for that deviation, he says. “It’s meant to be a working environment where we can all learn from each other about the best way to care for our patients.”
Van Winkle anticipates that the number of doctors in the San Antonio ACO might reach 100 by year’s end, and he is already looking toward the next phase of revenue-sharing. The San Antonio ACO is joining forces with other ACOs to pursue designation as a Next Generation ACO, with the goal of being one of the first chosen under the new model next year, he says.
Related:89 ACOs join Medicare Shared Savings Program
Van Winkle, who is also part of a clinically integrated network, acknowledges that he’s covering his bases with “a boot-and-suspenders approach” to the reimbursement future. But regardless of how models shake out, he believes that patient care will benefit from the process.
“We’re learning, and I’m learning, a lot more about wise business practices in the practice of medicine,” Van Winkle says. “Where waste is, how to recognize waste, how to apply evidence-based criteria rather than traditional criteria to medical care. There are a lot of things that we’ve done just because we’ve always done it that way.”