Posts Tagged ACOs
Should emergency physicians advocate that they be carved-out of payment reform? There may be no easy answer to this question, at least not yet; and in any case, advocating to be an exception to the transition from fee-for-service to pay-for-performance and risk-sharing may be a waste of time and effort. The tide is clearly turning, though not as quickly as payers and government regulators might wish; and it would appear that eventually, every physician and hospital will be subjected to various incentives and disincentives to provide better care for less money, or perhaps less care for less money. Even if the Affordable Care Act is killed by the Supreme Court, along with the provision of this act that mandates “paying more to doctors who provide quality care at lower cost to Medicare, and reducing payments to physicians who run up Medicare’s costs without better results”; this snowball is already rolling. The question for ACEP and emergency physicians is: do we scramble to get out of the way, or hitch a ride?
One of the considerations at issue is the attribution problem. Lots of different providers impact the care of emergency department patients, and what gets done to and for them. Unlike most physicians’ offices, the ED is an open practice. Physicians often send their patients to the ED to get tests and procedures and treatments that the physician could perform, or order, in a lab or outpatient radiology suite, or consultant’s office. One-stop shopping is quick, its easy, and it gets the patient out of the doctor’s office, allowing better turn-around. Consultants call or come to the ED and order all sorts of tests and treatments, and sometimes these orders are attributed to the treating ED physician. When physicians are financially at risk for the cost of caring for their patients, or are simply tracked and compared with each other regarding these costs; attribution is an important issue. Under payment reform, determining how a physician’s decisions impact the cost of care involves many complicated adjustments related to the patient’s health care issues, and the roles of other physicians involved in the patient’s care. According to Dr. Berwick, the former administrator of CMS, this “may be the most difficult measurement challenge in the whole world of value-based purchasing”. These adjustments are even more difficult to make in an open practice like the ED, where the most expensive care is often the result of a multi-provider team effort.
Another consideration relates to the impact of payment reform incentives and risk-sharing on medical decision-making in the context of a medical emergency. In the middle of a heart attack, do you really want your ED physician factoring in how he or she will be judged, or compensated, by how little is spent on your care; or trying to shift critical time dependent decisions to some other provider down the road? Here’s an example: the ED physician can look at your ECG and make the expensive decision to call in the cath lab team in order to reduce the time it takes to get your coronary artery open, saving heart muscle and maybe your life. Or, he can call the cardiologist to come in and make that decision, wasting critical minutes, but putting the cardiologist on the hook for the cost of this decision. Of course, the obvious answer is to make the entire team responsible not only for costs but also outcomes, which is what bundled payments, capitation, ACOs, and integrated health care systems are designed to address. But don’t think for a minute that paying the entire team for performance is going to entirely mitigate the impact of these cost-cutting incentives. Ask seniors how they feel about health care payment reform under Medicare: for the elderly, and most everyone, incentives for physicians to skimp on needed care is frightening.
So far, things like bundled payments and capitation have been focused on scheduled, elective, non-emergency care, because it is easier to predict and monitor the relative contribution of the surgeon, the anesthesiologist, the primary care doc, the pathologist, and so on. In an emergency, care is less predictable, and it’s more difficult to attribute medical decision-making to one or another provider; and frankly, cost-cutting is a bit more risky, and cost-effective care perhaps more difficult to achieve. I suspect, however, that this will not deter the payers, because emergency care is also more expensive. If emergency care providers expect to be able to ride the train of fee-for-service forever, carving themselves out of payment reform, they will likely be disappointed. Either they will be tagged as an expensive commodity that payers will try to work around (using the EMTALA mandate as cover, and non-payment as one of the tactics – as in the Washington State Medicaid non-payment policy), or they will be subsumed into hospital employment or mandated participation in PHOs or ACOs or other risk-sharing ventures that undoubtedly will undervalue emergency physicians’ services and undermine their current paychecks. Unless, that is, these emergency care providers find ways to practice cost-effective care, and participate successfully in shared-savings and other at-risk incentive programs, in a responsible, caring, and efficient manner that ensures good outcomes, saves patients and payers money, and incidentally preserves their own incomes.
