Taking on risk: Understanding the new world of payments

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.

 

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