The Year of Reform


Originally published 12/23/10 on iPractice.

“The search for static security — in the law and elsewhere — is misguided. The fact is security can only be achieved through constant change, adapting old ideas that have outlived their usefulness to current facts.”
William Osler, MD, 1849-1919
Even as the healthcare reform process hit snags, it had a sense of inevitability. For decades, anyone with even a modest understanding of how the current system worked could only conclude that it was too costly, delivered too little value, was fragmented in ways that often thwart quality and safety, and was an inordinate burden on the rest of the economy. It was, in a word, unsustainable.

So the question was not whether change would come or not, but what forms it would take. And, of course, against this backdrop was the nagging worry, at least for doctors, that it would mean a further erosion of position: more intrusion and less say.

Perhaps it isn’t the practice of medicine, per se, that has become so challenging, but the environment of practice. The system can be complex, adversarial, and bureaucratic, wringing away the pleasure of caring well for patients.
At the same time, it hasn’t been any less stressful for the patients and their employers. Healthcare cost, in the form of premiums, grew four times as fast as the Consumer Price Index over the last decade, according to the Kaiser Family Foundation. In the four years leading up to this year’s reform, about 1 in 10 commercial health plan enrollees may have been priced out of the market and lost coverage.
Now, both policy and the market will change how the system works, hopefully for the better. Change of this magnitude, though, tends to be bumpy.
The stated intention of the Patient Protection and Affordable Care Act (PPACT) is to lower healthcare costs while extending coverage. To get there, the legislation focused most closely on health insurance reform. This stems from the theory that premiums are the engine of the healthcare economy — health plans collect money to pay for care products and services throughout the system — and changes in the ways healthcare is funded could impact the supply and delivery of care downstream.

Three provisions in the new legislation, staged over the next eight years, have promise for driving down costs. But even if those provisions are less successful in reshaping medicine, powerful new tools emerging in the marketplace should support clinical decision making, streamline and simplify administration, and reduce healthcare waste. Together, these transformational healthcare trends could significantly shrink healthcare cost while improving the quality, safety, and continuity of care.

These innovative dynamics are almost certainly not fads. They are new paradigms taking hold because they create compelling value for those involved in healthcare. Because they have the potential to make care easier, better, and cheaper, they are gaining wide acceptance throughout the industry.
Here’s a quick overview of five changes, with some thoughts on how you may want to position your own practice.
You can like or dislike them, but because they are designed to sweep and change the environment, you probably shouldn’t ignore them.
Healthcare Transparency
Increasingly, the quality, safety, and cost performance of individual physicians is being monitored by purchasers.
Commercial health plans, large employers, and employer collaboratives profile physicians to identify high and low performers. The data are often difficult, though not impossible, to come by. At present, Medicare physician data, the simplest and most logical place to look, is locked and unavailable, but there are hints this could change. Self-insured employers have good data. A number of commercial interests provide quantitative physician profiling services for individuals, employers, and health plans.
Revelations from the analyzed data can be startling. Jerry Reeves, MD, a prominent former health plan manager, points to as much as an eight-fold cost difference between the least and most expensive physicians to obtain the identical outcome for an episode of a specific condition in Nevada, Illinois, New York, and Pennsylvania. Documentation of this tremendous variation is a powerful wake-up call for employers who have always assumed that each physician approaches a specific problem in much the same way, and it impacts how they view selecting a physician. It should also challenge physicians to reconsider whether their practice patterns are optimal.

In some ways, the data are becoming much more available and easier to analyze. The explosion in electronic health information technologies has spawned projects that are integrating healthcare data of all types — including physician performance profiling/rating — into market and clinical decision making.

