The CFA Perspective

Physician/Hospital Alignment and Bundled Payment – Part Two

Continuing the discussion from Part One of physician/hospital alignment and the reemergence of bundled payment initiatives, let’s discuss the impact of health care reform in the area of bundled payment for care.  A national pilot program on payment bundling is included in H.R. 3590, the Patient Protection & Affordable Care Act.  This pilot program is set to commence in 2012 (no later than January 1, 2013) and run for five years.

 

Although conceptually similar to previous efforts by HHS, this pilot is intended to bundle payment for an entire episode of care inclusive of up to 30 days post-hospital discharge (implying an unprecedented level of physician/hospital cooperation, coordination and collaboration!).  While no identification of covered procedures/conditions has yet been made, but it seems reasonable that major cardiovascular procedures, and possibly certain medical cardiology admissions such as heart failure, will be included as has been done in past pilot projects.  Some other details included in the legislation (and pending final detailed regulations), include the following:

 

• Inclusive of Medicare beneficiaries
• Up to eight medical conditions for an episode of care to be selected
• Conditions will be a mix of chronic and acute
• Bundled services to include acute inpatient, physician, outpatient hospital, post acute, and other appropriate services
• An episode of care is defined as three days prior to admission, inpatient hospital admission, and the 30 days following discharge from a hospital
• Program to be established no later than January 1, 2013
• Quality measures to be developed under contract for use in the program
• The pilot to be conducted for a period of five years
• Applications can be submitted by an “entity” consisting of a hospital, a physician group, an SNF, and a home health care agency
• The Secretary of HHS will make bundled payments (amounts to-be-determined) to the contracting entity
• Quality measure to be reported and to include:
  • Functional status improvement
  • Reducing rates of avoidable hospital readmission
  • Rates of admission to emergency room after hospitalization
  • Incidence of healthcare acquired infection
  • Efficiency measures
  • Measures of patient-centeredness of care
  • Measures of patient perception of care
  • Other appropriate measures of patient outcome
• An interim report on the demonstration not less than two years after implementation
• A final report no later than three years after implementation

 

Participation in such a pilot project is always challenging – it must make both strategic and operational sense to the participant(s).  Notice the high level of cooperation, coordination and information required of the participating “entities” especially among hospital and physicians inclusive of both pre-hospitalization, hospitalization and 30-days post-acute care phases!  The work that will need to go into the program design on the part of all of the participants, just to be able to file an application, let alone pull off designing and managing such a program at the local level will be extraordinary.

 

Will this pilot program “have legs?”  Only time will tell.  However, it is vital for hospitals and physicians to recognize that such efforts will only continue and place an increased burden on hospitals to solidify their alignment strategies with select physicians.  It is hard to image that success under the requirements of care coordination, bundled payment and pay-for-performance scenarios can be possible without the appropriate physician/hospital alignment strategies in place.

 

CFA will keep you informed on further developments on hospital/physician alignment and bundled pricing, and would welcome your thoughts and comments as we progress. For further information, CFA recommends you review H.R. 3590 and, in particular, the proposed bundled payment pilot program.

The Transradial Approach to PCI – A “Win-Win” for Everybody?

When was the last time you came across a simple and straightforward change in clinical technique that typically results in better clinical outcomes, fewer complications, higher patient satisfaction, and lower cost per procedure?  While that has occasionally happened in the cardiovascular field, the increasing trend for substitution of the transradial (through the wrist) for the transfemoral (through the groin) approach for PCI, seems to be a real "win-win" for everyone involved.

 Traditionally, guidewires and catheters for PCI are inserted through the femoral artery.  Bleeding or vascular complications occur about 2% of the time.  Patients are recovered lying flat and immobile for 4-6 hours to prevent bleeding, which has also been helped by the advent of vascular closure devices.  The patient is more comfortable, dangerous bleeds are reduced, but vascular complications still exist.  Enter the transradial approach in the late 1980's.  Outside of the U.S., about 40-50% of all PCI's are done transradially.  In the U.S., that number currently is in the low single digits and only a small percentage of U.S. interventional cardiologists have been trained to use this approach.

 The advantages of the transradial over transfemoral approach are significant and include:

• The initial needle puncture is simple and straightforward
• Not impacted by a patient with peripheral vascular disease, obesity or female gender
• No need to recover the patient lying flat and immobile; patients are recovered sitting up and can leave the cath lab almost immediately post-procedure; this allows (theoretically) the patient to forgo spending an overnight stay in the hospital
• Because no vascular closure device is required, a significant cost is eliminated
• Less bleeding and other complications, significantly decreasing the risk of mortality
• If present, bleeding or other complications are readily identified and easy to address
• Overall case cost is decreased by obviating the use of vascular closure devices
• It is safer, more convenient, and more comfortable for the patient

 There are several reasons the approach has not been used more frequently, including:

