Urology Practices Must Develop Strategies to Respond to New Payment Models

Urology Practice Management - August 2016, Vol 5, No 4 - AUA Meeting Highlights
Charles Bankhead

Urology practices must develop strategic plans to transition from fee-for-service to fee-for-value reimbursement models, practice management consultants advised at the 2016 American Urological Association Practice Management Conference.

The transition to value-based reimbursement offers substantial opportunities and strategies that give practices and urologists the chance to be well-positioned for the future.

“The ultimate goal is to develop a viable strategy that incorporates aspects of traditional and contemporary approaches to meet the needs of the shifting healthcare landscape,” said Max Reiboldt, CPA, President and Chief Executive Officer, Coker Group, Alpharetta, GA.

By way of introduction to the “value transition,” Mr Reiboldt and Coker Group Senior Vice President Aimee N. Greeter, MPH, noted that the transition from volume to value has implications for payers, patients, and providers.

For payers, the transition will involve shifting more risk from payers to providers and increasing the use of value-based programs, such as bundled payments, pay-for-performance strategies, and shared-savings plans.

Providers will have to “retool” operations to focus more on care management, cost reduction, data utilization, and prevention and wellness services. Meanwhile, providers will seek to harness innovation and entrepreneurialism to develop clinically integrated networks.

Patients will increasingly receive care through consumer-driven, high-deductible health plans and expect increased price transparency.

The proportion of Medicare reimbursement made through alternative models (payment linked to the effective management of a patient population or an episode of care) has increased from 0% in 2011 to 30% in 2016, and will increase to 50% by 2018, said Mr Reiboldt. By including fee-for-service payments linked to quality initiatives and metrics, the proportion of Medicare payments made through alternative models will account for 90% of all Medicare payments.

“Although there has been more focus on government payers making the transition to fee-for-value, commercial payers are not far behind,” said Mr Reiboldt. All pathways through the transition lead to value, he continued. Quality enhancement initiatives will meld with cost reduction to produce higher value.

Successful organizations will actively seek out and implement strategies to have the effect of “infusing the value proposition into their organizational framework.”

Practices and organizations that fail to prepare now could face serious financial consequences in the future. To avoid those consequences, they must respond with strategies that address the organization’s infrastructure, physician compensation structure, and alignment models.

Value-Based Reimbursement: Infrastructure Issues

To compete and successfully participate in a value-based reimbursement environment, organizations must develop a detailed understanding of their cost structure. Achieving that understanding requires taking into account all physician and related costs, including drugs and supplies. An organization must have a detailed understanding of its base level of cost to effectively negotiate with payers, said Mr Reiboldt.

Successful practices must establish a comprehensive data infrastructure. In addition to meeting the requirements of an electronic medical rec­ord system, a comprehensive data analysis system must be able to condense and analyze the complete picture of the practice cost structure, track quality and outcome measures, compare the cost of individual services across providers, and integrate with local practices to determine cost trends and share information.

“This information technology will be imperative for supporting other internal efforts, such as the development of care process guidelines under a system, such as the care process design system,” said Mr Reiboldt.

A care process design system is a systematic methodology for developing care pathways that “reliably and consistently drive high-quality, low-cost care while feeding back relevant information to foster continuous clinical and process improvement.” As a care process transformation tool, a care process development system promotes collaboration, engagement, and clinical care processes.

“Care process development system” sets the stage for physicians to understand their individual impact on the organization, and how they must work to decrease costs while improving quality,” said Mr Reiboldt.

Alignment Models

Several alignment models have emerged in response to the transition to value-based payment, including patient-centered medical homes, quality collaboratives, clinically integrated networks, and accountable care organizations.

“Renewed alignment models are increasingly focused on finding a ‘happy medium’ between hospital and physician control. With physicians typically being the primary controllers of cost, this approach is consistent with current healthcare trends,” said Ms Greeter.

The 4 key areas that have emerged as negotiation points for attaining alignment with market characteristics and organizational culture are:

  1. Compensation model
  2. Governance structure
  3. Noncompete clauses
  4. Income distribution plans.

Ms Greeter described a case involving 5 single-specialty practices that had formed an independent practice association and then began to develop a clinically integrated network. The motivation for pursuing such a network include collective negotiations with payers; continued ability to refer patients within the community to grow market share; drive down costs and increase the bargaining power with hospitals; and to compete more effectively under a value-based reimbursement paradigm.

The practices formed a working group to structure the network and to identify and vet key issues. With third-party assistance, the working group performed an environmental assessment, which included the identification of competitors’ strategies for responding to accountable care, the impact of these strategies on potential partners, and the evaluation of information technology needs in the provider community.

The group also identified key third parties to enlist as advisers, including physicians, attorneys, and consultants for payer contracting. With third-party assistance, the group also developed a realistic business plan for network development.

The working group became the executive committee and considered scalability with respect to transition from an independent physician association to clinically integrated network and information technology functionality.

Finally, the executive committee developed a compliant structure for the network, including legal structure, membership agreements, compensation structure, a care process development system, and a risk management model.

Physician Compensation

With the introduction of relative value units in the past decade, physician compensation has been transitioning from a compensation structure that includes high guarantees and no productivity expectations to a strong focus on productivity, a variable treatment of guarantees, and scaled-down benefit packages.

Since 2010, the focus on productivity has continued, but guarantees have decreased, benefit packages have continued down the scale-down pathway, and many physicians have begun to wonder what the future holds for them, said Ms Greeter.

The second decade of the 2000s has seen the expansion of nonproductivity incentives, driven primarily by the shift in focus from volume to value. The expansion has been accompanied by a shift in focus from foundational expectations to value drivers, which are often tied to quality-based reimbursement.

Transitioning from a fee-for-service to a fee-for-value medical practice includes multiple strategies that affect physician compensation.

“Begin tracking quality metrics and performance, and restructure compensation to reward these outcomes. Incentivize providers to reduce overhead costs and deliver care efficiently,” said Mr Reiboldt.

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Last modified: August 22, 2016
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