A perfect scenario ... perfectly bad!

A friend phoned me today with a question about medical homes and coordinated care. After hearing his scenario, I responded, "Perfect!" Unfortunately, it was a perfectly bad scenario that describes exactly how unprepared optometrists will start losing access to their own patients. I'm sorry to say it, here's the bad news ... then some good news.

An optometrist sees a patient for a regular eye health exam, does the usual diagnostic testing, and then some, and determines the patient needs to see an ophthalmologist. The patient visits the ophthalmologist who happens to be involved in a care team through an ACO or medical home. Although the patient had chosen the optometrist for the initial visit, the ongoing care is now turned over to the care coordinator whose job it is to coordinate all the care of the patient. The care coordinator schedules a follow-up visit with the care team's optometrist instead of going back to the referring optometrist.

Yes, we can hear the outcry. Unfair. Wrong. Bad business. And no doubt there's some merit to those cries. It'll happen nevertheless. The reason may constitute an unfair betrayal but it may also be legitimate. 

This scenario sits in the middle ground between legislation and reality. The legislation says patients may choose their Medicare provider but the reality is they'll often just go along with the recommendation of their doctor's office. Remember that medical homes and care coordinators are incentivized, so some will be rather convincing about the reasons to see team doctors. Also remember that there may be legitimate new reasons to have patients switch specialty providers.

What if the referring optometrist does not use EHRs? Or, the O.D. has EHRs but doesn't use them for communications. The optometrist may know nothing about care teams or medical homes, so hasn't attempted to connect with the local provider network. All of these are reasons a provider cannot be included - doesn't qualify - when it comes to team delivery of care or bundled payments.

On the other hand, let's say that optometrist is you, and you have implemented not only a certified EHR but also DIRECT communications capabilities. Admittedly, in this case you'd have been proactive enough not to end up here in the first place. But supposing you did somehow, you'd now be in a position to step in and prove value to that care team, perhaps even add more value than the incumbent optometrist. 

Do you have questions or scenarios for which you'd like to see an explanation? Submit them through the Comments and Reactions area below this post, or email us. We'll be happy to respond.

Alistair Jackson, M.Ed.

ACOs, Unlikely Homes for Medical Homes - Part 3 of 3

Continued … see part 1 of this discussion, published Monday, August 20

OK, so you’re a skeptic and the numbers from last day look just too good to be true. Let’s take a more conservative view. While the above scenarios are supported by actual clinical tests and situations, let’s suppose they are best-case scenarios and therefore extreme. If the savings were only 15% of the above, the medical home provider could still see over $100,000. Let’s say then that the medical home decides to keep 50% of the shared savings and divide the other 50% among the other team members. This means adding only $50,000 to the income of the primary care physician. Current average PCP income = $135,000. Add $75,000 net for care coordination. Add $50,000 from shared savings. $260,000.  We now have a program that, even when viewed from the most conservative vantage point, is structured to bring the income of the primary care physician from $135,000 to $260,000. In essence, the program is designed to double the income of primary care physicians who decide to participate in medical home style delivery and reimbursement systems.  

We can start to understand now why payers are willing to work together to fund the coordination of care through pilot programs like the Comprehensive Primary Care Initiative (CPCI). We can also see why 200 primary care physicians attended the first organizational meeting of the CPCI in one small city in Ohio.  And we can also understand why ACOs would not embrace this process or why, in fact, they would put as many barriers as possible in place to prevent such a system from being implemented. As we have stated already, the regulations by which ACOs can be established are so complex that almost all ACOs are large health systems. These health systems primarily generate their income from specialty care while the savings are being generated through primary care, coordinated care and the medical home.  

It is clear to see that the maximum cost savings, and the biggest boost to improving quality of care is going to work when the medical home is a separate business entity from the health system.  Predictably, we would not expect to see ACOs embrace the medical home.  On the other hand, we would expect to see – and are seeing, in fact – huge popularity of the CPCI among independent primary care physicians. ACOs are resisting expansion of the medical home even publishing negative studies to resist the concept from being established as part of the new delivery system.  