This post also appears in The Fickle Finger: www.ficklefinger.net/blog/
Several years ago, the medical director of the emergency department I was working in at the time decided to take a closer look at productivity amongst our physician and PA staff. In order to ensure that data on patients seen and visit times was being appropriately attributed to the treating physician or PA, we took a closer look at how the patient and the treating provider were linked in the hospital’s IT system (the data source), since we had a fair amount of double and triple coverage. It was a bit surprising, not to mention perplexing, to discover that at registration, the physician who arrived for the latest shift was assigned in the IT system to all the patients who arrived during this shift, until the next physician arrived, regardless of which provider actually took care of the patient. Thus, all the data related to provider productivity, and the attribution of the ordering provider for diagnostic tests, consults, medications, admissions, etc. which was derived from the IT system, was flawed. An approach initially designed to facilitate speedy order entry was never subjected to reconciliation at the end of the day, as we all assumed. Bummer.
The more we looked at the issue, the more complex it became. How should we attribute an inpatient admission when one ER physician handed off to another in mid-workup at change of shift? What about when a PA was supervised by two different physicians? Should a double bounce-back be attributed to the first treating physician, or the second, or both? You might think that provider-order-entry would solve many of the issues related to attribution of diagnostic test and treatment orders and consults and such; but if a patient is sent in to the ED by their primary care provider to have a work-up for RUQ pain, should the PCP or the ED physician be ‘credited’ with ordering the GB Ultrasound? Is the ED physician, or the hospitalist, responsible for ordering the admission? If a consultant requests a serum porcelain level before he will see the patient in the ED, is the consultant or the ED physician acting as the ordering provider?
You might think all of this is irrelevant, or as I am fond of saying, academic (meaning almost irrelevant); but in light of payment reform and Accountable Care Organizations and the push for cost-effective, error-free care: the need for accurate attribution in the ED is likely to be pretty important. If you can’t count correctly, you can’t have accountability. Since many ED physicians are employees of the hospital or academic institution where they work, accurate attribution might, in an era where cost-effectiveness and resource utilization is likely to be scrutinized at the individual provider level, mean the difference between continuing employment and getting the boot. Attribution might even be more important for contracted ED staffing groups working under contractual agreements with PHOs and hospital-owned or affiliated ACOs in risk-sharing or shared-savings arrangements that predicate payment of withholds or payouts to the ED group on performance against cost-effective care or use-reduction targets. These staffing contracts often have no-cause 90 day cancellation clauses hanging over these ED staffing groups, putting everyone’s job at risk.
I raise the issue of attribution and accountability in ED care because our practice environment is very complex – ED care is a team sport, with many providers having varied positions (sometimes the ED physician is the quarterback, sometimes the trauma surgeon, and sometimes the PA or NP), and the field of play is often unmarked and multidimensional, and the game challenging to track and score. If a quarterback throws a touchdown pass, who gets the credit: the QB, the receiver, or the offensive line? If a patient has wrong-side chest-tube placement, is the ED physician, the radiology tech who mislabeled the film, or the surgeon at the head of the gurney responsible? Who gets credit for the unnecessary dye-enhanced rescan, the risk-averse radiologist who insists he needs more contrast to make the diagnosis, the ED physician who is prepared to make the diagnosis of appendicitis clinically, or the surgeon demanding a scan before doing the consult? I am not advocating that ED care be carved out of the risk-sharing or shared-savings or pay for performance calculation simply because attribution in the ED is complicated. If we get carved out of these arrangements, ED physicians will simply become another expense item, inviting even less favorable treatment. I am just saying that we need to start working on developing systems and standards for the attribution of the work done in the ED now, before this payment reform cake is fully baked.
