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Doctors Feel Pressure to Accept Risk-based Reimbursement

 |  By jfellows@healthleadersmedia.com  
   July 24, 2014

As insurers step up efforts to cover more lives with value- and performance-based contracts, physicians are under the gun to adapt to an altered reimbursement reality.

Cigna has met its goal of covering 1 million healthcare consumers under its quality and performance-based reimbursement model called Collaborative Accountable Care (CAC) arrangements, the insurer announced this month.

The Bloomfield, Connecticut-based payer has 100 such arrangements with large physicians groups in 27 states. Cigna's National Medical Executive for Performance Measurement and Improvement, Dick Salmon, MD, says large groups were targeted because they had the resources, organization, and capabilities to manage population health.

"Since 2008, we have been focusing on large physician-led organizations, including multispecialty groups, primary care groups, IPAs and the physician leadership in integrated delivery systems and PHOs," says Salmon.

"However, our research indicates that just 20% of customers with high cost conditions or complex needs receive care from a large physician-led organization, so we know that focusing on just large physician groups isn't enough."

Salmon says Cigna has expanded its reach to include smaller physician groups with small "test-and-learn" pilot projects in select markets.

Cigna is not the only large insurer refining its reimbursement approach to accommodate a value-based healthcare system. Aetna, Humana, UnitedHealth, and others are aggressively pursuing strategies that pay providers based on quality and cost-containment.

What's in a Name?
These risk-sharing agreements are called various things from accountable care organizations to bundled payment initiatives. And while the range of reimbursement models do have some important differences, the thread that unites them all is rewarding for improvement in health outcomes and costs.

The transition to value-based purchasing is far enough long now to assume that while an ACO might not be called an ACO five, 10 or 20 years from now, the reimbursement model it is trying to become will be in some incarnation in the future.

Larger physician groups, as Cigna is betting on, have the resources to be positioned for this transition, but smaller physician groups are either not ready or capable, according to a March study from the Journal of Health Services Research.

The study found that 60% of physician practices were not participating in an ACO; 25% did belong to an ACO, while 15% planned on joining one in the future.

And even though the study showed that more than half of physician practices were not part of an ACO, the study's authors indicated that figure was high not necessarily because doctors had turned up their noses to the payment and care delivery model (though there are more than several examples of physicians and physician groups avoiding ACOs and similar arrangements).

Instead, the study concluded that based on its more than two dozen indicators measuring care management, quality, and other patient-centered medical home processes, physician practices that were not in an ACO scored lowest.

With the study's sample showing that if practices with more than 100 providers, it indicates smaller practices aren't ready to participate in an ACO.

Size Matters
Las Vegas-based HealthCare Partners Nevada is very familiar with providing value-based care. As a network of more than 200 primary care physicians and more than 1,300 specialists, Todd Lefkowitz, senior vice president of managed care operations and network development, says nearly half of its 250,000 unique patients are in some sort of value-based contract.

"Nationally, employers can't continue to incur double-digit increases in their second largest expense," says Lefkowitz. "By 2016, our goal is to move the majority of our contracts, particularly primary care contracts, to risk-based."

Healthcare Partners Nevada is one of Cigna's CAC partners. It was also one of the Medicare Pioneer ACOs, though now Lefkowitz says it's converted to a Medicare Shared Savings Program. The large, multi-specialty practice also has other value-based contracts with other payers. He says while the arrangements aim to reach have similar goals, the cost and quality metrics are not the same, and that can be a challenge for physicians.

"Nevada doesn't look like other CAC's (Cigna's model)," says Lefkowitz. "We have huge, self-funded clients, the casinos. The incentives are aligned for the patient, provider, and employer. For the first full year, we did slightly improve on quality, and we produced shared savings. We split a percentage of those savings with the employer group."

HealthCare Partners' achievement with Cigna mirrors the results the insurer found among its participants: 73% on average had 3% better than market average in total medical cost; 2% had better than market average in quality.

Lefkowitz says its cost savings were, in fact, much better than the 3%; he puts the savings closer to 18%.

Risk-based Arrangements Inevitable
Cigna's milestone of 100 CAC contracts is likely a notch in what is likely to become old news. More insurers are moving to risk-sharing arrangements, and they're being aggressive about strategy.

Already this year, UnitedHealthcare announced that $27 billion of its annual reimbursements to physicians and hospitals are tied to accountable care and performance-based programs. By 2018, UnitedHealthcare is hoping to increase that to $65 billion.

Independence Blue Cross, which is in 24 states and Washington D.C., reports that nearly 90% of the providers in its ACO payment model lowered readmission rates by an average of 16%.

Lefkowitz attributes the high rate of adoption at his practice to HealthCare Partners Nevada's long history of managing care with an eye toward value rather than fee-for-service. In fact, in 2006, the group terminated all 12 of its FFS contracts and went to a 100% global risk arrangement. They were working exclusively with a Medicare Advantage payer.

"It was a very difficult decision to make, but at the time we realized the way the organization was structured, in terms of providing more resources in our clinics, we were not able to effectively provide the same care that we would in a value-based arrangement," he says.

The practice stayed at risk for three years before acquiring a primary care practice that was mostly FFS. It swung them back into what is more likely a truer reality for other practices across the country: practicing medicine two payment models.

"It was our goal not to displace patients," he says. "And while 50% of our patients are in FFS arrangements, over 80% of our revenue comes from value-based reimbursement. I don't know if it's realistic to think 100% of the reimbursement will be value-based."

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Jacqueline Fellows is a contributing writer at HealthLeaders Media.

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