Jim Grue, O.D.

Alistair Jackson, M.Ed.

ACOs, Unlikely Homes for Medical Homes - Part 2 of 3

Continued … see part 1 of this discussion, published Monday, August 20

When a new medical home is formed, a rather complex set of formulae is used to predict the cost of care in the traditional delivery system. Going forward, the actual cost of coordinated care is tracked, so eventually it is known whether the coordinated care or the traditional care was more expensive. The hypothesis is that coordinated care is able to deliver better quality at a lower cost, so let’s assume that the coordinated care, in fact, ends up less expensive. At least in these early years, the formula for shared savings dictates that the medical home gets paid 85% of the savings.  Yes, almost the complete amount saved through the medical home’s coordinated care approach is given back to the medical home.  This will no doubt change over time; a big return is intentionally structured as a major incentive in order to convert quickly to the new model, a similar approach to the EHRs incentive program – money speeds adoption.  

Now let’s look at the savings possible. Almost all providers, new to the medical home concept, are concerned that the primary care physician will act as a gatekeeper, preventing them from seeing the patient or doing the required tests. In reality, nothing could be further from the truth, which we’ll see below. Cost savings are not generated by reducing or eliminating necessary care. In fact, the maximum savings are generated when the coordinator ensures that the patient receives the very best care. It is difficult to think of an example where poor care is less expensive than the best care. If a patient isn’t properly diagnosed and treated then invariably there are more visits to eventually get it right. If the best surgery is not performed, the result is simply more after-care at higher expense.  So the first mandate of a care coordinator is to make sure all care received by every patient is the best available. This alone will generate savings.  

The next step is to eliminate duplication of care that doesn’t result in better outcomes. A familiar scenario will serve us well here:  in eye care, if an optometrist does specialty tests then has to refer the patient to an ophthalmologist, in almost all cases, the ophthalmologist repeats every specialized test.  In the case of ODs and retinal specialists co-following patients, both typically see the patient on an ongoing basis and both continue to perform the same specialty tests. This happens right now because the two specialists get to decide what tests they want, not to mention that it’s in the economic interests of both to perform the tests. If we were in a position to coordinate the care of this patient, we’d know exactly how to increase those shared savings! We’d make sure the appropriate tests were being done but by one provider only and we’d have the results shared by all providers seeing the patient. The only time a test would need to be repeated would be if there was a question of its accuracy, which then gives the coordinator the incentive to ensure that the office that performs the tests is the one that proves over time its ability to get the most consistent, accurate results. 

Scenarios like this one are replicated in different ways throughout medicine every day. So, the care coordinator has two simple tasks that create huge savings: ensure every patient receives the best available care at every visit; identify and reduce or eliminate redundant costs which do not improve the quality of care.

Studies have shown that these two things alone have the potential to reduce the total cost of care by as much as 30%. Those are big dollar amounts. When we consider that the cost of health care in the United States is approximately $7,000 per person per year, we start to see the potential shared savings. Using this figure, a medical home coordinating the care of 500 patients is coordinating $3.5 million dollars of care per year. If 30% can indeed be saved, the potential savings is over $1 million. The 85% rule tells us that the medical home could receive over $850,000 from shared savings. These are staggering numbers for PCPs whose average annual earnings are currently $135,000.  Do we dare think PCPs are not all over this opportunity? If in doubt, check out the website of the American Academy of Family Physicians and see what they’re doing about the PCMH initiative.

To be continued …

Jim Grue, O.D.

Alistair Jackson, M.Ed.

ACOs, Unlikely Homes for Medical Homes - Part 1 of 3

In the early days of Accountable Care Organizations, it seemed they would be the natural resting place for the patient-centered medical home (PCMH). That thinking has changed. While it appears ACOs may use some medical home concepts, there is growing doubt about the compatibility of the two entities. Let’s understand why. 