PPACA, Medical Loss Ratios, and Capitation – a Loop Hole Big Enough to Drive an Armored Truck Through
One of the new health reform provisions in the PPACA regulations is a requirement for health insurers to spend a certain proportion of health insurance premiums on actual medical care, thus limiting to some extent the proportion of these premiums that can be allocated to administrative expenses and profits. This proportion is called the medical loss ratio (MLR), and in the regs the proportion that must be spent on care is 85% or higher in large-group markets and 80% or higher in individual and small-group markets. I believe the impetus for this rule is two fold: 1) to try to get insurers to minimize the costs associated with administration of the plan (so as to maximize their profits within the MLR restriction), and 2) to try to insure that any successful cost-effective care strategies that are adopted go directly to reducing the premium costs for enrollees. Insurers that fail to meet this standard must rebate some premiums back to enrolees. It doesn’t take much savvy to imagine that insurance companies executives would, in response to this reform of their market, launch aggressive advocacy strategies to modify these regulations in order to recoup their potential profit margins and maintain their obscene executive salaries.
Great debates have been sparked at DHHS and at the National Association of Insurance Commissioners over a wide range of MLR issues, especially around what types of activities should be included in the definition of ‘medical services provided to enrollees’ (should nurse advice lines and other ‘cost-containment strategies’ count as care?), whether federal taxes should be factored into or excluded from the calculations, to which types of plans should MLR standards apply (should mini-med plans be included?), and a whole host of other accounting, reporting, and procedural issues. Nothing generates gaming the system in Washington like new federal regulations, and health insurance lobbyists are having a field day. I had to laugh when I read that the former director of the Congressional Budget Office and president of the think tank American Action Forum was quoted as saying: “I was surprised to see the members of Congress try to influence this process.” Really?
In all the fuss, some of which has actually made it into the national news media, there appears to be one particular loophole for insurers that seems to have escaped much attention. This loophole is big enough to drive an armored truck through, on the way to the bank (with a brief stop-over in Wall Street to rack up some leveraged premium on the insurer’s stock price). When health plans, particularly HMOs, capitate medical groups and IPAs to service their enrollees, these plans typically pass, via the per-member-per-month cap payment, not only the risk of paying for care, but also much of the cost for managing the program. Capitated medical groups are often delegated the responsibility for paying non-contracted provider claims, credentialing providers, managing prior authorizations, investing in IT, marketing plans to potential enrollees, and a whole host of other administrative tasks normally performed by the plan. Yet in accounting for administrative overhead to meet the MLR requirements, it appears that these plans will be allowed to shift these administrative costs to their subcontracted medical groups and IPAs and count them as ‘medical services’. What a deal for the plans!
At a recent Department of Managed Health Care meeting in California, a representative of a large capitated medical group described the development of one of the first Accountable Care Organizations (ACOs) in the state, in concert with Blue Cross. When I asked this representative, during the public question period, which of the administrative costs associated with management of the ACO would be attributed to Blue Cross when it came time to calculate the MLRs for the plan; he at first hemmed and hawed, then said that the issue had not been discussed with the plan yet. Really? This far into the planning process, you would think that issue would be pretty high on the list. ACOs are not just going to be Medicare Advantage programs, they are going to evolve into the next iteration of commercial health coverage, and you can bet that many plans will skip right over shared savings and similar strategies and go directly to capitation, because there is nothing better for an insurance company than collecting premiums like a health plan, acting like a broker, and shucking all the risk on to the providers. At this same DMHC hearing, CAL/ACEP testified as to how EMTALA obligated providers were being ripped off by these unregulated subcontracting medical groups and IPAs, and left holding bags full of unpaid claims when these risk bearing organizations go belly up. The HMOs, of course, often respectfully decline to take responsibility for these unpaid claims. Remember the term ‘negligent delegation’ when an ACO near you goes bankrupt – it may come in handy.
But I digress. My point here is that, for some reason, DHHS seems to have been deterred from closing this ‘capitation-delegation model’ loophole in the MLR rules, and we can only hope they catch on before the rules are finalized.
