This article appears in the April 2014 issue of HealthLeaders magazine.
When the enrollment period opened for the new health insurance exchanges in 2013, it was a signal to physicians that a key element of the Patient Protection and Affordable Care Act had, indeed, arrived and would start to play out in their waiting rooms this year. Other changes providers are now contending with include the implementation of ICD-10, public disclosure of any financial gain doctors receive from drug and device manufacturers because of the Physician Payments Sunshine Act, and attesting to meaningful use requirements. All of this is happening against the backdrop of an evolving industry in which physicians are facing an influx of more patients with insurance coverage but without annual limits or preexisting condition clauses.
To say physicians are under tremendous pressure may be the understatement of 2014. A key metric to assess how well physicians are navigating the healthcare system is reimbursement.
"The pressure everybody is experiencing, to a large degree, is revenue related," says Armin Ernst, MD, president and CEO of Worcester, Mass.–based Reliant Medical Group, an independent multispecialty physician group with more than 250 doctors at 20 sites in central Massachusetts. The practice has 106 primary care physicians and 150 specialists.
A cornerstone of PPACA is to get healthcare costs under control, which means moving away from a fee-for-service reimbursement system and replacing it with one that rewards quality and outcomes. It's a transition welcomed by most physicians, but alternative payment models are still relatively new and many organizations are treading carefully. For example, in Massachusetts, a state often lauded as a healthcare pioneer, FFS remains the dominant payment method used by commercial insurers. According to a 2013 report from the state's Center for Health Information and Analysis, while state-based payers have implemented some alternative payment methods, only one national payer was participating in an APM model in Massachusetts. The rest relied on FFS.
This means in Massachusetts, and elsewhere, providers are stuck navigating two payment arrangements, if they venture out to be part of an alternative payment model at all.
"It is very difficult to have your feet in two different worlds and to maintain the divide," explains Ernst, who believes the physician of the future needs to prepare for more scrutiny now in order to survive financially.
"There's less money around," says Ernst. "We all have to do more with less, and we've all recognized that quality has to be a significant driver in how we're getting paid."
Reliant has chosen to pursue contracts that put its providers on the hook for more risk, and it has made strong headway. In 2012, $157 million—52% of Reliant's total revenue—was associated with risk contracts. It's a trend that began five years ago, says Marc-David Munk, MD, chief medical officer for Reliant Medical Group.
"Every year, it seems to increase," says Munk. "We're looking forward to a point in our future where we have next to no FFS patients."
Reliant leaders hope to be at that point in five years. For 2014, Reliant's goal is to have more payers handing over risk to the multispecialty practice—up to 80% of its patient panel by year's end. The more risk, the better, according to Munk. Right now, 71,000 of its patients are fully capitated, about 40%.
"Being in a risk environment allowed us to do many of the things that physicians wished they could do," Munk says.
For example, Reliant offers shared medical appointments for certain chronic conditions, such as diabetes. Patients with high blood pressure or cholesterol and weight management issues can also participate in a shared appointment. The 90-minute, once-a-month appointments also give patients a way to be more engaged with their care and understand they are not alone. In addition to a physician, a nurse is present at the appointments to address other issues, such as depression and anxiety. Munk says the appointments are very popular with patients and easier with global-risk contracts because it's difficult to bill for a shared appointment under a FFS structure.
Another program that Reliant is piloting, HomeRun, involves providers seeing frail elderly patients in their own homes. The home visit is done by geriatricians and nurse managers. Munk says he also is looking to begin a separate hospital-at-home program that would allow patients to stay home with support instead of being admitted to the hospital.
"It comes at a lower cost for us," Munk says. "And it's something that we would find difficult to bill for in a FFS environment. The bottom line for us is these kinds of things improve the care that we can deliver to patients and also deliver it to the bottom line. It's frankly a much less expensive way of providing care than waiting for patients to get sick at home and then having them bounce back to the emergency department two or three times and get readmitted. Don't forget we bear the cost of all of those visits. Everybody benefits when we get a little more intelligent about how to spend those dollars."
Reliant's aggressive strategy is due, in part, to its affiliation with Atrius Health, a Newton, Mass.–based nonprofit organization that has assembled more than 1,000 physicians among its seven community-based medical groups in Massachusetts. Atrius is a Medicare Pioneer Accountable Care Organization and has an alternative quality contract with Blue Cross Blue Shield of Massachusetts.
On its own, some Reliant locations have also achieved level 3 patient-centered medical home recognition—the highest level awarded by the National Committee for Quality Assurance. While PCMHs are not necessarily engaged in APM models, payers often offer incentives to practices and physicians that attain the recognition.
Reliant's confidence in succeeding with global risk comes from its history. Before 2011, Reliant was known as the Fallon Clinic, established in 1929 as a medical group in central Massachusetts. Its members embraced the idea of capitated payment and, in the 1970s, created their own HMO known as the Fallon Community Health Plan. Ernst credits the early adoption of capitated care as one reason Reliant has been able to move forward more quickly with modern alternative payment models.