Obamacare appears to be under unrelenting attack, yet the law’s push toward value based payments seems to be alive and reasonably well. The Center for Medicare & Medicaid Innovation, which was established under Obamacare, has just announced a new episode payment model, called BPCI Advanced.
In this podcast interview, Archway Health CEO Dave Terry talks about the evolution of value based payments, and makes the surprising assertion that voluntary programs may ultimately be more successful in transforming our healthcare system than mandatory ones.
Overview:
(0:11) What is value based care?
(1:17) When people think about value based payment, usually they think about ACOs. What else is there?
(2:15) How are these models evolving?
(4:26) Having fewer metrics sounds great. But do the remaining metrics need to be more complex or measured more precisely?
(6:18) What’s the connection between value based care and the Affordable Care Act?
(8:17) The new program is voluntary, whereas under Obama we were moving toward mandatory programs. What are the implications?
(10:18) What is BPCI Advanced? What do providers need to know about it?
(12:52) Say more about post acute care. Why can’t post acute providers be episode initiators?
(14:17) Explain how DRGs could go from hospital-only to global?
(14:50) How is Archway involved in BPCI Advanced?
(16:55) Medicare is the driver, but what is the role of commercial payers?
It takes an average of 24 days for a new patient to get an appointment with a doctor, up 30 percent since 2014. In Boston, it’s 52 days! Physician schedules are full, and yet a significant percentage of appointments are canceled or patients just don’t show up –costing doctors billions in revenue and depriving needy patients of appointments.
These two things are related: with such a long wait the patient may either be cured on her own, go to the ED, die, or just forget about the visit.
Patrick Rudolph saw an opportunity to do something about this problem and started QueueDr to simply and automatically offer patients a chance to fill those open slots. You can listen to him explain in our podcast:
(0:10) What problem are you addressing?
(0:58) Why do you think the problem is getting worse?
(2:25) Bad technology is a problem. What do you mean that your technology doesn’t require anything of the user?
(3:44) What does it look like from the patient standpoint?
(4:54) One of your customers says your product works “too well.” What is he talking about?
(5:58) Do you think this cancellation issue is a standalone solution or should it be a feature in a broader system?
(8:01) You’re not the first one to address scheduling and cancellation as a challenge. How do you compare with other approaches?
(9:46) How would QueueDr work with a policy like charging patients who don’t show up or introducing an open access schedule?
(11:58) Where will the company be five years from now?
As an economics graduate, MBA, and entrepreneur I’m a fan of the free market system. The invisible hand is a beautiful thing, and it’s certainly been good for me. A healthcare management consultant and board member, I make my living from the business of health.
Capitalism has a place in healthcare, but in developing policies we should also recognize the limits of free market approaches and be open to the benefits of socialist ideas. For example, before the Affordable Care Act, people with pre-existing conditions or high healthcare costs would experience “job lock.” They couldn’t afford to leave their employers’ group insurance plans even if they wanted to start their own small business. Would-be entrepreneurs used to call me asking for advice –not about business plans, raising money, hiring, or product development– but about how I handled health insurance. Fortunately in Massachusetts this was not a problem, even before the ACA, because we had guaranteed issue (could not be denied coverage for pre-existing conditions) and community rating (premium based on larger group, not individual risk). In most parts of the country, though, it was a problem, and if the ACA is repealed it may become a problem again.
A recent New York Times article (The Company Behind Many Surprise Emergency Room Bills) provides another example of the limitations of a free market approach. It’s worthwhile for free market ideologues to understand this before setting policy. To recap:
Some hospitals hire outside companies like EmCare to staff their emergency rooms. To maximize profits, those companies sometimes decide not to negotiate contracts with insurance companies. Hence they are “out of network” on purpose
When patients come in to the emergency department –suffering a heart attack, stab wound or whatever– they are treated by these out of network doctors, who then bill the insurance company at a rate that may be a multiple of in-network rates. This is true even if the hospital itself, and most of its doctors, are in network
The insurance company may pass along some or all of the expense to the patient, especially if the patient has a high deductible plan
Patients get angry, and a story appears in the New York Times
The Times story ends there, and it’s bad enough. I guess you could argue that the free market is sort of working here. After all, physicians are setting their own rates, and in theory patients could decide to go elsewhere. The consumer making noises helps to bring the market into equilibrium. And maybe the problem is not enough capitalism. Maybe EDs shouldn’t be required to take patients who can’t pay…
What the Times doesn’t say –probably because they don’t know about it– is that there’s an additional capitalist ecosystem that comes into play here. Let’s say a physician charges the insurance company $100,000 for something that would be reimbursed at $10,000 under a network contract. In case you think I’m exaggerating, this kind of thing actually happens –if not with emergency physicians then with ambulatory surgery centers and behavioral health.