Health care is bankrupting this country. The truth is, emergency physicians are as much a part of the problem as any other provider, health plan, or patient in this country. Many emergency physicians over-order scans and tests, practice defensive medicine, over-utilize consultants, don’t pay much attention to the cost of drugs and treatments we order or prescribe, and generally spend too much money for too little benefit. I could argue convincingly that we are more effective and efficient than most physicians, especially in light of the difficulties of practice in the ED; but our challenge is not just to dispel the mistaken assumption that ED services do not meet the value proposition. We must simultaneously participate in developing solutions to the cost-effective care conundrum, or the payers and politicians will focus on ways to work around us, or through us.
Policy makers have selected payment reform as the primary path to cost-effective care, and fee for service as the principle foil responsible for our health care financing predicament. I could argue that tacking ‘for profit’ in front of ‘health plans’ is equally responsible, but this is, after all, America. Health reform is in many respects predicated on the concept of risk sharing: sharing the financial risks of care (and the rewards of cost-effective care) between insurers, providers, and patients on the assumption that having ‘skin in the game’ will solve the problem. Bundled payments, episodes of care, ACOs, pay for performance: its all designed to restrain costs by sharing risk, which is presumed to motivate providers to adopt strategies and develop infrastructure designed to cut costs (first) and improve care (second). The most critical role that ACEP has in the next few years is to determine how EPs can participate in the context of payment reform while preserving our value and protecting our practices.
Let’s talk about ACOs first. To make a very complicated story short, ACOs are likely to be about full capitation, or about risk pools, or both; and they are also about consolidation of physician practices to facilitate this risk sharing. In my experience, one consequence of this consolidation is that the PHOs (physician hospital organizations – soon to morph into ACOs) tend to pay lower rates to EPs than health plans pay. EPs are going to have to find ways to share risk in ACOs as independent practitioners or as hospital employees without sacrificing significant income or undermining practice quality and autonomy. Half of ED physicians are either hospital employees or the employees of academic institutions, and the other half are partners or independent contractors (or employees) of groups contracted to staff the ED. What the former need to understand about the latter is that the independent practice of emergency medicine is key to defining the commercial value of EP services: anything that undermines the payment of claims from an EP who is engaged in the ‘independent practice’ of EM undermines the wages of the EP who is employed by a hospital, a university or an HMO. We are all part of a national market for EP services. If the mode of our participation in ACOs, either as contracted groups, or employees, turns EP services into a commodity, we, and perhaps our patients, will suffer. Thus, when ACEP talks about EP participation in ACOs, or contributes to the development of model contracts, or policies for revenue or risk-pool distribution, or strategies for coordination of care with other ACO-participating providers; these three different modes of EM practice (independent contractor, employee, educator) need to be factored into the equation, most likely in separate and distinct approaches.
Another set of strategies for cost-containment and payment reform is the concept of bundled payments and episodes of care. I liken this to carving off most of the meat before throwing the bone to the pack of hounds. I suspect it will not be easy to identify episodes of care or bundled payment categories that will accurately reflect the contribution of EPs to the overall effort expended on these patient groupings. The management of abdominal pain is s tree with so many branch points it makes knee replacement look like an asparagus stalk. To complicate matters further, the three modes of EM practice will also have to be addressed in defining the EP’s share of the bundled payment for these episodes of care. For example, the work-up and management of a patient with abdominal pain in an environment like Kaiser is likely to be quite different than for the same patient in a community ED or a university teaching hospital where access to consultants, follow-up, and coordination of care are organized on a different model; even if you assume that under ACOs, access to EMRs and diagnostic services were equivalent. Personally, I think even though most episodes of care and bundled payments will focus on the higher-cost conditions, these approaches to payment reform are not likely to cover more than a modest percentage of the work EPs do, or the compensation we earn. Mostly, I believe, independent EM practitioners will be carved out of these payment reform modules because our level of participation will be difficult to predict, and our ability to restrict our role is limited. We are, after all, one of the few players on the team that regularly plays just about every position. The danger of being carved out, however, is that we then stick out like a sore thumb, an expense item begging to be trimmed.
