Health for life

The look of cooperation

Medicare continues to move forward with its PRQS "value-based" fee schedule modifier that will adjust physician payments up or down by 2% and 1%, respectively. 

As the Disease Management Care Blog understands it, 2013 physicians quality and cost data will be compared to peers, and the docs who are above and below the mean will be correspondingly financially rewarded or dinged starting in 2015.  While the American Medical Association continues to quibble over the details, this Affordable Care Act pay-for-performance (P4P) train has left the station.

Unfortunately for CMS, plenty of research suggests that it remains an open question whether PRQS will have much of an impact. For example, findings from this Ontario study indicate that incentives tend to reward physicians who have already achieved the quality thresholds, doing little for the docs who are behind.  Additional research shows physicians may not agree with the underlying methodology and distrust the reliance on insurers data, leading to a willful disregard of the incentives.  And then theres this expert survey that suggests that the effort it takes to achieve low single digit digit changes in income may be viewed as not worth the trouble.

The DMCB also thinks there may be another under-recognized issue at stake. While fee schedule changes in the 1% to 2% range can make a big difference to large hospital-physician organizations, that money, thanks to these organizations byzantine internal accounting and transfer pricing, is unlikely to trickle down in a meaningful way to their employed physicians paychecks. 

Ouch.

Physicians and P4P may turn out to be like cats and going for a walk.



Image from Wikipedia

"I wonder how I can lose less money?"

The ever resourceful HealthHombre Blog quotes an interesting academic review paper to make an important point: many of the widespread assumptions of smooth sailing for the 106 new ACOs still remain unproven.

The DMCB agrees with this important HealthHombre insight. In addition to the many "known unknowns" (including just how physician-hospital organizations will perform in managing insurance risk), there are also the "known known" year-to-year random fluctuations in claims expense.  And, as the DMCB noted, theres the "unknown unknown" "antifragile" threats to a highly protected sector of the economy that could bring the whole ACO-thing down, 2008-style.

And heres a case in point that backs up HealthHombre.  "Wellspan" is a highly regarded and well-run hospital system that is local to the DMCB. This recent news report is telling because Wellspans success and challenges probably apply to other emerging integrated institutions that have an appetite for risk contracting.

According to the press report, Wellspan garnered an excellent credit rating because...

"766 physicians — more than 75 percent of those in the hospitals market — are affiliated with WellSpan, which [was] counted as a key credit strength."

But the bad news is that the rating also....

.....noted that WellSpans physician group, which employs 411 of those doctors, generated losses of $19.6 million in 2011 and $21.4 million in 2012 (bolding DMCB).

The DMCB has heard similar statements from seasoned health system administrators both locally and nationally.  If "physician integration" is supposed to be the bedrock of ACOs, how is it that the docs are responsible for millions of dollars in losses?  What is the likelihood that these organizations will finish December 31, 2013 in the black?

Room for one more!

Once again, the Disease Management Care Blog got it right: the prognosis for the Congressional 12-person Super Committee was only slightly better than the likelihood that the DMCB was a Justin Bieber love-child.  How could the Committee ever succeed with the 13th Man being elsewhere overseas, while Dr. Krugman on the left and the WSJs editorialists on the right were both agreeing that any deal would be Satans spawn?

But if budget cutting is a good thing, why are the equity markets down?   In addition to the lingering threat of an eventual Moodys downgrade, the DMCB suspects stock holders a) have calculated a $1.2 trillion budget cut was never really up to the task*, and b) fear that the 2012 Congress wont stick to its guns.

So, asks the DMCB, whats next? 

Automatic cuts will be applied to discretionary federal spending as well as the defense budget.  While Medicaid is spared (much to the relief of our nations governors), Medicare is facing a 2% sequestration which, because premiums and cost sharing will go untouched, translates into payment cuts for hospitals, doctors and other providers.  An additionally toxic wild card is a looming additional "SGR" 27.4% Medicare physician fee schedule cut.

How will the DMCBs physician colleagues react to this dysfunction? 

Not well:

1) for those in physician owned practices, it may come down to deciding whether or not to go postal Texan.

2) for those in salaried positions, they can look forward to their Administrators turning to the "dishwasher" approach of maximizing patient throughput-dependent revenue: theres always room for a few more.  And if docs expect Uncle Sam to have any sympathy, they need to think again.

Let the games continue.

(HT to George Will)