Consider these separate initiatives, all part of the same trend.
  • The Department of Health and Human Services, in collaboration with the Institute of Medicine, recently launched the Community Health Data Initiative, which will release data on a variety of topics, including smoking and obesity rates, access to healthy food, utilization of medical services, and quality of hospital treatments. The purposes are to “raise awareness of community health performance, increase pressure on decision makers to improve performance, and help facilitate and inform action to improve performance.”
  • The Meaningful Use Rules for Electronic Health Record technologies will incorporate quality measures developed by the National Quality Forum, and so physician data would be far more detailed. Even if these data are devoid of patient identifiers, physicians could easily be distinguished based on unique metrics if they were to become public.
  • After a hiatus of more than a decade, medical management infrastructure is being aggressively rebuilt by virtually every major health plan to cope with the requirements of healthcare reform. Despite the plans’ continued gain using the old paradigm of fee-for-service without much oversight, more aggressive medical management approaches based on performance and value data will almost certainly become far more prominent going forward.
  • Many commercial health plans now provide an up-to-date online resource for primary care physicians who rank specialist performance.
It may be useful to remember the economist Adam Smith’s observation that markets need information to work. The sudden availability of large amounts of comparative physician data will make healthcare into a market, which could profoundly change the ways physicians practice.
Physician Perspective: Seek profile data through your local health systems or health plans that compare your performance to those of specialty peers. How do you rank? Think through what you might do to become a “higher performing” physician. Patients and purchasers are intent on finding objective quality, safety, and cost measures that can guide choices.
While you may be skeptical of ranking methodologies, it may be counterproductive to assume all approaches are worthless. Still, if you have been profiled, you have a right to know the methodology used. The mechanisms for achieving transparency must be transparent as well.
Clinical Decision Support
In 2003, Elizabeth McGlynn and colleagues at RAND, a research and analytics firm, published a seminal article in The New England Journal of Medicine showing that American adults get only about 55 percent of recommended care.
With 40,000 new medical articles released every month, it is all but impossible for physicians to stay current. A new and gradually improving crop of decision support tools leverage data (e.g., claims, EHR, drug/PBM, lab) to provide clinicians with reminders, care gap guidelines, and best practice guidelines at the point of care. These tools are intended to support rather than supplant a clinician’s efforts, offering information for consideration. The professional caregiver retains the necessary latitude to exercise judgment that fits each circumstance.
In a more transparent environment, as reimbursement is increasingly tied to performance, these aids will be expected to help most physicians hit targets and optimize their value in the marketplace.
Physician Perspective: Investigate and consider investing in tools — for example, those from DocSiteWellCentiveAnvita Health, and MEDai — that are built to facilitate care management with the most current knowledge and help physicians with reminders and actionable care items. Could prompts like these help improve your practice and help you achieve desired quality targets?
Healthcare Reform’s Revival of Medical Management
In November 1999, at the height of anti-managed care fervor, UnitedHealth Group announced that their health plans would no longer do medical management. Many physicians at the time complained that health plans were second-guessing their decisions. But flawed as they were, the medical management processes were bent on containing real excesses. After United’s announcement, oversight of care delivery significantly diminished. Most health plans followed suit, dismantling their medical management functions. Healthcare utilization and cost exploded. In the succeeding six years, healthcare costs rose 57 percent, compared to 39 percent in the preceding six years, a 46 percent increase. As recently as 2008, estimates of waste in American healthcare were as high as 55 percent of all healthcare expenditures.
Recognizing that a great deal of healthcare behavior is driven by health plan arrangements, the healthcare reform bill tries to incentivize health plans to reconstitute their medical management functions, reduce unnecessary and inappropriate care, and slow healthcare cost growth. The provisions call for:
  • A reduction in medical loss ratios (effective 2010). That is, the percentage of premiums spent on medical claims should be no lower than 85 percent for large groups and 80 percent for small groups. Functionally, this requires insurance companies to limit the portion of premium dedicated to administration.
  • The establishment of cooperative (i.e., member-owned) health plans (effective July 1, 2013). These new structures — under the Consumer Operated and Oriented Plan (CO-OP) program — would be “owned” by their enrollees, which would give them ample reason to root out unnecessary costs. Even more important, existing insurance companies are prohibited from being involved with these health plans, which means that the legacy plans will suddenly have new market competitors.
  • A slowing of system-wide cost growth (effective January 1, 2018). By 2018, an excise tax of 40 percent will be levied on the portion of a health plan premium greater than $10,200 for an individual and $27,500 for a family. While most discussions during reform focused on taxing excessively “rich” (or expensive) health plans, as a practical matter it now appears that these rules could apply to nearly all health plans. New data from the Kaiser Family Foundation/HRET 2010 Employer Health Benefits Annual Survey show that 2010 premium growth for family health plans slowed dramatically, rising only about 3 percent this year. If annual health plan cost increases remain at 8.2 percent until 2018, as they have for most of the past decade, then they’ll avoid the Cadillac tax. But if they rise much at all beyond this, to 9.1 percent, they’ll trip the threshold and the tax penalties will be significant.
This provision is designed to encourage health plans to reestablish and aggressively pursue medical management that can reduce healthcare cost growth. On the other hand, the provision also states that, if healthcare costs have risen more than expected, Congress can relent.
All three of these initiatives should result in a renewed interest in clinical appropriateness and medical management. The belief that much of current healthcare activity and cost is unnecessary will drive efforts by purchasers and payers to clamp down on what they perceive as excess, when compared to evidence-based benchmarks.
Many physicians will see these initiatives as onerous and intrusive, and there will undoubtedly be pushback. But the reality is that healthcare’s historical cost growth is destabilizing both the industry and the larger economy. When push comes to shove, it will be the industry that is forced to moderate its behaviors.
Physician Perspective: The legislation prompts several questions:
  • “Am I practicing as efficiently and effectively as I could?”
  • “Are some elements of my care — e.g., laboratory tests, advanced images — simply there to boost my income? Are others based on preferences rather than hard data?”
  • “If my success was tied to ‘value’ targets, how would I fare?”
  • “If my patients’ costs (e.g., severity-adjusted episodic costs) and outcomes (e.g., postsurgical readmission rates) were compared to those of other physicians within my specialty, locally and nationally, how would I rank?”
As healthcare becomes managed more like a market, driven by both policy and economic forces, these questions will become increasingly compelling.