The insurance company or third party administrator may then hire a cost containment vendor to ‘re-price’ or negotiate the claim. The cost containment vendor negotiates with a separate “revenue cycle management” company hired by the physician group.
Let’s say for the sake of argument that they agree to a reduced payment of $15,000 instead of $100,000. The cost containment company might take 20% of the savings (20%*$85,000=$17,000) as a commission and the revenue cycle management company might make $1500 or so for their efforts. So everyone in this scheme is happy:
The physician still collects $13,500 compared to $10,000 in a network deal. (And in some circumstances if the insurer isn’t paying attention they’ll get the full $100,000.)
The revenue cycle management company takes its cut, even if it’s less than the others
The cost containment companies makes more than the physician ($17,000 v $13,500). It doesn’t usually work that way but sometimes it does. [Note that I had these numbers wrong until I was corrected in the comments.]
And the health plan pays $15,000 rather than $100,000. If the payer is acting as a TPA or ASO rather than bearing risk, they may even get a fee from their employer customer for the cost containment service
While it’s great that so many new jobs and business opportunities are created, this is not exactly the way to hold down the cost of healthcare and improve affordability.
Contrast this scenario with one where the patient is covered by a government program: Medicare or Medicaid. The government determines the fee for services rendered and pays it to the physician. The patient contributes at most a $50 co-pay. The physician may or may not like what he’s being paid, but there are no shenanigans.
If you adore the free market and abhor government interference, maybe the first scenario is best. Having seen it up close, I have a hard time arguing for it.
I oppose over-testing and over-treatment, so I really had to think hard five years ago when I turned 45 and my doctor offered PSA screening for prostate caner. The US Preventive Services Task Force (USPSTF) had just come out against PSA screening, concluding that the harms outweighed the benefits.
I know that PSA is a very imperfect indicator. I definitely want to avoid the stress and possible discomfort of having a biopsy. I’m worried about false positive and false negative biopsy results. And I don’t relish the significant potential for incontinence, impotence, or bowel problems from treatment.
But at this stage of my life I am willing to accept a significant risk of morbidity in exchange for a small reduction in mortality risk, which is my impression of what my choice to have the PSA test means. In 10 or 20 years I probably won’t feel that way. And I hope there will be better detection, follow-up and treatment options by then.
I’m also confident in my ability to make informed choices with my physicians along the way. The PSA test itself was done as part of routine blood work and there was no additional risk from that. My doctor and I agreed that if the PSA is elevated we’ll discuss what to do next. At that stage I’ll also have the chance to do more research and get more opinions if necessary. I’m not automatically going to get into a cascade of follow-up and treatment.
Now the USPSTF appears to be coming around to my way of thinking. In particular, they note that more men are choosing “active surveillance,” i.e., keeping a close watch rather than jumping straight to aggressive treatment.
The choice about whether to undergo PSA testing and what to do once results are in is a great opportunity for shared decision making. And this is what should be encourage.
When we think of insurance, it’s usually for things that are rare and expensive. You never want to use your car insurance, fire insurance, or disability insurance and you don’t use file a claim for routine things like changing the oil, buying a fire extinguisher or missing a day of work with a sore back. Insurance works best when it spreads big risks over a large pool of people.
But healthcare is different, and health insurance covers even small, routine things like primary care physician visits. Direct primary care practices change the model because they are paid directly by the patient, not the insurance company. That keeps costs down and increases the alignment between doctor and patient.
I like the idea, and in fact I interviewed an early practitioner of primary care back in 2009, before the Affordable Care Act!
Recently, I spoke with Dr. Jeffrey Gold, of Gold Direct Care in Marblehead, MA. He filled me in on how his practice works and why he’s a proponent of the direct model.
(0:10) What do you mean by “direct” primary care?
(0:47) How does that feel different from a typical primary care office? Is it the same thing as a concierge practice?
(4:58) You don’t accept insurance. Does that affect your overhead and enable you to be more cost effective?
(7:08) What happens when a patient goes out of your orbit to see a specialist or be hospitalized? Do you still have to deal with insurance companies then?
(9:38) Are there particular kinds of patients that are a really good fit for a direct care model?
(11:22) What would be the impact on the overall healthcare system if every patient were a direct care patient?
(14:10) Does the Affordable Care Act help or hinder what you are doing? What changes would you like to see in the healthcare law?
