Health law is the federal, state, and local law, rules, regulations and other jurisprudence among providers, payers and vendors to the healthcare industry and its patient and delivery of health care services; all with an emphasis on operations, regulatory and transactional legal issues.
As the movement to value based arrangements continues many providers are considering joining an Accountable Care Organization (ACO). At the same time, regulators from the Federal Trade Commission (FTC) and the HHS Office of Inspector General (OIG) are signaling increased scrutiny of Accountable Care Organizations and other value based payment arrangements, especially those making creative use of the antitrust and fraud and abuse waivers in place for Medicare ACOs. A recent article states that claims of higher quality of care may help in defense of antitrust action. Tracking and organizing results that reflect efficiencies and quality improvements is obviously a must but before a provider even considers joining an ACO, the following questions must be asked and answered:
What level of risk are you willing to assume?
First know what level of risk you are willing to assume. For instance, are you comfortable assuming risk at all or do you want to enter this area more slowly and share in only the savings? A core challenge when converting to a value based, rather than fee for service system, is the lack of consistency in payment measures.
What are your baseline metrics for the quality measures?
The ACO will identify quality measures as part of the agreement. Currently there is a lack of a single set of metrics adopted by all payer sources. To negotiate your position, you must know your baseline and whether you can meet the benchmarks identified. Quality metrics can include for example, HEDIS measures, AHRQ measures, and CMS measures.
Florida’s providers are buzzing with questions about value based care, asking why now? Is it a fad? Will it really ever be a widespread form of payment? Why does Florida seem farther behind the value based curve than other markets?
While there are more aggressive markets in other parts of the country, the bottom line is this: CMS changes are coming and they will not be stopped. The government has invested too much money to turn around at this point. Here are just a few examples of why:
The CMS Value Based Program with hospitals is already implemented;
Center for Medicare and Medicaid Innovation is piloting NUMEROUS programs covering many physician specialties
CMS expanded the Medicare Shared Savings Program to 3 tracks.
A new Merit-Based Incentive Payment for Physicians, Physician Assistants, Nurse Practitioners, Clinical Nurse Specialists, and Certified Registered Nurse Anesthetists will be apply to payments for services furnished in 2019.
The train has left the station. Providers will now shift from fee for service to value based payments with CMS. To be successful and still have a profitable business, clinical integration and quality improvements will need to be implemented to improve your practice whether you are hospital based or office based AND whether you are employed by a hospital or in private practice. These changes will be implemented for all of your patients as you will not distinguish in your level of service between patients with managed care as the payor rather than CMS. This essentially means that managed care payors will reap the benefits of these improvements in your practice. If you do not have a value based contract in place with the managed care payors they will not be sharing one dime with you. They will reap the benefits of your improvements AND keep the money! And by the time you get around to a managed care contract that is value based, the shared savings opportunities will be less than if you began those discussions now. read more
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. read more
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. read more
We shouldn’t be surprised that physicians still talk about banding together into “supergroups.” This has been a hot topic in South Florida for about 20 years. There are notable examples of large single-specialty groups that have succeeded – but unfortunately, there are many more groups that have crashed and burned, with many docs left considering how to get out. It’s an old joke, but getting doctors together really can feel like herding cats. The politics are tiring, expensive and time consuming. And there is no guarantee of success. read more
Hospitals, particularly those heading ACO development efforts, are quick to say things like “One day, all physicians will be employed by hospitals.” Though there is clearly some wisdom under that statement, it’s also a remarkable leap of faith.
Three things are clear in this era of healthcare reform: (1) healthcare will be provided to more, but with less; (2) there will be a growing move over time to pass financial risk to providers; and (3) those businesses in a position to control both costs and quality (and some say patient satisfaction) are in a position to both survive and even do better than ever.
This leaves the door wide open as to the form of the business that can succeed. Is it a single specialty mega practice? Is it a multi specialty medical practice? How about a hospital? read more
The popular conception in healthcare is that (1) a new law was passed, (2) it changed everything, and (3) in a bad way. Over time, however, it should get clearer that, while there was a law passed, the law alone is not driving changes to our healthcare system: it’s our own demographics and behavior. Most of the tax dollars currently fueling our healthcare system (and arguably our economy) are tied to an aging Boomer population that are soon to drop off the income producing cliff into the Medicare population. Bye bye income earners; hello ridiculous public healthcare expenditures. Though it is true that the timing for expanding public spending on healthcare (with the federal mandates aimed at employers and Medicaid eligibility expansion) could not be more poorly timed, the situation is more of a “Perfect Storm” than a surgical strike.
The financial stress of our changing population and of a historic utilization based healthcare system is causing our healthcare system to morph in every way. “Health insurance,” with increasing cost, copays and deductibles and reduced benefits, is quickly ceasing to look like your father’s 80/20 major medical plan and starting to look more like catastrophic coverage. Fee for service compensation is fast becoming “spoken” out of existence. There are more “pay for performance,” “case rate” and other outcome and risk based compensation models than you can shake a stick at. The simple truths are: payers have to deliver more with less; and patients have to bear more and more of their healthcare expenses. read more
[contact-form-7 404 "Not Found"] The idea of an organization which provides discounted fees to patients is not a new concept. Organizations like independent physician associations (IPAs), even accountable care organizations (ACOs) and simpler discounted fee plans will be surprised to know that Florida may require them to be licensed by the Office of Insurance Regulation (OIR), even though they do not handle pre payments and do not collect premiums. That’s perhaps the most startling aspect of the regulations—there is no financial risk involved, and yet Florida law seems to require regulation.
Pursuant to Fla. Stat. 636.202(2), a “discounted medical plan organization” means an entity which, in exchange for fees, dues, charges, or other consideration, provides access for plan members to providers of medical services and the right to receive medical services from those providers at a discount. A “discount medical plan” means a business arrangement or contract in which a person, in exchange for fees, dues, charges, or other consideration, provides access for plan members to providers of medical services and the right to receive medical services from those providers at a discount. Fla. Stat. 636.202(1). A discount medical plan does not include any product regulated under chapter 627, chapter 641, or part I of chapter 636 (governing Prepaid Limited Health Service Organization). Fla. Stat. 636.202(1), which of course is no comfort to providers looking to garner or protect market share by discounting services or by creating a collection of discount services providers, which is typical of IPAs and “networks.”
Before doing business in Florida as a DMPO, an entity must be legally organized in a compliant wayand must be licensed by the OIR as a discount medical plan organization or be licensed by the office pursuant to chapter 624 [Florida Insurance Code], part I of this chapter [Prepaid Limited Health Service Organization], or chapter 641 [HMO, Prepaid Health Clinic]. Fla. Stat. 636.204(1) emphasis added. Each discount medical plan organization must at all times maintain a net worth of at least $150,000.
Providers looking to provide discounted fee arrangements in a simple and effective manner many be surprised to know how complex that endeavor in fact is. Moreover, the discounts will likely (and ironically) have to be reduced in order to bear the state licensure and financial viability fees. Go figure!
Hanging 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.
In an effort to stay competitive, hospital physician recruitment deals are on the rise. These arrangements are permitted under applicable federal law (the Stark Law) and are a core tool in hospitals’ tool chest. These arrangements generally involve the hospital “loaning” to the physician or to a practice employing the doctor the costs associated with that doctor joining. Since the ramp up costs associated with hiring or a physician just relocating to a new community can be steep (especially as payer contracts can take many months to set in place), hospital financial assistance can be critical. How do they work? Simple—
1.The hospital guarantees, based in part on MGMA salary surveys and other cost data sources, that the physician will collect at least $X each month for a period of normally up to 12 months;
Though it may sound too good to be true, there are drawbacks, including:
1.There are pretty severe limitations placed on noncompetes for hospital recruited physicians which can be daunting to practices hiring them;
2.Unless carefully worded and negotiated, recruited physicians may find themselves with high expectations and little delivered in terms of the marketing and other support required to create a successful practice. Not being financially successful is no defense to the requirement of staying in the hospital community for several years to write off the loan;
3. Some hospitals offset their business risk by taking any excess earnings (the collections exceeding the guaranteed amount) for months after the 12 month guarantee period, a period when collections should be substantially higher than during the early phases of the recruitment.
Practices entering into a hospital recruitment arrangement need to be careful in their physician contracts to pass as much financial risk as possible to the recruited doctor. A recruited doctor that decides he or she no longer likes the new community can leave the practice holding the bag for a huge amount of money which has not yet been forgiven.
Recruited physicians need to be careful about the risk passed off to them in their employment contracts if they are joining an existing practice, since the practices typically benefit by receiving enough money to cover all of the new physician’s salary, benefits and overhead.