• Lack of trained cardiologists
• Lack of financial incentives due to the existing reimbursement structure
• Lack of a marketing campaign by device manufacturers (who have concentrated their efforts outside the U.S.)
• Lack of patient demand because the approach has not been widely publicized
• An impression that the learning curve is too steep and learning inertia on the part of busy interventional cardiologists
• Lack of recognition and inclusion in practice guidelines or recommended practices by professional societies

 As with any procedure, there are certain contraindications and potential complications.  Additionally, physicians need to be trained in the procedure by those with solid experience.  Like all new procedures, there is a learning curve.  Despite these factors, the transradial approach is gaining momentum, fostered by recent study results and an increasing recognition by influential physicians that this approach has real benefit.  CV services management staff should fully evaluate this approach, seek out physician champions and put together an implementation plan to successfully integrate this technology into their program.  This can be a perfect hospital and physician performance improvement project or targeted metric as part of a physician/hospital alignment effort.  It's not very often that a modest clinical change can simultaneously improve clinical outcomes, reduce complication rates, increase patient satisfaction, and lower procedure costs and be a "win-win" for all involved!

 For further information, CFA suggests you review the article, Trends in the Prevalence and Outcomes of Radial and Femoral Approaches to Percutaneous Coronary Intervention:  A Report from the National Cardiovascular Data Registry, published in the November 2009 Journal of the American College of Cardiology - Cardiac Interventions.

2010 is Here and “Most Cardiologists Lose, Some Lose Big”

The CY 2010 Medicare Physician Fee Schedule (MFFS) Final Rule, as originally presented by the Centers for Medicare and Medicaid Services (CMS), passed into law January 2010 despite heavy lobbying efforts on the part of cardiologists, cardiac imagers and others. The new fee schedules, mandated by adjustments in the Sustainable Growth Rate (SGR) formula that governs physician payments, are phasing in sharp cuts in reimbursement for office-based imaging procedures; shifting payments from specialists to primary care practitioners; and changing coding and reimbursement for consultations, office visits and hospital visits; among other changes. The net result is an approximate overall cut of 21%. The RVU conversion factor drops from $36.0666 to $28.3895.

At the last minute, implementation of a portion of the reductions was put off until March 1, 2010. Intense lobbying and lawsuits questioning the rules methodology by the American College of Cardiology (ACC) and others are continuing in an effort to prevent full implementation. Only Congressional action can change the implementation schedule or the substance of the changes.

"Most cardiologists lose, some lose big," is a quote from a slide presentation put together by the ACC for its members before implementation was scheduled to take place at the beginning of the year.

As referenced in our last posting, a December 2009 a poll by the American College of Cardiology asked cardiologists to answer the question, "Did your practice integrate with a hospital in 2009?" As reported on the ACC website, www.acc.org:

• 13% said yes, my practice integrated in 2009.
• 23% said no, but my practice has concrete plans to integrate.
• 50% said no, but my practice is thinking about it in the next 1-2 years.
• 15% said no, my practice has no plans to integrate with a hospital.

A month or so into the new reimbursement climate, what would the answers be if the same question were posed today? One could conclude that these substantial reimbursement changes may tip the scale in favor of a more concentrated effort at integration between physicians and hospitals. Certainly, when and if the full fee schedule changes are implemented, the concern for future income and practice revenue stability of those affected will grow.

CFA is aware of cardiology groups that have been thrown into turmoil over these changes because of, among other factors, the way the group compensates its members; their respective work assignments and subspecialties, and associated reimbursement; which members own or otherwise control ancillary and testing equipment and services; and related issues. These changes can shake the very foundation of cardiology practice compensation methodology. Group practice compensation is a critical issue for member stability and the ultimate success of the group. Variation in compensation and perceived inequities under the pressure of reduced reimbursement could cause a group to become unstable, split apart or possibly seek closer integration with a hospital or health system as a strategy to return the group to a semblance of economic stability and harmony.

If the fee reductions are mitigated in the near term, as has frequently been the case in the past, there will still be erosion of the financial performance of cardiology practices. As healthcare costs increase, the assault on physician payment is anticipated to continue unabated. In the mind of most physicians, governmental reimbursement will inevitably be eroded at their expense and the overall reimbursement environment will remain toxic.

CFA recommends that cardiovascular physicians monitor their professional societies for updated information on reimbursement changes. These would include www.acc.org, www.scai.org and www.sts.org, among others.

It is critically important that cardiovascular management and hospital administrative staff monitor the situation with their cardiovascular physician colleagues' practice circumstances. Hospital management should be open to evaluating alternatives for collaboration and more effective alignment and integration with their cardiovascular medical staff.

Poll Indicates Cardiologists More Likely to Integrate with Hospitals

With the ongoing interest in physician and hospital alignment and integration strategies, this December 11, 2009 poll from the American College of Cardiology (ACC) is most interesting. Credit is given to our colleague, Walter Unger of Unger and Associates, for bringing this poll to our attention. The poll was conducted by Jim Fasules, M.D., FACC, ACC's Senior VP of Advocacy, and reported by ACC CEO Jack Lewin, M.D. Participants in the poll were asked, "Did your practice integrate with a hospital in 2009?" Here are the responses:

• 13% said yes, my practice integrated in 2009.
• 23% said no, but my practice has concrete plans to integrate.
• 50% said no, but my practice is thinking about it in the next 1-2 years.
• 15% said no, my practice has no plans to integrate with a hospital.