Why would ACOs would be resistant to medical homes?  First, the medical home concept promotes coordinated care and shared savings, core values in health care reform. Second and fundamentally, health care reform means a change in the financial positioning of primary care versus specialty care. In the current fee-for-service system, some would contest, primary care is underpaid while specialty care is overpaid. The balance is shifted by the core tenets of health care reform so that primary care becomes better paid, basically at the expense of specialty care. And hospitals and health systems, where ACOs typically reside, are predominantly specialist-oriented.

For the sake of simplicity in the following discussion, we’ll be viewing primary care and specialty care in separate business contexts even though we know that within hospitals, health systems and ACOs the two exist under one roof.

To begin, let’s use precise figures from the Ohio Comprehensive Primary Care Initiative (CPCI); it is modeled as a medical home and we know the numbers. Reimbursement for primary care physicians through the medical home model involves two key changes: the first is that the medical home gets paid a separate fee for coordinating the care of patients; secondly, the medical home gets to share in the savings created as a result of care coordination.  

What is the effect on PCP income of getting paid for coordinating the care of patients? Let’s assume that the office of a primary care physician can coordinate the care of 500 patients. This requires the medical home to hire an additional staff person at a cost of $50,000.  The CPCI in Ohio is paying $22.50 per head per month for care coordination. This generates $11,500 per month, or $138,000 per year, in additional revenue to the medical home. After the cost of the additional staff person, the new revenue leaves $88,000 for organizational profit.  Supposing that the medical home provider has some miscellaneous expenses, we’ll allocate $75,000 toward profit. The average income for a primary care physician in the USA today is $135,000.  Therefore, by becoming a medical home, a primary care physician practice increases its income to about $210,000.  So we can see how becoming a medical home, versus remaining simply an independent PCP practice, can significantly increase the income of the primary care physician. Yet, we haven’t begun to consider the real income-increasing potential of a medical home: shared savings accounts. This is where it gets interesting.

To be continued …

Jim Grue, O.D.

Alistair Jackson, M.Ed.

Getting personal about Health Care Reform

On August 13, Medscape News Today published a rather worthwhile read: Healthcare Reform: It is Getting Personal by Steven D Shapiro of UPMC. Here's the outline:

• Abstract and Introduction
• Patient-centered Accountable Care
• Evidence-based Care Pathways & Clinical Effectiveness Research
• Molecular Networks
• Targeted Therapy for Cancer & the Cost–benefit Equation
• Scientific Approach to Personalized Medicine
• The Electronic Health Record & Analytics
• Conclusion
• Future Perspective

Don't let the number of topics fool you; it's not an overly lengthy article. Outside of molecular networks and cancer therapies, Shapiro covers many of the same themes we articulate here on EMRlogic Live, most of which come down to understanding the essentially predictable tides of change in healthcare, forsaking expensive and ineffective fee-for-service models and moving to a new era of patient-centered care that leverages the power available through health information technology.

In his Future Perspective, Shapiro wraps up with: 

"Sharing of data is another hurdle. This includes both patients' willingness to share their personal genetic information, as well as physician and scientist willingness to work together. .."

Let me add to that the willingness of health systems to share data. Shapiro advocates that "Medical centers should strive for a central data warehouse" ... providing "a 'single source of truth'. In a perfect world, data repositories could be powerful tools. To the degree however that the warehouse is controlled (knowledge is power) or information kept for economic gain, we shoot ourselves in the foot.

Since it's getting personal, let's not do that.

Alistair Jackson, M.Ed.

You asked about ACOs - Part 2, Team Delivery of Care

... continued from last day. For a brief discussion of ACOs and Communications, see Monday, August 13.

