According to a recent study published by Accenture, only 1 in 3 physicians will be in independent private medical practice by 2016. What’s killing the private medical office? No surprise there — according to the study, physicians cite reimbursement pressure and practice overhead as key factors driving them to hospital employment. Access the Accenture Report here.
These are uncertain times for physicians. The future of healthcare is uncertain for everyone involved, from payors to providers to consumers. In fact, there may be only one universal certainty about the future of healthcare: things are changing and are going to continue to change.
The federal Affordable Care Act (ACA) has sent shivers of panic through all levels of the industry. Payors are scrambling to find ways to control burgeoning premium and provider costs. Their stated goal is to transition reimbursement from fee-for-service to models based on quality and performance metrics (though no one has really figured out how to accomplish that goal).
Hospitals and other providers are racing to form Accountable Care Organizations (ACOs) and other networks to try to take advantage of these promised “new reimbursement models”. Unfortunately, developing a network that can effectively control costs and performance across a continuum of care is virtually impossible without knowing what criteria payors will pay for, how those criteria will be measured and how they will be incentivized/rewarded. As a result, most of the provider networks I have encountered in the last couple of years are suffering “all hat, no cattle syndrome” — which is to say that they have big plans for managing care but don’t yet have any payor contracts that will pay them for doing so.
For many physicians, particularly those in private practice, the lack of certainty and the resulting panic in the marketplace can be maddening. Looking for any kind of certainty, many physicians have sold or are considering selling out to a hospital. Unfortunately, as noted above, hospitals generally have no better idea of what the future of healthcare will look like than anyone else. Not surprisingly then, most hospital-physician employment agreements have a term of no more than three years, and more and more often, hospitals are building mechanisms into their employment agreements to permit them to reevaluate compensation even before the end of the agreement term.
What will make the most sense for a particular physician or practice will depend on a variety of factors, many of which will be subjective. While there can likely never be any guaranty that a particular decision in this regard will result in success, the chances of making the right decision will be greatly improved with some careful self-evaluation and planning.
The next several posts on this blog will explore some of the big practice planning decisions physicians are being faced with and the various practical and legal considerations that physicians should evaluate in making those decisions. Topics to be covered will include whether to sell, merge or stay the same, identifying the right “partners”, optimizing practice performance to adapt to change and contracting for successful relationships.
Many physicians are aware of the push by the Medicare program to move away from a fee for service physician payment model to one which recognizes higher quality and lower cost care. However, few physicians have a good understanding of how such payment models would work and how their practices would fair under them. This week, the Centers for Medicare and Medicaid Services (CMS) released some important data regarding one of these value-based payment programs: the Value Modifier program.
The Value Modifier program seeks to reward physicians who provide high quality and low cost care by increasing their reimbursement by a “value modifier”. Physicians who do not score favorably under the program will, in turn, be subject to a downward payment adjustment. This week, CMS published a summary of the results of the first year of the program which initially applied only to physician groups of 100 or more.
In the initial year of the program, groups subject to the Value Modifier had the option to participate in a tiering program (which will be mandatory starting in 2016). Under this program, depending on their cost and quality scores, groups would either be subject to an upward payment adjustment, a neutral payment adjustment or a downward adjustment. Of 691 group practices subject to the Value Modifier, only 127 initially elected to participate in the tiering program. Of these 127 groups, only 106 submitted sufficient data to receive both cost and quality scores for tiering purposes. According to the published results, 14 groups will receive an upward adjustment; 11 groups will receive a downward adjustment and 81 groups will have a neutral adjustment (i.e., no adjustment ). None of the groups earned the highest modifier adjustment available for quality and low cost.
The Value Modifier program will apply to all physician groups and solo practitioners beginning in 2016. Physicians need to be paying careful attention to this and other value-based payment programs as it is clear that CMS is serious about shifting payment arrangements in this direction.
According to various news outlets, physicians at the University of California student health centers (as many as 150 physicians in all) went on strike this week in protest of what they believe are unfair labor practices by the University. These physicians are members of the Union of American Physicians and Dentists. The protest stems from contract negotiations between the Union and the University which have been ongoing for many months. While this is only the first time in more than 25 years that physicians in the United States have gone on strike, with more and more physicians becoming employees of large health systems and insurance companies, this strike could be a sign of things to come in the not too distant future.
Yesterday the Secretary of the Department of Health and Human Services (HHS) formally announced HHS’ intention to shift 90% of all traditional Medicare payments from fee-for-service (FFS) to quality or value-based payments by 2018. The secretary announced that HHS’ goal is to have 30% of traditional FFS payments tied to quality or value in 2016, increasing to 50% by 2018, through alternative payment models such as reimbursement through Accountable Care Organizations (ACOs) and bundled payment arrangements.
The Secretary also announced creation of a Health Care Payment Learning and Action Network through which HHS will work with private payers, employers, consumers, providers, and states to develop and expand alternative payment models. An HHS press release regarding the Secretary’s announcements can be viewed here.