These results show just how strong the trend towards integration really is. A total of 36% of practices have integrated or have "concrete plans" to integrate. Another 50% of the respondents state that they are thinking about it. While the respondents are (presumably) only cardiologists, and the poll was not inclusive of other cardiovascular physicians (particularly cardiac surgeons) who may entertain the idea of integration, the poll is still a powerful indication of just how strong the integration movement is.

CFA is involved with clients where the circumstances leading up to interest on the part of cardiovascular physicians in integrating vary considerably. One would think the predominate reason for cardiologists and cardiac surgeons, among others, to consider alignment with local hospitals is purely economic. The initial stimulus frequently is; however, other factors come into play. It is logical to assume that physicians who have not been financially successful would be the first to consider an integration strategy. But this is not necessarily so. Consider the following:

Recently, in the southeast, a group of cardiovascular surgeons affiliated with the largest volume and most prestigious cardiovascular program in their state expressed interest in integration with their affiliated hospital. By every comparative metric applied, they were a highly financially successful group of surgeons with a significant geographic monopoly based on strong referral patterns. While their overall cardiac surgical volume had trended down, their group and individual incomes were stable as they aggressively managed their practice expenses and diversified into vascular surgery to maintain case volume and revenue. This group went to the extensive measure of taking one of their surgeons out of active practice and sending him for retraining in state of the art vascular procedures to build practice volume. Yet they still believed the overall, long term trends were working against them. The historical financial success of their practice did not preclude them from reconsidering their future direction.

Hospitals need to be prepared for this Physician-hospital alignment and integration movement by proactively thinking about their overall strategy and tactics before the issue arises. One of our senior staff attended a seminar on alignment this past year where a hospital administrator from the Midwest said that he lived in dread of any phone call or personal visit from one of his medical staff, because so many of them were asking to be bought out and employed! He was overwhelmed by the issue and knew that he needed to prepare a strategic response to this trend if he was going to keep his head above water.

CFA recommends that all hospitals and physician groups be prepared to deal with the issue of integration. With up to 50% of poll respondents actively considering integration with a hospital, it is imperative that each hospital and physician group understand the economic and political trends that promote alignment and integration, and the implications on their respective businesses.

To view the poll referenced in this posting, please refer to The Lewin Report

Hospital and Physician Alignment in the Cardiovascular Enterprise

Hospital cardiovascular program managers and cardiology, cardiovascular surgery and vascular surgery practice administrators are well aware of the continuing evolution of cardiac and vascular medicine and the multitude of challenges facing each of us.  For cardiovascular program leaders across the country, the challenges of the past will continue into 2010, along with new circumstances requiring creative solutions.  The national debate over healthcare reform that is heating up is leading to more confusion and indecision about the future.  Hospitals and physician practices continue to be inundated with strategic, clinical, financial, operational, and competitive issues that require informed organizational responses.  The possible strategies to successfully address these issues are numerous and varied.

In such times, an approach that pools resources to solidify the program's foundation for the future is critical to short term and ongoing success.  Sound physician/hospital alignment has the potential to be a CV service line transformative strategy that can:

1. Align strategic, operational and financial incentives between physicians and hospitals
2. Provide a platform for developing customized integration strategies
3. Improve operating performance and profitability
4. Reduce/prevent competitive risk and predatory recruitment
5. Gain competitive advantage; retain and expand market share

Experience in the field of cardiovascular physician/hospital alignment projects, leads to several key conclusions when planning for a cardiovascular program's future:

• If you have seen one and done one, then you have seen just one and done just one. Unfortunately, what has worked in one city, for one hospital or group of physicians, may not work for you. A situation that seems similar to yours may be different in a crucial aspect that precludes your success.
• While there is a major trend towards hospitals employing specialists like cardiologists and cardiovascular surgeons, this is not always doable-nor is it frequently the best answer in all circumstances and in all communities.
• It isn't always about money. Yes, economics and aligned incentives are important, but a myriad of personal, political and other factors can impact physician thinking and hospital actions. How often has a physician said that he wishes he was in charge of the CV service line for just one day? Very often, the issue is the appropriate exercise of control and sharing of management responsibilities.
• Do not think that establishing a physician/hospital alignment model is simple, straightforward and completed quickly-it can be a contentious, problematic, sometimes meandering, and occasionally disappointing process.
• Incremental steps are not a bad strategy. Alignment options short of employing physicians offer hospitals and physicians a chance to work together more closely and experience a new collaborative business model. Experiencing what it is like to work together under a new arrangement can prove invaluable to both parties prior to employment should that be a consideration. This is especially true during this period of uncertainty about the implications of healthcare reform.

Interested in further information on the topic of Hospital and Physician Alignment in the Cardiovascular Enterprise?  Download a copy of CFA's article Physician and Hospital Alignment Strategies: