Taming Payment and Delivery Model Monsters

Experts Urge FPs to Get in the Game

September 21, 2012 08:15 pm Sheri Porter

Allan Goroll, M.D., wants to make sure that family physicians -- indeed all primary care physicians -- understand what they need to do to get in the health care delivery and payment reform game to ensure they have the financial resources necessary to achieve better health outcomes and get paid accordingly for the high value they create.

[Man facing shadow of monster]

"When you look at primary care in the past two decades, it has suffered terribly from a dysfunctional fee-for-service payment system dominated by procedural specialty interests and devaluing of primary care work," says Goroll, professor of medicine at Harvard Medical School and a practicing primary care internist.

"The consequences include a $3.5 million lifetime income disparity between primary care and the average (sub)specialist and a 'hamster-wheel' practice environment of rushed visits, demoralized physicians, dissatisfied patients and a generation of medical students who have shunned the field. There have been few incentives and no substantial rewards for doing the right thing."

Furthermore, "under this system, the primary incentive is to maximize visit volume," Goroll adds.

"Value" is the key word moving forward, and it isn't measured by the number of office visits tallied in a month or the number of office procedures cranked out each week. Mathematically, value is calculated by dividing the quality of health care delivered by the costs incurred, says Goroll, who chaired the payment reform task force for the Patient-Centered Primary Care Collaborative and who currently consults with practices and networks regarding payment reform and primary care.

He poses this question to family physicians: "Are you prepared for a new social contract with society in which you are accountable for the outcomes you achieve and paid according to the value you create?

"Unless you want to remain a slave to volume, you need to take reasonable financial responsibility for your performance and the outcomes it achieves," says Goroll. "In return, you can insist on getting paid more appropriately for the considerable value you create rather than pitifully for the number of face-to-face visits you conduct."

story highlights

  • Experts say America's health care system needs to stop paying for volume-based care and instead focus payment on rewarding, encouraging and enabling the provision of good health care.
  • If payment reform is to move forward, physicians must be willing to accept increasing amounts of performance risk in exchange for higher payment.
  • Physicians need to play an active role and should get their payment reform ideas in front of the organizations that can test them.

Sort Out Models, Methods, Mechanisms

Stuart Guterman, vice president for payment and system reform at the Commonwealth Fund, a private foundation that aims to promote a high-performing U.S. health care system, notes that a variety of payment approaches are being tested, including pay-for-performance, shared savings, bundled payment, blended payment and capitation, as alternatives to the standard fee-for-service payment to which physicians are so accustomed.

But when weighing models of health care delivery and health care payment, many FPs may find the terminology tedious.

"People use these terms interchangeably, and that has resulted in some confusion," says Guterman. He points to the patient-centered medical home (PCMH) and accountable care organizations (ACOs) as examples of alternative delivery models that are being developed and applied throughout the health care system.

However, stakeholders across the country, including private health insurance plans and state and federal governments, announce new pilot projects aimed at testing various combinations of delivery models and payment mechanisms with dizzying regularity. The sheer volume of activity makes it difficult for physicians to keep track. And FPs who are waiting for that one great idea to pop out of the crowded field may be disappointed.

"There's not going to be one answer. The delivery system -- and the payment system that is used to finance it -- may not look the same everywhere across the country" says Guterman. Rather, regional health care markets present unique circumstances and serve patients with different needs.

"It is said that health care is local, and it really is," notes Guterman. However, "the results that the health system produces -- better care, better health and lower cost -- should be the same, even if the approaches used to get there are different."

Negotiate How You Want to Get Paid

As the U.S. health care system moves away from a volume-based fee-for-service (FFS) payment model and toward other models, such as bundled, blended and capitated payment, family physicians need to take control of their destiny. "Right now, we still get paid by piecework -- much like garment workers at the turn of the century," says Allan Goroll, M.D., a practicing internist who also serves as a payment reform consultant to primary care practices.

But Goroll insists that physicians do have a say in their futures, and he suggests these tips to get them moving in the right direction:

  • get over the fear of change;
  • match the degree of performance risk you are willing to take with your practice's ability to deliver value as determined by the quality and cost metrics specified by a model;
  • negotiate with payers on those metrics to be sure they are clinically meaningful, realistic and scientifically validated;
  • minimize assumption of actuarial risk for outcomes by insisting on robust risk adjustment of any bundled, comprehensive or global (capitated) payment for delivery of comprehensive primary care; and
  • move cautiously if leaving private practice to become an employed physician, or you could find yourself in yet another volume-based payment system that looks like a salaried position with a performance bonus but actually is little more than a FFS system paid largely on volume.

"Negotiate hard and proudly," says Goroll. "Indicate that you are prepared to accept a new social contract. We (primary care physicians) are prepared to deliver on getting better patient outcomes, and in return, we're asking for better pay that is more commensurate with the value we create."

Adhere to Basic Principles

If payment reform is to move forward, primary care physicians must be willing to take on increasing amounts of performance risk in return for higher payment, says Goroll.

Current payment reform models represent a spectrum of increasing responsibility for performance that range from no performance (think pure FFS) to assumption of full responsibility for outcomes (as in global capitation, which is defined as a fixed number of dollars set aside to pay for a population of patients).

"Payment mechanisms with the lowest performance risk will continue to have the lowest pay; at the highest level of performance risk, there is the potential for substantial financial reward, but you are assuming considerable financial risk for outcomes," says Goroll.

Physicians walk a fine line when matching a particular payment system with their practices' ability to manage care and achieve high performance, but that's exactly what must happen.

"If you're prepared to work toward better outcomes and you think you can achieve those, then you should choose a payment system that has the maximum benefit for you," says Goroll. "Why be stuck in fee-for-service with all its distortions when you have the opportunity to practice medicine as it should be practiced and be rewarded financially?"

On the other hand, "If you're a solo doc and just hanging on by your fingernails, then you shouldn't jump into the performance 'deep water' if you're not going to be able to deliver high-performance primary care that now requires a heavy dose of health information technology, team care and population management," says Goroll.

Assuming such risk is not new to primary care physicians; they were offered this under capitation "gate-keeper" contracts in the 1990s, and it was sold as providing autonomy in return for accepting financial risk.

"Most primary care practices did poorly under such contracts because per-capita payments were too low, and there was little or no risk adjustment by the insurance company to protect against actuarial risk," says Goroll.

"Capitated or comprehensive payment for the complex, sick and needy patient should be 100 times what it is for somebody who is basically healthy, young and psychologically stable," he notes. "A practice needs to be sure that the amount of money needed to provide comprehensive primary care for such persons will be adequate."

Contribute to the Process

"Is primary care prepared to step up and deliver the high performance it is capable of delivering? That's really the question," says Goroll. "I think the answer is yes, but it takes serious effort and work.

"Not only are primary care physicians going to be asked to do more good things and achieve better outcomes, but to do them in a cost-effective way. If primary care practices are prepared to do that, then they should be paid according to the value they create and not be limited by a FFS system that devalues their efforts."

Guterman stresses that experimentation with different financing approaches should be a collaborative effort in which physicians play a key role. "This can't be viewed as something that gets imposed on doctors," he says.

He urges physicians to get their great ideas in front of the organizations that can use them, such as CMS' Center for Medicare and Medicaid Innovation(www.innovations.cms.gov), the Agency for Healthcare Research and Quality's Healthcare Innovations Exchange(www.innovations.ahrq.gov), and their own professional societies.

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