I think one of the most effective ways for EPs and ACEP to contribute to solving the cost of care conundrum, and thus demonstrate our value to patients and payers alike, is through cost-effective care protocols. It is through the use of such protocols that EPs can earn a piece of the cost-sharing incentives, especially in risk pools. If we get carved out of bundled payments, we can get integrated back in under the risk-sharing umbrella through risk pools. Even so, it will still be necessary to utilize cost-effective care protocols that take into consideration each of the three EM practice modes. For example, hearing hoofbeats, you are more likely to encounter zebras in the ED of a major university teaching and referral center than in a small community hospital. Likewise, we should also focus on the most costly patients and types of care first, use best evidence, and take great care to protect our integrity as professionals and care givers. This last is what I mean by preserving the quality of our practice. An emphasis on cost-effectiveness is an invitation to inappropriate deferral of care, denial of access to needed testing and consultation, inappropriate discrimination in service, avoidable delays, and excessive risk taking, all of which hurts our patients and ourselves. Development of these protocols will not be easy, but adoption of these protocols across the spectrum of EM practice will be the real challenge. As I mentioned in the very beginning of this three-part diatribe, one hospital’s welcome cost effective protocol is another’s inadvertent financial misstep. It will take time to align incentives across all our modes of practice, medical staffs, hospital administrations, payers, and patients. Patient education as well as resident and provider training will be an essential part of the process, and all of us need to be part of the solution.
Accountable Care Organizations, Capitation, and Emergency Care Providers – Lessons Learned from California’s Delegated Payer Model
Talk to legislators about factors responsible for the high cost of health care in the U.S., and they will likely bring up the fee-for-service model of physician compensation. I am not sure if this is an issue of a few well-publicized ‘bad apples’, or if no one really believes any more that the vast majority of physicians are motivated first and foremost to provide appropriate care. In any case, the search for an alternative to fee-for-service physician (and hospital) compensation eventually led to the concept of capitation – a mechanism to put providers at risk for the cost of the services they provide, thus countering the incentive to provide questionably necessary services. The concept of capitation achieved its fullest expression in the Knox-Keene law that expanded the HMO concept to incorporate not only the capitation of ‘risk bearing organizations’ or RBOs (medical groups and IPAs), but also the delegation of payment responsibility to these RBOs. This model effectively allows HMOs licensed under Knox-Keene in California to carve their ‘management overhead’ and profits right off the top of the premium dollar, and delegate not only some or all of the financial indemnity risk of care, but also the responsibility to pay providers who are not contracted or otherwise incorporated as participants in the RBO’s provider network. This model not only incentivizes these RBOs to deny needed services to the enrollees assigned to their network, it also incentivizes the RBOs to underpay non-contracted emergency care providers who are obligated by EMTALA to treat these enrollees whether or not the RBO pays these claims appropriately, or at all.
Accountable Care Organizations (ACOs) have been included in proposals for health care reform in both the House and Senate versions of health care bills now working their way through Congress, as a potential solution to rising health care costs. ACOs are predicated on the idea that ‘the current provider payment system pays for volume rather than value’; and that by addressing both delivery system and provider payment reform simultaneously, ACOs can achieve the value driven objective imbued in the managed care model (see Can Accountable Care Organizations Improve the Value of Health Care by Solving the Cost and Quality Quandaries?) Two basic versions of ACO physician compensation models are being considered in the House version: a shared savings program (SSP) which is fee-for-service based but incorporates an expenditure savings risk pool / quality standards threshold concept, and a population based payment (PBP) model using a ‘partial capitation’ approach involving risk and profit sharing rather than full-risk contracting, similar to the Medicare Prescription Drug Program’s risk corridors to limit potential ACO losses. The proponents of the partial capitation model often point to the ‘success’ of California’s Knox-Keene program as evidence that population based payment is a better alternative than a fee-for-service based model. On hearing of this argument, I felt compelled to point out that the Knox-Keene HMO concept, and particularly the delegated payer model, has been a nightmare for emergency care providers (ECPs) in California.