While HHS’ desire to shift to outcomes-based reimbursement is nothing new, the Secretary’s announcements yesterday should signify to physicians and other healthcare providers that these payment models are likely to proliferate and as a result, pressure on providers to adapt to them can be expected to intensify. From a provider perspective, this is likely to mean that efforts to integrate through network formation, employment and the like will continue and networks may become more aggressive in their efforts to lock up eligible providers.
In news that may not come as a shock to those of us who have been through the cycle of hospitals purchasing physician practices before, a recent study has found that hospitals are losing considerable amounts of money on acquired physician practices. According to the study, 92% of reporting hospital CEOs state that they are losing money on their physician networks and 58% of the survey respondents report losing more than $100,000 per employee physician in 2014. For more information on the study, see “The Challenges of Integrating Physician Group Operations”, 2014 Kentucky Healthcare Industry Study, Dean Dorton Allen Ford, PLLC. While many hospitals believe that acquisition of physician practices is necessary in order to integrate the delivery of care, the question remains whether many hospitals will be able to absorb these losses long enough to reap the potential benefits of this integration. Payor models which would reward clinical integration have been slow to develop, and even once those models are established, there is no telling whether integrated provider networks will be able to make money under them.
Despite the Department of Health and Human Services’ intent to make Medicare healthcare cost data more transparent for the healthcare consumer, according to a recent report by the U.S. Government Accountability Office, current Medicare cost data, and the manner in which it is being provided, are largely ineffective in enabling consumers to make informed healthcare decisions. The GAO cites a variety of shortcomings with current HHS transparency websites and tools, including that they lack information on topics of considerable relevance to consumers, such as patient-reported outcome measures and patient out-of-pocket costs, and they do not organize cost and quality information in a way that enables consumers to readily understand and compare provider performance or customize how the information is presented to enable consumers to identify the best providers for aspects of care that they may find most relevant. The GAO report substantiates one of the central concerns espoused by critics of the healthcare data transparency push: that consumers lack the understanding and/or training to understand complex healthcare related financial and outcomes data. Ultimately, however, the report serves to demonstrate that much work is still yet to be done if this data is to be useful to the health care consumer.
Many physicians recently received a notice from the Centers for Medicare and Medicaid Services (CMS) notifying them of the opportunity to register with the CMS “Open Payments” system and review financial data reported about them by drug and device manufacturers under the federal Physician Payments Sunshine Act (“Sunshine Act”). This had led to some confusion among physicians as to what, if any, obligation they have under the Sunshine Act.
The Sunshine Act requires “applicable manufacturers” of drugs, medical devices and biologicals covered under Medicare, Medicaid and CHIP to report certain payments and items of value given to physicians. This information is collected by CMS and is to be made public on a searchable online database by September 30, 2014. Under the law, an “applicable manufacturer” is limited to an entity operating in the United States that is either: An entity engaged in the production, preparation, propagation, compounding, or conversion of a covered product; or An entity under common ownership with an “applicable manufacturer” that provides assistance or support with respect to the production, preparation, propagation, compounding, conversion, marketing, promotion, sale, or distribution of a covered product. The reporting requirement is the manufacturers’ obligation. Physicians who receive payments from applicable manufacturers have no reporting obligation.
Physicians do have a right, however, to dispute reported payments. Specifically, before CMS posts the collected information to the public website, physicians have 45 days to review and correct the information. The reporting manufacturers will have an additional 15 days to correct the erroneous information before submitting and attesting to the updated information to finalize the data submission. More information on the Sunshine Act can be found on the CMS website here: http://www.cms.gov/Regulations-and-Guidance/Legislation/National-Physician-Payment-Transparency-Program/index.html
An article on Businessweek.com today suggests that healthcare companies rank worse than financial institutions, utility companies and even retailers when it comes to cybersecurity. This is particularly frightening news given the intense focus on healthcare data security under HIPAA for a number of years now. By now, healthcare companies and providers should be well aware of the requirements of HIPAA and should have appropriate safeguards in place that meet or exceed the HIPAA requirements. At its core, HIPAA requires that health information be protected with reasonable administrative, technical, and physical safeguards to ensure its confidentiality, integrity, and availability and to prevent unauthorized or inappropriate use or disclosure. What safeguards are reasonable will depend on the facts and circumstances. If you’re still not sure what you are supposed to be doing to protect your patients’ health care data, it’s probably a good time to conduct an audit of your policies, procedures and systems to be sure they are compliant.
This past Friday, the Office of the National Coordinator for Health Information Technology, in collaboration with the HHS Office for Civil Rights and HHS Office of the General Counsel, developed a HIPAA “Security Risk Assessment Tool.” The Security Risk Assessment Tool is a downloadable program that was developed to assist providers in performing HIPAA security risk assessments and determining HIPAA vulnerabilities. The program offers an easy tool for providers to (1) determine what types of safeguards are needed for their practice, (2) document whether or not they meet each standard, and (3) document why any of the safeguards are not applicable to their practice. The program is available for download on the HealthIT website at the following address: http://www.healthit.gov/providers-professionals/security-risk-assessment. There is also a helpful video on how to use the program available here: http://www.healthit.gov/providers-professionals/security-risk-assessment-videos (3rd video on the web page).
For more information on this new tool or HIPAA security, contact Matthew Redding.