Team Delivery of Care

We clearly see a corollary in the development of team-based care delivery: the purists would like to see a system where all providers could form into teams to deliver care in the most efficient and cost-effective ways and in which all providers could participate in shared savings accounts. Large health systems want to maintain their dominance and even extend their control over the delivery system. What we are seeing arise is a number of programs that represent the gamut between these two extremes.  

On the one extreme are ACOs which revolve around a myriad of regulations to the point that it is difficult even to understand exactly what ACOs can and cannot do. The bottom line is that this complex set of regulations restricts ACOs to relatively large health systems in order to fulfill all the requirements. This, of course, favors health system domination and, in fact, was pushed as a complex system by the large health systems.

On the other end of the spectrum is the new Comprehensive Primary Care Initiative, which was effected largely by the designers of health care reform and pushed by the Office of the National Coordinator. These stakeholders want to see competition in the health care marketplace and access by providers at all levels.  

From an eye care perspective, we believe it is important for every eye care provider to have a general understanding of ACOs and health information exchanges, knowing that both are too complex and too diverse to be fully understood in terms of what they can and cannot do. Every eye care provider, on the other hand, should have an intimate knowledge of how DIRECT works and the significance of the Comprehensive Primary Care Initiative, as these are the two programs that most parallel the original goals of the health care reform movement. They also show how providers may work together, through coordinated care, to provide the highest level of care within a structure that openly communicates patient health information between providers. Seeing the significance of shared savings when controlled by primary care is a key to understanding the importance of team care delivery and reimbursement.  

Once again, we believe the way that independent eye care providers are going to be most successful is to understand ACOs and exchanges generally but DIRECT and the Comprehensive Primary Care Initiative specifically. The latter pair illustrate well how the emerging system is supposed to function. Then, being involved in the local community as the care delivery structures are being formed is the most important step.  To that end, the National Eye Care Communications Project, while sponsored by EMRlogic, is offered as a vendor-neutral gathering where providers can share their learnings, their experiences and assist all participants in understanding the cultural changes necessary for business success in health care reform.

Jim Grue, O.D.
Alistair Jackson, M.Ed.

More on ACOs is available in Archives. See Categories: Accountable Care Organizations.

You asked about ACOs - Part 1, Communications

One of the participating doctors in our National Eye Care Communications Project asked for more insight into ACOs, as what some have called "the real rising power" in health care reform.  

In our attempts to understand national-scale bills or movements, such as health care reform, we must acknowledge a conceptual level where the creators and influencers would like to see things go, and also a practical level involving the passing of regulations, legislation and policy.  These two levels rarely align.  And this was never more true than in the case of health care reform.  Let’s consider two parallel situations – communications and team delivery of care – in which we see clearly this difference between how a system is ideally designed and what was necessary to put it in place on a practical basis.

Communications

In the area of communications, we see two distinct programs emerging: the first is the health information exchanges being established in almost all states; the second is the national DIRECT communications network.

From a conceptual standpoint, the purists in health care reform would like to see a system in which every provider has equal and secure access to patient health information. From a practical standpoint, health systems see an advantage in being the central hub with information easily flowing in and where they have control over what flows out. The result is the first category of exchanges, repository-type HIEs, being developed by large health systems that tend to dominate the process in their states. The health systems share patient health information through the exchange, and independent providers send information into the exchange. Independent providers however, for the most part, only have access to view patient information through portals rather than easily receive information from the exchange.

In addition to the health information exchanges, we also see the emergence of the DIRECT system, which is being resisted in many states by the large health systems. DIRECT however is being pushed by the National Coordinator of Health Information Technology and also by some state HIE adminstrators as a way of granting to all providers equal access to patient health information. This is the system that gives independent eye care providers equal access to patient health information.

To be continued ... join us next day for part 2, Team Delivery of Care.

Jim Grue, O.D.
Alistair Jackson, M.Ed.

More on ACOs is available in Archives. See Categories: Accountable Care Organizations.