ECPs are obligated by EMTALA to provide care to HMO and subcontracted RBO enrollees no matter how inappropriately these providers are paid for the services provided to these HMO enrollees. With the prohibition of balance billing imposed by the California Supreme Court; Governor Schwarzenegger’s veto of SB 981, a bill designed to establish a fair payment rate and dispute process for non-contracted emergency physician services; and the Department of Managed Health Care’s reticence to enforce AB 1455 fair payment regulations: ECPs have nearly lost all leverage to obtain fair payment for non-contracted services, and to obtain reasonable rates in contract negotiations with both plans and RBOs. We have become the ‘indentured servants’ of the HMOs in California. The delegation of payment responsibility to the HMO’s capitated medical groups and IPAs was the rancid icing on this cake. Here is how capitation and the delegated model have screwed ECPs in California:
1. HMOs are directly regulated by the DMHC, but unregulated medical groups and IPAs that subcontract to the for-profit HMOs often pay less than half what the plans pay, because they are insulated from the DMHC’s direct regulatory oversight.
2. Many on-call specialists have cited, as a reason for leaving on-call rosters, having to fight medical groups for fair payment of their claims. These medical groups are happy to have the on-call specialists take care of the group’s patients in the ER at 3 am, but these very same medical groups often decline to refer patients to the on-call specialist during regular office hours
3. The EMTALA mandate puts emergency care and hospital based providers at a real disadvantage in contract rate negotiations – if you can’t say no, you have no leverage. Further, some RBOs have the equivalent of a monopsony in their local markets, and use this leverage to get hospitals to coerce their hospital-based physicians into accepting below market contract rates with the RBO. Coercive contracting is supposed to be illegal in California (CA Health and Safety Code Section 1322, Stark II, Anti-trust, etc) but violations are difficult to prove, retaliation is a real threat, and the laws are hard to enforce.
4. Many capitated medical groups and IPAs routinely down-code 50% of ER physician claims, and some even down-code 100% of the claims for the care of our sickest patients. The DMHC has been reticent to respond to numerous complaints from providers, and the Department’s claims adjudication process is flawed and expensive.
5. Capitated medical groups and IPAs that are on the verge of bankruptcy from poor risk management put emergency care provider claims at the end of the list of claims to be paid because they know these providers must continue to see their patients even if payments are withheld. When the medical group or IPA finally goes bankrupt, the contracting HMOs refuse to take responsibility for these unpaid claims. Emergency care providers have lost millions as a result of delegation to financially insolvent subcontracting medical groups.
6. Several ER groups have been forced to go to court to obtain fair payment from capitated groups, and this has undermined otherwise positive and long-standing collegial relationships. Amazingly, some staff at the DMHC have actually encouraged this approach.
7. Many capitated medical groups do not have the resources to employ certified coders for claims review: and inappropriately down-code, bundle, and deny payment of legitimate emergency care claims; have great difficulty complying with AB 1455 prompt payment regulations; and rarely submit their payment practices to outside reviewers to verify compliance.
8. The RBOs have resisted giving up paying for ECP claims, citing that if the HMOs have to pay these claims, the capitated medical groups will have no incentive to keep their patients from using the ED, and the RBOs will also lose the capitation revenues they retain by keeping their patients out of the ED. However, ED usage risk pools can provide incentives for capitated physicians to provide access for after hours urgent care and to manage their chronically ill patients so they don’t need to use the ED for exacerbations. Risk pools incentivize medical groups to do the right thing – profit by managing their patients; payment delegation incentivizes the RBOs to do the wrong thing – profit by underpaying legitimate claims.
9. Capitated medical groups say that if the plans have to take back the responsibility for paying emergency care provider claims, they will take back too much of the capitation payments to cover those claims. If the success of these medical groups is predicated on being able to derive unearned profits off the backs of ECPs by taking advantage of their EMTALA obligation, sidestepping fair payment regulations, and systematically down-coding, underpaying, and denying their claims: this would be an unsustainable business model in a fair market.
10. Several HMOs (like Kaiser) and RBOs have been paying ECP claims in CA appropriately, but this puts them at a competitive disadvantage compared to the for-profit HMOs and RBOs, and they are under significant pressure to follow in the path of easy unearned revenues and profits established by less principled payers.
If capitated ACOs end up being promoted through national health care reform legislation; you, too, may well experience these same vexing issues in your ED.