Value-Based Benefit Design

The idea that health plans should reward proven approaches and discourage unproven ones is spreading like wildfire, especially among large employers. Spearheaded by organizations like the Center for Value Health Innovation, health plans will increasingly design benefits that tightly link reimbursement to medical evidence, and that reward both positive outcomes and efficiency. This paradigm is diametrically opposed to fee-for-service reimbursement, which financially rewards the delivery of more products and services, independent of appropriateness. Getting it right may require retooling many aspects of practice.
Examples of how this might play out?
  • Install a stent into a stable heart patient and the plan might reimburse you a fraction of what you’re used to.
  • Get rewarded for addressing and eliminating patient care gaps — e.g., HbA1c’s for diabetics; Pap smears for women; PSAs for men. Leave gaps unaddressed, and you may be penalized.
  • Self-referred advanced images are more likely to be scrutinized and severely discounted. (In June 2009, a Medicare Payment Advisory Commission (MedPAC) report to Congress found that, in 2005, “episodes with a self-referring physician are associated with greater imaging spending than episodes with no self-referring physician, controlling for differences in patient severity level, geographic market, and physician specialty.”)
Physician Perspective: Investigate and contact any local health plans that claim to have value-based designs. Think through how you might practice differently if fee-for-service reimbursement went away, and your practice’s success became more significantly bound to your ability to deliver measurably high-quality and efficient care. Determine how your specialty and practice might change positively and negatively if you were to adhere strictly to guideline-driven practice.
Medical Homes
Medical homes are more than just places where patients can turn for information and concerns. Primary care physicians in medical homes are patient advocates and guides, rather than the gatekeepers for managed care. Some, like on-site employer clinics, have moved outside fee-for-service reimbursement, which allows them to escape volume-based visit schedules. Reduced patient loads let primary care physicians explore and manage more complex problems without referring.  
Medical homes make use of a variety of tools, programs, and incentives to optimize care. They use analytics to identify which patients have risks or potential care gaps. Patients with chronic diseases — who account for as much as 75 percent of healthcare expenditures nationally — are paired with an on-site disease management nurse, who works with the physician to provide regular face-to-face counseling. At least one study has shown this approach to be one of the most effective methods for producing lifestyle behavioral change.
Medical homes may provide free access to primary care, drugs, and labs, so that patients have no financial reason to resist going to the doctor or taking their medicines. They take advantage of clinical decision support tools to help ensure clinicians deliver the most appropriate care at the right time no matter how obscure the medical condition presented or how new the appropriate data-driven guidelines may be.
Perhaps most important, good medical homes reestablish a collaborative working relationship between the primary care physician and the specialist. This means open communication and sharing of information. This approach also establishes a line of accountability from the specialist back to the primary care physician.
Physician Perspective: If you’re a primary care physician, check the National Committee for Quality Assurance (NCQA) criteria to see whether your practice could qualify as a medical home. If you’re a specialist, think through how you might best collaborate with a PCP to help optimize care through a medical home.
Consider what new tools, programs, incentive structures, or skill sets might enhance your ability to manage patients, and think how you might practice differently if, for example, patients could come to you for free, or receive their labs for free.
Imagine what opportunities could arise if you knew, using analytics, which patients had chronic disease or were likely to have a major acute event over the course of the next year. Look into gaining access to new technologies, and then imagine how they might alter the workflow of your practice.
Consider the impact if you were to add a nurse whose job was to manage patients with chronic disease.
Finally, investigate whether local health plans or employers are willing to reimburse you to manage patients in this way, so you can make this shift toward delivering better care to your sickest patients.
Working with Change
The healthcare marketplace is being transformed by the simple fact that cost has exceeded the ability of individuals, employers, and governments to pay for it, leaving too many patients with inadequate care. The recent reform bills are likely to have sweeping consequences. It’s not easy to adapt, but embracing change may be easier if you seek out solutions in the emerging market to seize on the opportunities for positive change by creating improvements in quality, safety, and cost. New technologies are being developed for analysis, communications and decision support, data collaboratives, mechanisms that re-empower primary care, clinical decision support — all with tremendous promise for helping you deliver better, more efficient care.
But at the same time, these new approaches, combined with a powerful, if gradual, transition away from fee-for-service reimbursement and toward an emphasis on results, will almost certainly change the fundamental nature of most practices, as well as the ways patients interact with physicians. Not all these changes will be welcome, but there is no question that many are direly necessary and overdue.
If you agree with the aphorism that “the only constant is change,” then the only path is to adapt. I believe the most successful professionals will be those who embrace the coming changes and learn to be distinguished within them.
What do you think of the changes produced by reform? Click “Comment or ask a question” to add your thoughts.

About Brian Klepper

Brian Klepper is a health care analyst, commentator and a Principal in Worksite Health Advisors.
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